-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gpr36y5boUZzajyWMBERmtIsmFlUcNJWo99YCdfxgiemcRASj78Jlsq0OJSV7EAB 3OpfeX/gpoVz+lhO3bluXA== 0000950131-97-002057.txt : 19970327 0000950131-97-002057.hdr.sgml : 19970327 ACCESSION NUMBER: 0000950131-97-002057 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19970326 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CTBI PREFERRED CAPITAL TRUST CENTRAL INDEX KEY: 0001036256 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-23957 FILM NUMBER: 97563017 BUSINESS ADDRESS: STREET 1: 208 NORTH MAYO TRAIL CITY: PIKEVILLE STATE: KY ZIP: 41501 BUSINESS PHONE: 6064331414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIKEVILLE NATIONAL CORP CENTRAL INDEX KEY: 0000350852 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 610979818 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-23957-01 FILM NUMBER: 97563018 BUSINESS ADDRESS: STREET 1: 208 NORTH MAYO TRAIL STREET 2: P O BOX 2947 CITY: PIKEVILLE STATE: KY ZIP: 41502-2947 BUSINESS PHONE: 6064321414 MAIL ADDRESS: STREET 1: 208 NORTH MAYO TRAIL STREET 2: PO BOX 2947 CITY: PIKEVILLE STATE: KY ZIP: 41501 S-3 1 REGISTRATION AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1997 REGISTRATION STATEMENT NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ CMMUNITYOTRUST BANCORP, INC. KENTUCKY 61-0979818 CTBI PREFERRED CAPITAL DELAWARE 31-1512911 TRUST (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER (EXACT NAME OFREGISTRANT AS SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) P.O. BOX 2947 208 NORTH MAYO TRAIL PIKEVILLE, KENTUCKY 41501 (606) 432-1414 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------ BURLIN COLEMAN COPY TO: COPY TO: 208 NORTH MAYO TRAIL NICHOLAS R. GLANCY, ESQ. STEPHEN M. WISEMAN, PIKEVILLE, KENTUCKY 41501 ESQ. GREENEBAUM DOLL & MCDONALD PLLC (606) 432-1414 1400 VINE CENTER TOWER KING & SPALDING (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE 120 WEST 45TH STREET LEXINGTON, KENTUCKY NUMBER, INCLUDING AREA 40507 NEW YORK, NY 10036- CODE, OF AGENT FOR (606) 231-8500 4003 SERVICE) (212) 556-2100 ------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED AMOUNT AGGREGATE MAXIMUM AMOUNT OF TO BE PRICE AGGREGATE REGISTRATION TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE (2) - ----------------------------------------------------------------------------------------------------------- CTBI Preferred Capital Trust Preferred Securities (1)................................. 1,380,000 $25.00 $34,500,000 $10,454.55 - ----------------------------------------------------------------------------------------------------------- Community Trust Bancorp, Inc. Guarantee (2)(3).. (2) -- -- -- - ----------------------------------------------------------------------------------------------------------- Community Trust Bancorp, Inc. Subordinated Debentures (2)(3).............................. (2) -- -- -- - -----------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- (1) Includes 180,000 shares of Preferred Securities which may be issued by CTBI Preferred Capital Trust to cover underwriters' over-allotments. (2) The Subordinated Debentures will be purchased by CTBI Preferred Capital Trust with the proceeds of the sale of the Preferred Securities. No separate consideration will be received for the issuance of the Subordinated Debentures or the Guarantee. In accordance with Rule 457 no separate fee is payable for the Community Trust Bancorp, Inc. Subordinated Debentures or Guarantee. (3) This Registration Statement is deemed to cover the Subordinated Debentures and the Guarantee. ------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A) MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED MARCH 26, 1997 PROSPECTUS 1,200,000 PREFERRED SECURITIES CTBI PREFERRED CAPITAL TRUST % CUMULATIVE TRUST PREFERRED SECURITIES (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY) GUARANTEED TO THE EXTENT SET FORTH HEREIN BY LOGO --------- The % Cumulative Trust Preferred Securities ("Preferred Securities") offered hereby represent preferred undivided beneficial interests in CTBI Preferred Capital Trust, a trust created under the laws of the State of Delaware ("CTBI Trust"). Community Trust Bancorp, Inc., a Kentucky corporation ("Company"), will own all of the beneficial interests represented by common securities of CTBI Trust ("Common Securities"). State Street Bank and Trust Company is the Property Trustee of CTBI Trust. CTBI Trust exists for the sole purpose of issuing the Preferred Securities and Common Securities and investing the proceeds thereof in an equivalent amount of % Subordinated Debentures ("Subordinated Debentures") to be issued by the Company. (Continued on Next Page) SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL. --------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, OR ANY STATE SECURITY COMMISSION, NOR HAS THE SECURITIES EXCHANGE COMMISSION, OR ANY STATE SECURITY COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------- THESE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL GOVERNMENT OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS PRICE TO AND COMMISSIONS PROCEEDS TO THE PUBLIC (1)(2)(3) TRUST (1)(2) - -------------------------------------------------------------------------------- Per Preferred Security................ $25.00 (2) $25.00 - -------------------------------------------------------------------------------- Total (4)............................. $30,000,000 (2) $30,000,000
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) The Company and CTBI Trust have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Because the proceeds of the sale of the Preferred Securities will be invested in the Subordinated Debentures, the Company has agreed to pay the Underwriters, as compensation (the "Underwriters' Compensation") for arranging the investment therein of such proceeds, $ per Preferred Security (or, in the aggregate, $ ). See "Underwriting." (3) Expenses of the offering to be paid by the Company are estimated to be approximately $175,000. (4) CTBI Trust has granted the underwriters an option for 30 days to purchase up to an additional 180,000 shares of Preferred Securities on the same terms set forth above solely to cover over-allotments, if any. If such option is exercised in full, the total Price to the Public and Proceeds to CTBI Trust will be $34,500,000 and the aggregate underwriters compensation will be $ . See "Underwriting." --------- The Preferred Securities offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Preferred Securities will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company on or about , 1997, against payment therefor in immediately-available funds. --------- MORGAN KEEGAN & COMPANY, INC. J.J.B. HILLIARD, W.L. LYONS, INC. , 1997 (continued from previous page) The Subordinated Debentures will mature on March 31, 2027, which date may be (1) shortened to a date not earlier than March 31, 2007, or (2) extended to a date not later than March 31, 2036, in each case if certain conditions are met (including, in the case of shortening the Stated Maturity (as defined herein), the Company having received prior approval of the Board of Governors of the Federal Reserve System ("Federal Reserve") to do so if then required under applicable capital guidelines or policies of the Federal Reserve). The Subordinated Debentures will be the unsecured obligations of the Company and will be subordinate and junior in right of payment to Senior Debt, Subordinated Debt and, under certain circumstances, Additional Senior Obligations of the Company, as described herein. See "Description of the Subordinated Debentures--Subordination" in this Prospectus. The Preferred Securities will have a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise over the Common Securities. See "Description of the Preferred Securities--Subordination of Common Securities." Holders of Preferred Securities will be entitled to receive preferential cumulative cash distributions ("Distributions") accruing from the date of original issuance and payable quarterly in arrears on the last day of March, June, September and December of each year (each, a "Distribution Date"), commencing on June 30, 1997, at the annual rate of % ("Securities Rate") of the Liquidation Amount of $25 per Preferred Security. The Company has the right to defer payment of interest on the Subordinated Debentures at any time or from time to time for a period not to exceed 20 consecutive quarters with respect to each deferral period (each, an "Extension Period"), provided that no Extension Period may extend beyond the Stated Maturity of the Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all amounts then due, the Company may elect to begin a new Extension Period subject to the requirements set forth herein. If interest payments on the Subordinated Debentures are so deferred, Distributions on the Preferred Securities will also be deferred, and the Company will not be permitted, subject to certain exceptions described herein, to declare or pay any cash distributions with respect to its capital stock or debt securities that rank pari passu with or junior to the Subordinated Debentures. DURING AN EXTENSION PERIOD, INTEREST ON THE SUBORDINATED DEBENTURES WILL CONTINUE TO ACCRUE (AND THE AMOUNT OF DISTRIBUTIONS TO WHICH HOLDERS OF THE PREFERRED SECURITIES ARE ENTITLED WILL ACCUMULATE) AT THE RATE OF % PER ANNUM, COMPOUNDED QUARTERLY, AND HOLDERS OF THE PREFERRED SECURITIES WILL BE REQUIRED TO INCLUDE INTEREST INCOME (IN THE FORM OF ORIGINAL ISSUE DISCOUNT) IN THEIR GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IN ADVANCE OF RECEIPT OF THE CASH DISTRIBUTIONS WITH RESPECT TO SUCH DEFERRED INTEREST PAYMENTS. See "Description of Subordinated Debentures--Option to Extend Interest Payment Period" and "Certain Federal Income Tax Consequences--Potential Extension of Interest Payment Period and Original Issue Discount." The Company has, through the Guarantee, CTBI Trust Agreement, Subordinated Debentures, Indenture and other documents (each as defined herein), taken together, fully, irrevocably and unconditionally guaranteed, on a subordinated basis, all of CTBI Trust's obligations under the Preferred Securities. See "Relationship Among the Preferred Securities, the Subordinated Debentures and the Guarantee--Full and Unconditional Guarantee." The Guarantee of the Company guarantees the payments of Distributions and payments on liquidation or redemption of the Preferred Securities, but only in each case to the extent of funds held by CTBI Trust, as described herein. See "Description of Guarantee." If the Company does not make interest payments on the Subordinated Debentures held by CTBI Trust, CTBI Trust will have insufficient funds to pay Distributions on the Preferred Securities. The Guarantee does not cover payments of Distributions when CTBI Trust does not have sufficient funds to pay such Distributions. The obligations of the Company under the Guarantee and the Preferred Securities are subordinate and junior in right and payment to all Senior Debt, Subordinated Debt and, under certain circumstances, Additional Senior Obligations. The Subordinated Debentures will be pari passu with preferred stock issued by the Company, if any, and senior to the Company's common stock (each as defined in "Description of Subordinated Debentures--Subordination"). The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Subordinated Debentures at maturity or their earlier redemption. Subject to Federal Reserve approval, if then required, the Subordinated Debentures are redeemable prior to maturity at the option of the Company (1) on or ii after March 31, 2007, in whole at any time or in part from time to time, or (2) at any time, in whole (but not in part), upon the occurrence and during the continuance of a Tax Event, an Investment Company Event or a Capital Event (as described herein), in each case at a redemption price equal to the accrued and unpaid interest on the Subordinated Debentures so redeemed to the date fixed for redemption, plus 100% of the principal amount thereof. See "Description of the Preferred Securities--Redemption." The Company will have the right at any time to terminate the Preferred Securities and cause the Subordinated Debentures to be distributed to holders of Preferred Securities in liquidation of the CTBI Trust, subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve. See "Description of the Preferred Securities--Redemption." The Subordinated Debentures are unsecured and subordinated to all Senior Debt, Subordinated Debt and, under certain circumstances, Additional Senior Obligations. In the event of the termination of CTBI Trust, after satisfaction of liabilities to creditors of CTBI Trust as required by applicable law, the holders of Preferred Securities will be entitled to receive a Liquidation Amount of $25 per Preferred Security, plus accumulated and unpaid Distributions thereon to the date of payment, which may be in the form of a distribution of a like amount of Subordinated Debentures, subject to certain exceptions. See "Description of the Preferred Securities--Liquidation Distribution Upon Termination." The Company and CTBI Trust have applied for quotation of the Preferred Securities, and expect the Preferred Securities to be traded, on The Nasdaq Stock Market's National Market within 30 days of the date of this Prospectus under the symbol "CTBIP." IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON NASDAQ OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. iii [MAP OF BANK TERRITORY APPEARS HERE] Ashland Main Office 1544 Winchester Ave. Ashland, KY 41101 Express Center (ATM) 344 16th Street Ashland, KY 41101 South Ashland Branch (ATM) 2101 29th Street Ashland, KY 41101 Westwood Branch 721 Wheatley Road Ashland, KY 41101 Summit Branch (ATM) 7100 U.S. Route 60 Ashland, KY 41101 Ashland Town Center (ATM) 500 Winchester Ave. Ashland, KY 41101 Russell Office ATM location at Russell Road Supermarket Campbellsville Corporate Headquarters & Annex 1218 East Broadway Campbellsville, KY 42718 Columbia Office 710 Russell Road Columbia, KY 42728 Greensburg Office 205 South Main St. P.O. Box 370 Greensburg, KY 42743 First Street Office (ATM) 315 E. First St. Campbellsville, KY 42719 Somerset Office (ATM) 3809 S. Highway 27 Somerset, KY 42502 Winn Dixie #1602 (ATM) 181 South Highway 27 Somerset, KY 42502 Jamestown Office U.S. Highway 127N Jamestown, KY 42629 Lebanon Office (ATM) 507 W. Main St. Lebanon, KY 40033 Additiional ATM Locations: Wal-Mart: Berea, Corbin, Georgetown, London, Paintsville, Paris, Somerset, Winchester Flemingsburg Main Office 101 N. Main Cross St. Flemingsberg, KY 41041 South Ridge Plaza 100 Clark Street Flemingsberg, KY 41041 By-Pass Branch (ATM) 200 Ashbrook Drive Flemingsberg, KY 41041 Ewing Branch Ewing, KY 41039 Lexington Main Street Branch 155 East Main Street Lexington, KY 40507 4 Beaumont Centre Branch (ATM) 901 Beaumont Centre Parkway Lexington, KY 40513 Winn Dixie Richmond Road Mist Lake Plaza Lexington, KY 40517 Winn Dixie Saron Drive Tales Creek South Shopping Center Lexington, KY 40515 London London Banking Office (ATM) 1706 West Highway 192 London, KY 40741 Middlesboro Main Office 1918 Cumberland Avenue Middlesboro, KY 40965 West Branch West Camberland Avenue & 38th St. Middlesboro, KY 40965 East Branch (ATM) 1206 East Cumberland Avenue Middlesboro, KY 40965 Pineville Branch (ATM) US 25 East Pineville, KY 40977 Mt. Sterling Main Office P.O. Box 306 Corner of High & Maysville Streets Mt. Sterling, KY 40353 North Branch Evans Drive Mt. Sterling, KY 40353 Mt. Sterling Plaza - (ATM location only) Maysville Road Mt. Sterling, KY 40353 Wal-Mart Superstore Branch (ATM) 196 Indian Mound Drive Mt. Sterling, KY 40353 ATM Location at Whitesburg Wal-Mart Pikeville Main Office (ATM) 208 North Mayo Trail Pikeville, KY 41501-2947 Elkhorn City Branch P.O. Box 740 Elkhorn City, KY 41522 Knott County Branch (ATM) Main Street Hindman, KY 41822 Floyd County Branch (ATM) P.O. Box 636 Prestonsburg, KY 41653 Main Street Branch 317-319 Main Street Pikeville, KY 41501 Marrowbone Branch P.O. Box 89 Regina, KY 41599 Mouthcard Branch P.O. Box 39 Mouthcard, KY 41540 Phelps Branch P.O. Box 86 Phelps, KY 41553 Town and Country Branch Town and Country Shopping Center Pikeville, KY 41501 Tug Valley Branch (ATM) South Williamson, KY 25661 606-237-6051 Virgie Branch Virgie, KY 41572 Weddington Plaza Branch (ATM) 4205 North Mayo Trail Pikeville, KY 41501 Additional ATM Locations: Pikeville Wal-Mart Prestonsburg Wal-Mart Pikeville Methodist Hospital Lexington Wal-Mart Versailles Main Office (ATM) 101 N. Main St. 480 Lexington Road Versailles, KY 40383 Woodford Plaza (ATM) P.O. Box 709 Versailles, KY 40383 West Liberty: Commercial Bank 550 Main Street West Liberty, KY 41472 Whitesburg Main Branch 112 W. Main Whitesburg, KY 41858 West Whitesburg Branch (ATM) 353 Hazard Road Whitesburg, KY 41858 Ermine Branch 782 Jenkins Road Whitesburg, KY 41858 Isom Branch Jeremiah, KY 41826 Neon Branch Neon, KY 41840 Williamsburg Main Office (ATM) 201 N. Third St. Williamsburg, KY 40769 Cumberland Region Shopping Center (ATM) 895 Hwy 25W South Williamsburg, KY 40769 ATM Located in Cumberland Shopping Center Wal-Mart store. Trust Company of Kentucky Lexington Office: 100 Vine Street-4th Floor Lexington, KY 40507 Ashland Office: 1544 Winchester Avenue Ashland, KY 41105 Pikeville Office: 208 North Mayo Trail Pikeville, KY 41502 Louisville Office: 4350 Brownsboro Road-Suite 170 Louisville, KY v PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information included elsewhere in this Prospectus. Unless otherwise indicated, the information contained in this Prospectus assumes that the Underwriters' over-allotment option will not be exercised. THE COMPANY Community Trust Bancorp, Inc. is a bank holding company and a thrift holding company headquartered in Pikeville, Kentucky. The Company currently owns all of the capital stock of two commercial banks, one thrift and one trust company, serving small and mid-sized communities in eastern, central and south-central Kentucky. As of December 31, 1996, the Company had total consolidated assets of $1.8 billion and total consolidated deposits of $1.5 billion, making it one of the largest independent bank holding companies headquartered in the Commonwealth of Kentucky. Effective January 1, 1997, the Company changed its name from Pikeville National Corporation to Community Trust Bancorp, Inc. and changed the name of its lead bank from Pikeville National Bank & Trust Company to Community Trust Bank, N.A. (the "Lead Bank"). Through its subsidiaries, the Company engages in a wide range of commercial and personal banking activities, which include accepting time and demand deposits; making secured and unsecured loans to corporations, individuals and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes and providing funds transfer services. The lending activities of the Banks (as defined herein) include making commercial, construction, mortgage, personal and consumer loans. Also available are lease financing, lines of credit, revolving credits, term loans and other specialized loans including asset-based financing. Various corporate subsidiaries act as trustees of personal trusts, as executors of estates, as trustees for employee benefit trusts, as registrars, transfer agents and paying agents for bond and stock issues and as depositories for securities. The Company's long-term strategy is to grow its traditional banking activities through both acquisition and de novo expansion. The Company is focused on the continuing growth of its indirect and commercial lending businesses and the introduction and promotion of enhanced financial products for both business and individual customers. CTBI TRUST CTBI Trust is a Delaware business trust. State Street Bank and Trust Company, Boston, Massachusetts will serve as the trustee under the Indenture ("Debenture Trustee"), the property trustee under the CTBI Trust Agreement ("Property Trustee"), and the trustee under the Guarantee ("Guarantee Trustee"). Richard M. Levy and Jean R. Hale, both executive officers of the Company, will serve as the Administrative Trustees of CTBI Trust ("Administrative Trustees"). Wilmington Trust Company will serve as the Delaware trustee under the CTBI Trust Agreement ("Delaware Trustee"). CTBI Trust's sole purpose will be to issue the Common Securities and the Preferred Securities and hold the Subordinated Debentures. The Administrative Trustees, the Property Trustee and the Delaware Trustee are sometimes collectively referred to herein as the "Securities Trustees." 1 THE OFFERING Securities Offered........ 1,200,000 shares of % Preferred Securities, liquidation amount $25 per Preferred Security ("Liquidation Amount"), evidencing preferred undivided beneficial interests in the assets of CTBI Trust. Offering Price............ $25 per Preferred Security. Distribution Dates........ The last day of each of March, June, September and December of each year, beginning June 30, 1997. Stated Maturity........... March 31, 2027, unless extended or shortened as provided herein. Subordinated Debentures... CTBI Trust will invest the proceeds from the issuance of the Preferred Securities and Common Securities in an equivalent amount of % subordinated debentures due March 31, 2027 ("Subordinated Debentures"). The Subordinated Debentures will be subordinate and junior in right of payment to all current indebtedness for borrowed money and other obligations of the Company included in the definition of Senior Debt, Subordinated Debt and, under certain circumstances, Additional Senior Obligations. See "Description of the Subordinated Debentures--Subordination." Guarantee................. The payment of distributions of the Preferred Securities is guaranteed by the Company under the Guarantee, but only to the extent CTBI Trust has funds legally and immediately available to make such distributions. If the Company does not make principal or interest payments of the Subordinated Debentures, CTBI Trust will not have sufficient funds to make distributions on the Preferred Securities, in which event the Guarantee will not apply to such distributions until CTBI Trust has sufficient funds legally available therefor. The obligations of the Company under the Guarantee will be subordinate and junior in right of payment to all other liabilities of the Company. The Company has, through the Guarantee, the Indenture, the Subordinated Debentures, the CTBI Trust Agreement and the Agreement as to Expenses and Liabilities ("Agreement as to Expenses and Liabilities"), fully and unconditionally guaranteed, subject to certain subordination provisions, all of CTBI Trust's obligations with respect to the Preferred Securities. See "Risk Factors--Risk Factors Relating to the Preferred Securities" and "-- Ranking of Subordinated Obligations Under the Guarantee and the Subordinated Debentures" "Rights Under the Guarantee" and "Description of Guarantee." Interest Deferral......... The Company has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period on the Subordinated Debentures, at any time and from time to time, for up to 20 consecutive quarters (each, an "Extension Period"). The only restrictions arising from the Company's deferral of payments of interest are that during the Extension Period the Company may not (subject to certain allowances) (i) pay dividends on or redeem any of its capital stock or (ii) pay principal or interest on any debt securities ranking pari 2 passu or subordinate to the Subordinated Debentures. See "Description of the Preferred Securities--Distributions--Extension Period." There could be multiple Extension Periods of varying lengths (none exceeding 20 consecutive calendar quarters) throughout the term of the Subordinated Debentures. All interest payments deferred during an Extension Period must be paid prior to a subsequent election by the Company to institute an Extension Period. If interest payments on the Subordinated Debentures are deferred, distributions on the Preferred Securities will also be deferred. During an Extension Period, holders of Preferred Securities will continue to accrue income for federal income tax purposes in advance of the receipt of the cash payments attributable to such deferred interest. See "Description of the Subordinated Debentures-- Option to Extend Interest Payment Period" and "Certain Federal Income Tax Considerations-- Potential Extension of Interest Payment Period and Original Issue Discount" and "--Market Discount and Acquisition Premium." Deferred interest will bear interest, compounded quarterly, at a rate per annum equal to the Securities Rate from the date of deferral to the date of payment. Redemption................ The Preferred Securities are subject to mandatory redemption upon repayment of the Subordinated Debentures at maturity or their earlier redemption. The Subordinated Debentures are redeemable by the Company (in whole or in part), from time to time on or after March 31, 2007, or at any time in whole upon the occurrence of a Special Event, as described below. If a partial redemption of the Subordinated Debentures would result in the de- listing of the Preferred Securities, the Company may only redeem the Subordinated Debentures in whole. Any partial redemption of the Subordinated Debentures will be effected by the redemption of an equivalent amount of Trust Securities, to be allocated pro rata between Preferred Securities and the Common Securities unless an Event of Default shall have occurred and be continuing as of the applicable Redemption Date or Distribution Date. See "Description of the Preferred Securities-- Redemption" and "--Tax Event Redemption, Investment Company Event Redemption or Capital Event Redemption." Special Event............. A Special Event means a Tax Event, an Investment Company Event or a Capital Event. A "Tax Event" means the receipt by the Company of an opinion of independent counsel experienced in such matters (which may be counsel to the Company) to the effect that, as a result of any amendment to, or change in (including any announced prospective change), the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of the issuance of the Subordinated Debentures under the Indenture, there is more than an insubstantial risk that (i) CTBI Trust is, or will be within 90 days after the date of such 3 opinion, subject to United States federal income tax with respect to income accrued or received on the Subordinated Debentures, (ii) interest payable by the Company on the Subordinated Debentures is not, or within 90 days after the date of such opinion will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) CTBI Trust is, or will be within 90 days after the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. An "Investment Company Event" means the receipt by CTBI Trust of an opinion of independent counsel experienced in such matters (which may be counsel to the Company) to the effect that, as a result of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that CTBI Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), which change becomes effective on or after the date of original issuance of the Preferred Securities. A "Capital Event" means the receipt by CTBI Trust of an opinion of independent counsel experienced in such matters (which may be counsel to the Company) that the Company cannot, or within 90 days after the date of such opinion of counsel, will not be permitted by the applicable regulatory authorities, due to a change in law, regulation, policy or guideline or interpretation or application of law or regulation, policy or guideline, to account for the Preferred Securities as Tier I Capital under the capital guidelines or policies of the Federal Reserve. Redemption Price.......... In the event of the redemption of Trust Securities or other termination of CTBI Trust without distribution of the Subordinated Debentures, each Preferred Security shall be entitled to receive a liquidation amount of $25 plus accrued and unpaid distributions thereon (including interest thereon) to the date of payment. Distribution of Subordinated Debentures... The Company has the right at any time to liquidate CTBI Trust and cause the Subordinated Debentures to be distributed to holders of Preferred Securities, subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve. See "Description of Preferred Securities--Redemption." The Nasdaq Stock Market's National Market Symbol.... Application has been made to have the Preferred Securities approved for quotation under The Nasdaq Stock Market's National Market under the symbol "CTBIP." 4 COMMUNITY TRUST BANCORP, INC. SUMMARY CONSOLIDATED FINANCIAL DATA(1)
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SUMMARY RESULTS OF OPERATIONS Interest Income......... $ 144,447 $ 131,026 $ 106,560 $ 104,929 $ 109,946 Interest Expenses....... 69,092 64,992 47,370 46,616 53,746 ---------- ---------- ---------- ---------- ---------- Net interest income.. 75,355 66,034 59,190 58,313 56,200 Provision for loan losses................. 7,285 5,858 6,066 4,442 7,311 Noninterest income...... 14,439 11,116 9,653 12,069 11,427 Noninterest expense..... 55,243 55,871 52,287 45,571 42,140 ---------- ---------- ---------- ---------- ---------- Income before federal income taxes........... 27,266 15,421 10,490 20,369 18,176 Federal income tax expense................ 8,471 4,608 2,278 5,533 5,072 ---------- ---------- ---------- ---------- ---------- Net income........... $ 18,795 $ 10,813 $ 8,212 $ 14,836 $ 13,104 ========== ========== ========== ========== ========== PER COMMON SHARE: Earnings per share...... $ 2.06 $ 1.21 $ 0.95 $ 1.80 $ 1.63 Cash dividends declared. 0.74 0.66 0.61 0.55 0.51 As a percentage of earnings per share.... 35.92% 54.55% 64.21% 30.56% 31.29% Book value, end of year. 15.86 14.66 13.57 13.44 12.08 Average common shares outstanding (in thousands)............. 9,138 8,960 8,601 8,246 8,024 AT YEAR END: Total assets............ $1,815,660 $1,730,170 $1,499,434 $1,464,039 $1,390,910 Long-term debt.......... 19,136 27,873 24,944 35,277 36,340 Shareholders' equity.... 144,754 133,795 166,636 107,371 96,406 AVERAGES: Assets.................. $1,762,009 $1,630,922 $1,470,630 $1,415,441 $1,354,655 Deposits................ 1,467,794 1,359,947 1,216,544 1,181,347 1,173,305 Earning assets.......... 1,632,532 1,508,539 1,365,750 1,313,064 1,253,475 Loans................... 1,215,243 1,021,637 872,045 849,202 857,532 Shareholders' equity.... 138,925 130,780 116,165 102,445 90,594 PROFITABILITY RATIOS: Return on average assets................. 1.07% 0.66% 0.56% 1.05% 0.97% Return on average common equity................. 13.53% 8.27% 7.07% 14.48% 14.46% Net interest margin..... 4.76% 4.54% 4.51% 4.60% 4.68% CAPITAL RATIOS: Average equity to average assets......... 7.88% 8.02% 7.90% 7.24% 6.69% Risk-based capital ratios: Leverage ratio......... 7.05% 6.44% 7.19% 6.36% 5.89% Tier I Capital......... 9.71% 10.24% 11.08% 10.10% 9.34% Total capital.......... 10.96% 11.51% 12.33% 12.23% 11.53% OTHER SIGNIFICANT RATIOS: Allowance to net loans, end of year............ 1.44% 1.44% 1.43% 1.58% 1.63% Allowance to nonperforming loans, end of year............ 113.50% 119.99% 106.12% 90.04% 95.96% Nonperforming assets to loans and foreclosed properties, end of year................... 1.35% 1.37% 1.83% 2.18% 2.51% Net charge-offs to average loans.......... 0.37% 0.47% 0.74% 0.57% 0.60% RATIO OF EARNINGS TO FIXED CHARGES:(2) Excluding deposit interest.............. 4.10x 2.77x 2.33x 3.61x 4.85x Including deposit interest.............. 1.39x 1.24x 1.22x 1.43x 1.34x RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS:(2) Excluding deposit interest.............. 4.10x 2.77x 2.33x 3.61x 4.85x Including deposit interest.............. 1.39x 1.24x 1.22x 1.43x 1.34x
- -------- (1) The numbers have been adjusted to reflect a 3 for 2 common stock split, effective February 1, 1994 to shareholders of record on January 5, 1994. (2) Earnings consist of income before income tax plus interest expense. Fixed charges consist of interest expense. The Company does not currently have any preferred stock outstanding. 5 RISK FACTORS Prospective investors should carefully consider, together with the other information contained and incorporated by reference in this Prospectus, the following risk factors in evaluating the Company and its business and CTBI Trust before purchasing the Preferred Securities offered hereby. This Prospectus contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") under the captions "Prospectus Summary," "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and that actual results could differ materially from those contemplated by such statements. These cautionary statements are being made pursuant to the "safe harbor" provisions of the Act. The considerations listed below represent certain important factors the Company believes could cause such results to differ. These considerations are not intended to represent a complete list of the general or specific risks that may affect the Company and CTBI Trust or guarantees of future performance. It should be recognized that other risks may be significant, presently or in the future, and the risks set forth below may affect the Company and CTBI Trust to a greater extent than indicated, and that actual results may differ materially from those in the forward-looking statements. RISK FACTORS RELATING TO THE PREFERRED SECURITIES RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED DEBENTURES The obligations of the Company under the Guarantee issued by the Company for the benefit of the holders of Preferred Securities and under the Subordinated Debentures are unsecured and rank subordinate and junior in right of payment to all Senior Debt and Subordinated Debt of the Company and, in certain circumstances relating to the dissolution, winding-up, liquidation or reorganization of the Company, to all Additional Senior Obligations of the Company. As of December 31, 1996, the aggregate outstanding Senior Debt, Subordinated Debt and Additional Senior Obligations of the Company were approximately $19,200,000. Because the Company is a holding company, the right of the Company to participate in any distribution of assets of any of the Banks upon any such Bank's liquidation or reorganization or otherwise (and thus the ability of holders of the Preferred Securities to benefit indirectly from such distribution) is subject to the prior claims of creditors of that Bank, except to the extent that the Company may itself be recognized as a creditor of that Bank. Accordingly, the Subordinated Debentures will be effectively subordinated to all existing and future liabilities of the Banks, and holders of Subordinated Debentures and Preferred Securities should look only to the assets of the Company for payments on the Subordinated Debentures. None of the Indenture, the Guarantee or the CTBI Trust Agreement places any limitation on the amount of secured or unsecured debt, including Senior Debt, Subordinated Debt and Additional Senior Obligations, that may be incurred by the Company. See "Description of Guarantee--Status of the Guarantee" and "Description of Subordinated Debentures--Subordination." The ability of CTBI Trust to pay amounts due on the Preferred Securities is solely dependent upon the Company making payments on the Subordinated Debentures as and when required. OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES So long as no Event of Default under the Indenture has occurred and is continuing, the Company has the right under the Indenture to defer the payment of interest on the Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters with respect to each Extension Period, provided that no Extension Period may extend beyond the Stated Maturity of the Subordinated Debentures. As a consequence of any such deferral, quarterly Distributions on the Preferred Securities by CTBI Trust will be deferred (and the amount of Distributions to which holders of the Preferred Securities are entitled will accumulate additional Distributions thereon at the rate of % per annum, compounded quarterly from the relevant payment date for such Distributions to the date of payment) during any such Extension Period. During any such Extension Period, the Company may not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock, or (ii) make any payment of principal, interest or premium, if any, on, or repay, repurchase or redeem any debt 6 securities of the Company, that rank pari passu with, or are junior in interest to, the Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company, if such guarantee ranks pari passu with, or is junior in interest to, the Subordinated Debentures (other than (a) dividends or distributions in Company common stock, (b) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to the rights under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period may exceed 20 consecutive quarters or extend beyond the Stated Maturity of the Subordinated Debentures. Upon the termination of any Extension Period and the payment of all interest then accrued and unpaid (together with interest thereon at the annual rate of % compounded quarterly, to the extent permitted by applicable law), the Company may elect to begin a new Extension Period subject to the above requirements. There is no limitation on the number of times that the Company may elect to begin an Extension Period. See "Descriptions of Preferred Securities--General" and "Description of Subordinated Debentures-- Option to Extend Interest Payment Period." Should an Extension Period occur, a holder of Preferred Securities will be required to accrue and recognize income (in the form of original issue discount) in respect of its pro rata share of the interest accruing on the Subordinated Debentures held by CTBI Trust for United States federal income tax purposes. As a result, a holder of Preferred Securities will include such income in gross income for United States federal income tax purposes in advance of the receipt of cash, and will not receive the cash related to such income from CTBI Trust if the holder disposes of the Preferred Securities prior to the record date for the payment of the related Distributions. See "Certain Federal Income Tax Consequences--Potential Extension of Interest Payment Period and Original Issue Discount." The Company has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. However, should the Company elect to exercise such right in the future, the market price of the Preferred Securities is likely to be adversely affected. A holder that disposes of its Preferred Securities during an Extension Period, therefore, might not receive the same return on its investment as a holder that continues to hold its Preferred Securities. In addition, as a result of the existence of the Company's right to defer interest payments, the market price of the Preferred Securities may be more volatile than the market prices of other securities on which original issue discount accrues that are not subject to such optional deferrals. TAX EVENT, INVESTMENT COMPANY EVENT, OR CAPITAL EVENT--REDEMPTION Upon the occurrence and during the continuance of a Tax Event, Investment Company Event or Capital Event (whether occurring before or after March 31, 2007), the Company has the right to redeem the Subordinated Debentures in whole (but not in part) within 90 days following the occurrence of such Tax Event, Investment Company Event or Capital Event and, therefore, cause a mandatory redemption of the Preferred Securities. The exercise of such right is subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable guidelines or policies of the Federal Reserve. See "Description of Subordinated Debentures--Redemption." EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES The Company will have the right at any time to terminate CTBI Trust and cause the Subordinated Debentures to be distributed to the holders of the Preferred Securities in liquidation of CTBI Trust. The exercise of such right is subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. See "Description of Preferred Securities-- Redemption." 7 SHORTENING OF STATED MATURITY OF SUBORDINATED DEBENTURES The Company will have the right at any time to shorten the maturity of the Subordinated Debentures to a date not earlier than March 31, 2007. The exercise of such right is subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. EXTENSION OF STATED MATURITY OF SUBORDINATED DEBENTURES The Company will also have the right to extend the maturity of the Subordinated Debentures whether or not CTBI Trust is terminated and the Subordinated Debentures are distributed to holders of the Preferred Securities to a date no later than the 39th anniversary of the initial issuance of the Preferred Securities, provided that the Company can extend the maturity only if at the time such election is made and at the time of such extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Subordinated Debentures, and (iii) CTBI Trust is not in arrears on payments of Distributions on the Preferred Securities and no deferred Distributions are accumulated. RIGHTS UNDER THE GUARANTEE The Guarantee guarantees to the holders of the Preferred Securities the following payments, to the extent not paid by CTBI Trust: (i) any accumulated and unpaid Distributions required to be paid on the Preferred Securities, to the extent that CTBI Trust has funds on hand legally available therefor at such time, (ii) the redemption price with respect to any Preferred Securities called for redemption, to the extent that CTBI Trust has funds on hand legally available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of CTBI Trust (unless the Subordinated Debentures are distributed to holders of the Preferred Securities), the lesser of (a) the aggregate of the Liquidation Amount and all accumulated and unpaid Distributions to the date of payment to the extent that CTBI Trust has funds on hand available therefor at such time and (b) the amount of assets of CTBI Trust remaining available for distribution to holders of the Preferred Securities. The holders of not less than a majority of aggregate Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Guarantee or to direct the exercise of any trust power conferred upon the Guarantee Trustee under the Guarantee. Any holder of the Preferred Securities may institute a legal proceeding directly against the Company to enforce its rights under the Guarantee without first instituting a legal proceeding against CTBI Trust, the Guarantee Trustee or any other person or entity. If the Company were to default on its obligation to pay amounts payable under the Subordinated Debentures, CTBI Trust would lack funds for the payment of Distributions or amounts payable on redemption of the Preferred Securities or otherwise, and, in such event, holders of Preferred Securities would not be able to rely upon the Guarantee for such amounts. Instead, in the event a Debenture Event of Default shall have occurred and be continuing and such event is attributable to the failure of the Company to pay interest on or principal of the Subordinated Debentures on the payment date on which such payment is due and payable, then a holder of Preferred Securities may institute a legal proceeding directly against the Company for enforcement of payment to such holder of the principal of or interest on such Subordinated Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such holder (a "Direct Action"). In connection with such Direct Action, the Company will have a right of set-off under the Indenture to the extent of any payment made by the Company to such holder of Preferred Securities in the Direct Action. Except as described herein, holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Subordinated Debentures or assert directly any other rights in respect of the Subordinated Debentures. See "Description of Subordinated Debentures--Debenture Events of Default," "--Enforcement of Certain Rights by Holders of Preferred Securities" and "Description of Guarantee." The CTBI Trust Agreement provides that each holder of Preferred Securities by acceptance thereof agrees to the provisions of the Guarantee and the Indenture. 8 LIMITED VOTING RIGHTS Holders of Preferred Securities will generally have limited voting rights relating only to the modification of the Preferred Securities and the exercise of CTBI Trust's rights as holder of Subordinated Debentures and the Guarantee. Holders of Preferred Securities will not be entitled to vote to appoint, remove or replace the Property Trustee or the Delaware Trustee, and such voting rights are vested exclusively in the holder of the Common Securities except upon the occurrence of certain events described herein. The Property Trustee, the Administrative Trustees and the Company may amend the CTBI Trust Agreement without the consent of holders of Preferred Securities to ensure that CTBI Trust will be classified for United States federal income tax purposes as a grantor trust even if such action adversely affects the interests of such holders. See "Description of Preferred Securities--Removal of CTBI Trust Trustees" and "--Voting Rights; Amendment of Trust Agreement." POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES On February 6, 1997, the revenue portion of President Clinton's 1998 budget proposal (the "Budget Proposal") was released. The Budget Proposal would generally deny deductions for interest on an instrument issued by a corporation that has a maximum weighted average maturity of more than 40 years. The Budget Proposal would also generally deny deductions for interest or original issue discount on an instrument issued by a corporation that has a maximum term of more than 15 years and that is not shown as indebtedness on the separate balance sheet of the issuer filed with the Commission or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet filed with the Commission. The above described provisions of the Budget Proposal are proposed to be effective generally for instruments issued on or after the date of first Congressional committee action. Since the Subordinated Debentures cannot have a term exceeding 40 years, the first of the above described Budget Proposals would be inapplicable. Furthermore, since the Company intends to reflect the Preferred Securities as long-term debt in its consolidated balance sheet filed with the Commission (although it will treat the Preferred Securities as a minority interest for regulatory reporting), the Budget Proposal, as currently drafted, would not appear to apply to the Subordinated Debentures. There can be no assurance, however, that similar legislation which would apply to the Subordinated Debentures will not be enacted, and such legislation could be retroactive in effect. If any such legislation were enacted, the Company would be unable to deduct interest on the Subordinated Debentures. Such a change could give rise to a Tax Event, which would permit the Company to cause a redemption of the Preferred Securities before March 31, 2007. See "Description of Subordinated Debentures--Redemption" and "Description of the Preferred Securities--Redemption--Tax Event Redemption, Investment Company Event Redemption or Capital Event Redemption." See also "Certain Federal Income Tax Consequences--Effect of Proposed Changes in Tax Laws." MARKET PRICES There can be no assurance as to the market prices for Preferred Securities or Subordinated Debentures that may be distributed in exchange for Preferred Securities if a liquidation of CTBI Trust occurs. Accordingly, the Preferred Securities, or the Subordinated Debentures that a holder of Preferred Securities may receive on liquidation of CTBI Trust, may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. In addition, there can be no assurance that the Company will not exercise its option to change the maturity of the Subordinated Debentures as permitted by the terms thereof and of the Indenture. Because holders of Preferred Securities may receive Subordinated Debentures on liquidation of CTBI Trust, prospective purchasers of Preferred Securities are also making an investment decision with regard to the Subordinated Debentures and should carefully review all the information regarding the Subordinated Debentures contained herein. See "Description of Subordinated Debentures." TRADING CHARACTERISTICS OF PREFERRED SECURITIES The Preferred Securities may trade at a price that does not accurately reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. A holder that disposes of its Preferred Securities 9 between record dates for payments of distributions thereon (and consequently does not receive a Distribution from CTBI Trust for the period prior to such disposition) will be required to include as ordinary income either OID (if applicable) or accrued but unpaid interest on the Subordinated Debentures through the date of disposition. To the extent the amount realized is less than the holder's adjusted tax basis, a holder will generally recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. See "Certain Federal Income Tax Consequences--Disposition of Preferred Securities." PREFERRED SECURITIES ARE NOT INSURED The Preferred Securities are not insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC") or by any other governmental agency. RISK FACTORS RELATING TO THE COMPANY STATUS OF THE COMPANY AS A BANK HOLDING COMPANY The Company is a legal entity separate and distinct from the Banks and its other subsidiaries, although the principal source of the Company's cash revenues is dividends from the Banks. The right of the Company to participate in the assets of any subsidiary upon the latter's liquidation, reorganization or otherwise (and thus the ability of the holders of Preferred Securities to benefit indirectly from any such distribution) will be subject to the claims of the subsidiaries' creditors, which will take priority except to the extent that the Company may itself be a creditor with a recognized claim. The Company's principal source of funds is dividends received from the subsidiary banks. Regulations limit the amount of dividends that may be paid by the Company's banking subsidiaries without prior approval. During 1997, approximately $3.4 million plus any 1997 net profits can be paid by the Company's banking subsidiaries without prior regulatory approval. The Banks are also subject to restrictions under federal law which limit the transfer of funds by any of the Banks to the Company and its nonbanking subsidiaries, whether in the form of loans, extensions of credit, investments, asset purchases or otherwise. Such transfers by any Bank to the Company or any of the Company's nonbanking subsidiaries are limited in amount to 10% of such Bank's capital and surplus and, with respect to the Company and all such nonbanking subsidiaries, to an aggregate of 20% of such Bank's capital and surplus. Furthermore, such loans and extensions of credit are required to be secured in specified amounts. IMPACT OF INTEREST RATE CHANGES The Company's results of operations are derived from the operations of the Banks and are principally dependent on net interest income, calculated as the difference between interest earned on loans and investments and the interest expense paid on deposits and other borrowings. Like other banks and financial institutions, the Company's interest income and interest expense are affected by general economic conditions and by the policies of regulatory authorities, including the monetary policies of the Federal Reserve. While management has taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Interest Rate Sensitivity Analysts." CREDIT RISK AND LOAN CONCENTRATION As a financial institution, the Company is exposed to the risk that customers to whom the Banks have made loans will be unable to repay those loans according to their terms and that collateral securing such loans (if any) may not be sufficient in value to assure repayment. Credit losses could have a material adverse effect on the Company's operating results. 10 A primary risk facing the Company, and financial institutions in general, is credit risk, that is, the risk of losing principal and interest due to a borrower's failure to perform according to the terms of such borrower's loan agreement. As of December 31, 1996, the Company's total loan portfolio was approximately $1,220 million or 67.8% of its total assets. The three largest components of the loan portfolio are commercial loans, $539 million or 38.6% of total loans, consumer installment loans, $257 million or 23.7% of total loans, and real estate mortgage and construction loans, $420 million or 37.4% of total loans. The Company's credit risk with respect to its consumer installment loan portfolio and commercial loan portfolio relates principally to the general creditworthiness of individuals and small- to medium-sized businesses in eastern, central and south-central Kentucky and eastern and central Tennessee. The Company's credit risk with respect to its real estate mortgage and construction loan portfolio relates principally to the general creditworthiness of individuals and the value of real estate serving as security for the repayment of the loans. REGULATORY RISK The banking industry is heavily regulated. These regulations are primarily intended to protect depositors and the FDIC, not shareholders or other creditors. Regulations affecting the financial institutions industry are undergoing continuous change, and the ultimate effect of such changes cannot be predicted. Regulations and laws affecting the Company and the Banks may be modified at any time, and new legislation affecting financial institutions may be proposed and enacted. There is no assurance that such modifications or new laws will not materially and adversely affect the business, condition or operations of the Company and the Banks. EXPOSURE TO LOCAL ECONOMIC CONDITIONS The success of the Company and the Banks is dependent to a certain extent upon the general economic conditions of the Commonwealth of Kentucky and the geographic markets served by the Banks. Unlike larger banks which are geographically diversified, the Company and the Banks provide financial and banking services to customers in east, central and south-central Kentucky. No assurance can be given concerning the economic conditions which will exist in such markets. COMPETITION The Company's subsidiaries face substantial competition for deposit, credit and trust relationships, as well as other sources of funding in the communities they serve. Competing providers include other national and state banks, thrifts and trust companies, insurance companies, mortgage banking operations, credit unions, finance companies, money market funds and other financial and non- financial companies which may offer products functionally equivalent to those offered by the Company's subsidiaries. Competing providers may have greater financial resources than the Company and offer services within and outside the market areas served by the Company's subsidiaries. Since July 1989, banking legislation in Kentucky has placed no limit on the number of banks or bank holding companies which a bank holding company may acquire. Interstate acquisitions are allowed where reciprocity exists between the laws of Kentucky. As a result, the Company may face increased competition from out-of-state banks. Bank holding companies are prohibited from controlling more than 15% of deposits held by banks in the state (exclusive of inter-bank and foreign deposits). USE OF PROCEEDS The CTBI Trust will use the proceeds of the sale of the Preferred Securities to acquire Subordinated Debentures from the Company. The Company intends to apply the net proceeds from the sale of the Subordinated Debentures to its general funds to be used for expansion through new branches and acquisitions, to fund growth in the Company's indirect consumer loan portfolio and for general corporate purposes. The Company does not have any current agreements or understandings regarding any acquisitions. 11 ACCOUNTING TREATMENT For financial reporting purposes, CTBI Trust will be treated as a subsidiary of the Company and, accordingly, the accounts of CTBI Trust will be included in the consolidated financial statements of the Company. The Preferred Securities will be presented in the consolidated balance sheet of the Company as a component of long term debt. The Company will record distributions payable on the Preferred Securities as interest expense in its consolidated statement of income. 12 THE COMPANY The Company is a bank holding company registered with the Board of Governors of the Federal Reserve System ("Federal Reserve") as a bank holding company and with the Office of Thrift Supervision as a thrift holding company. The Company was incorporated August 12, 1980, under the laws of the Commonwealth of Kentucky. The Company currently owns all of the capital stock of two commercial banks, one thrift and one trust company, serving small and mid-sized communities in eastern, central and south-central Kentucky. The commercial banks are Community Trust Bank, N.A. and Commercial Bank, West Liberty. The Company also owns all of the capital stock of Community Trust Bank, FSB, a federal savings bank located in Campbellsville, Kentucky ("Savings Bank") and the Trust Company of Kentucky, a state chartered trust company, with its principal office in Ashland, Kentucky and satellite offices in Lexington, Louisville, Middlesboro and Pikeville, Kentucky. As of December 31, 1996, the Company had total consolidated assets of $1.8 billion and total consolidated deposits of $1.5 billion, making it one of the largest independent bank holding companies headquartered in the Commonwealth of Kentucky. Effective January 1, 1997, the Company changed its name from Pikeville National Corporation to Community Trust Bancorp, Inc., changed the name of the Lead Bank from Pikeville National Bank & Trust Company to Community Trust Bank, N.A. and merged seven of its other commercial bank subsidiaries into the Lead Bank (the "Consolidation"). As a result of these transactions, the Lead Bank has approximately $1.5 billion in assets and 42 offices in 12 Kentucky counties. The Company's thrift and trust subsidiaries and West Liberty continue to operate as independent subsidiaries. The Company excluded Commercial Bank, West Liberty, Kentucky ("West Liberty") from the Consolidation. The Company has entered into a definitive agreement, subject to regulatory approval, to sell West Liberty to Commercial Bancshares, Inc., of West Liberty, Kentucky for cash of $10.2 million. As of December 31, 1996, West Liberty had $73 million in assets, constituting 4% of the Company's total consolidated assets. The Lead Bank, the Savings Bank and West Liberty are collectively referred to herein as the "Banks." Through its subsidiaries, the Company engages in a wide range of commercial and personal banking activities, which include accepting time and demand deposits; making secured and unsecured loans to corporations, individuals and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes and providing funds transfer services. The lending activities of the Banks include making commercial, construction, mortgage, personal and consumer loans. Also available are lease financing, lines of credit, revolving credits, term loans and other specialized loans including asset-based financing. Various corporate subsidiaries act as trustees of personal trusts, as executors of estates, as trustees for employee benefit trusts, as registrars, transfer agents and paying agents for bond and stock issues and as depositories for securities. RECENT DEVELOPMENTS From and after December 31, 1996, the following developments have occurred with respect to Company: 1. On January 30, 1997, the Company declared a 10% stock dividend to holders of the Company's common stock of record as of March 15, 1997. The stock dividend will be distributed on April 15, 1997. 2. On January 17, 1997, the Company settled a dispute with a former software vendor pursuant to which such former software vendor paid the Company $4.9 million before taxes. 13 CAPITALIZATION The following table sets forth (i) the consolidated capitalization of the Company at December 31, 1996 and (ii) the consolidated capitalization of the Company giving effect to the issuance of the Preferred Securities hereby offered by CTBI Trust, respectively, as if such sale had been consummated on December 31, 1996, and assuming the Underwriters' over-allotment options were not exercised.
DECEMBER 31, 1996 --------------------- ACTUAL AS ADJUSTED -------- ----------- (DOLLARS IN THOUSANDS) LONG-TERM DEBT Notes Payable...................................... $ 19,136 $ 19,136 Guaranteed preferred beneficial interests in the Company's Subordinated Debentures................. 0 30,000 -------- -------- Total Long-term Debt............................. $ 19,136 $ 39,136 -------- -------- SHAREHOLDERS' EQUITY Common stock, $5 par value; 25,000,000 shares authorized; 9,128,814 shares issued and outstanding....................................... $ 45,644 $ 45,622 Capital Surplus.................................... 27,915 27,915 Net unrealized holding gains on investment securities available for sale..................... (781) 356 Retained earnings.................................. 71,976 71,976 -------- -------- Total Shareholders' Equity....................... 144,754 144,754 -------- -------- Total Capitalization........................... $163,890 $193,890 ======== ========
CAPITAL RATIOS The following table sets forth certain ratios for the Company.
TO BE WELL CAPITALIZED UNDER PROMPT FOR CAPITAL ADEQUACY CORRECTIVE ACTION ACTUAL PURPOSES PROVISIONS (1) -------------- ---------------------- ----------------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO -------- ----- ------------ --------- ------------ ---------- (IN THOUSANDS) AS OF DECEMBER 31, 1996 Total Capital (to Risk Weighted Assets)................ $141,339 10.96% $ 103,152 8.00% $ 128,940 10.00% Tier I Capital (to Risk Weighted Assets)................ 125,188 9.71% 51,576 4.00% 77,364 6.00% Tier I Capital (to Average Assets).... 125,188 7.05% 71,052 4.00% 88,815 5.00%
- -------- (1) The Company is not currently subject to Prompt Corrective Action Provisions. 14 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY(1) The following table presents selected financial data for the Company for each of the last five years ended December 31:
1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SUMMARY RESULTS OF OPERATIONS Interest Income......... $ 144,447 $ 131,026 $ 106,560 $ 104,929 $ 109,946 Interest Expenses....... 69,092 64,992 47,370 46,616 53,746 ---------- ---------- ---------- ---------- ---------- Net interest income.. 75,355 66,034 59,190 58,313 56,200 Provision for loan losses................. 7,285 5,858 6,066 4,442 7,311 Noninterest income...... 14,439 11,116 9,653 12,069 11,427 Noninterest expense..... 55,243 55,871 52,287 45,571 42,140 ---------- ---------- ---------- ---------- ---------- Income before federal income taxes........... 27,266 15,421 10,490 20,369 18,176 Federal income tax expense................ 8,471 4,608 2,278 5,533 5,072 ---------- ---------- ---------- ---------- ---------- Net income........... $ 18,795 $ 10,813 $ 8,212 $ 14,836 $ 13,104 ========== ========== ========== ========== ========== PER COMMON SHARE: Earnings per share...... $ 2.06 $ 1.21 $ 0.95 $ 1.80 $ 1.63 Cash Dividends Declared. 0.74 0.66 0.61 0.55 0.51 As a percentage of earnings per share.... 35.92% 54.55% 64.21% 30.56% 31.29% Book value, end of year. 15.86 14.66 13.57 13.44 12.08 Average common shares outstanding............ 9,138 8,960 8,601 8,246 8,024 AT YEAR END: Total assets............ $1,815,660 $1,730,170 $1,499,434 $1,464,039 $1,390,910 Long-term debt.......... 19,136 27,873 24,944 35,277 36,340 Shareholders' equity.... 144,754 133,795 166,636 107,371 96,406 AVERAGES: Assets.................. $1,762,009 $1,630,922 $1,470,630 $1,415,441 $1,354,655 Deposits................ 1,467,794 1,359,947 1,216,544 1,181,347 1,173,305 Earning assets.......... 1,632,532 1,508,539 1,365,750 1,313,064 1,253,475 Loans................... 1,215,243 1,021,637 872,045 849,202 857,532 Shareholders' equity.... 138,925 130,780 116,165 102,445 90,594 PROFITABILITY RATIOS: Return on average assets................. 1.07% 0.66% 0.56% 1.05% 0.97% Return on average common equity................. 13.53% 8.27% 7.07% 14.48% 14.46% Net interest margin..... 4.76% 4.54% 4.51% 4.60% 4.68% CAPITAL RATIOS: Average equity to average assets......... 7.88% 8.02% 7.90% 7.24% 6.69% Risk-based capital ratios: Leverage ratio......... 7.05% 6.44% 7.19% 6.36% 5.89% Tier I Capital......... 9.71% 10.24% 11.08% 10.10% 9.34% Total capital.......... 10.96% 11.51% 12.33% 12.23% 11.53% OTHER SIGNIFICANT RATIOS: Allowance to net loans, end of year............ 1.44% 1.44% 1.43% 1.58% 1.63% Allowance to nonperforming loans, end of year............ 113.50% 119.99% 106.12% 90.04% 95.96% Nonperforming assets to loans and foreclosed properties, end of year............ 1.35% 1.37% 1.83% 2.18% 2.51% Net charge-offs to average loans.......... 0.37% 0.47% 0.74% 0.57% 0.60% RATIO OF EARNINGS TO FIXED CHARGES:(2) Excluding deposit interest.............. 4.10x 2.77x 2.33x 3.61x 4.85x Including deposit interest.............. 1.39x 1.24x 1.22x 1.43x 1.34x RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS:(2) Excluding deposit interest.............. 4.10x 2.77x 2.33x 3.61x 4.85x Including deposit interest.............. 1.39x 1.24x 1.22x 1.43x 1.34x
- -------- (1) The numbers have been adjusted to reflect a 3 for 2 common stock split, effective February 1, 1994 to shareholders of record on January 5, 1994. (2) Earnings consist of income before income tax plus interest expense. Fixed charges consist of interest expense. The Company does not currently have any preferred stock outstanding. 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company reported record earnings of $18.8 million for 1996, an increase of 74% over the $10.8 million for 1995 and an increase of 129% over the $8.2 million for 1994. Earnings per share for 1996 increased to $2.06 per share, compared to $1.21 for 1995 and $0.95 for 1994. Earnings for 1996 reflected increases in net interest income and noninterest income and decreases in noninterest expense. The Company's return on average assets for 1996 increased to 1.07% from 0.56% and 0.66% in 1994 and 1995, respectively, and the return on average equity for 1996 increased to 13.53% as compared to 7.07% and 8.27% for 1994 and 1995, respectively. Total assets as of December 31, 1996 were $1.82 billion, an increase of 5.2% as compared to total assets of $1.73 billion as of December 31, 1995. Total loans as of December 31, 1996 were $1.31 billion compared to $1.12 billion as of December 31, 1995, an increase of 17.0%. Total deposits increased marginally from $1.47 billion at December 31, 1995 to $1.48 billion at December 31, 1996. Effective January 1, 1997, the Company changed its name from Pikeville National Corporation to Community Trust Bancorp, Inc., changed the name of its lead bank from Pikeville National Bank and Trust Company to Community Trust Bank, N.A. (the "Lead Bank") and merged seven of its other commercial bank subsidiaries into the Lead Bank. As a result of these transactions, the Lead Bank has $1.5 billion in assets and forty-two offices in twelve Kentucky counties. The Company's thrift and trust subsidiaries, the Savings Bank and Trust Company of Kentucky, remain subsidiaries of the Company and will continue to operate as independent entities. The Company excluded West Liberty from the merger of its commercial bank subsidiaries into the Lead Bank. The Company has entered into a definitive agreement, subject to regulatory approval, to sell West Liberty to Commercial Bancshares, Inc., of West Liberty, Kentucky for cash of $10.2 million. West Liberty has $73 million in assets, constituting 4% of the Company's total consolidated assets. Consistent with the Company's strategic plan, the funds generated by the sale of West Liberty will provide the Company with the opportunity to expand in existing or enter into new markets through either internal expansion or acquisitions. After fourteen years of service, including as President and CEO from January 1, 1995, Terry Coleman resigned effective November 1, 1996 to pursue other interests. Burlin Coleman, the CEO from 1979 through 1994 and current chairman, came out of retirement to take over as President and CEO. The Company intends to continue the direction undertaken during Terry Coleman's tenure and does not expect his departure to have significant adverse consequences on the Company. The Company reached a settlement in a dispute with a former software vendor in January 1997. The settlement will increase 1997 earnings by $3.2 million, net of tax, and will be reported as an extraordinary item in the 1997 consolidated financial statements. ACQUISITIONS While no acquisitions were completed in 1996, the Company acquired all of the outstanding stock of four Kentucky banks during 1995, giving the Company additional economies of scale and new markets in which to deliver its existing products. On February 2, 1995, the Company acquired Community Bank of Lexington, Inc., Lexington, Kentucky ("Community Bank"), which had assets of $61 million. The Company issued 366,000 shares of common stock with a market price of $24 per share to fund the acquisition. The transaction was accounted for as a purchase, with $6.3 million of goodwill recognized. The offices of Community Bank became branches of the Lead Bank 16 on March 31, 1995. While the Company had already been active in lending in the Lexington-Fayette County market through its loan production office, this acquisition has given the Company offices in which to provide deposit products and other financial services in one of Kentucky's fastest growing markets. On May 31, 1995, the Company acquired Woodford Bancorp, Inc., Versailles, Kentucky ("Woodford"), which had assets of $103 million for 967,000 shares of its common stock. The transaction was accounted for as a pooling-of-interests, and all prior period financial information was restated to give effect to the transaction. This acquisition gives the Company another presence in the central Kentucky area, which has one of the highest per capita incomes and lowest unemployment rates in Kentucky. On June 30, 1995, the Company acquired Commercial Bank, Middlesboro, Kentucky ("Middlesboro"), which had assets of $99 million for $14.4 million in cash. The transaction was accounted for as a purchase, and goodwill of $4.3 million was recognized. The Company borrowed $13.5 million to fund the acquisition. Middlesboro is located on the Kentucky-Virginia-Tennessee border and is a growing market with a thriving tourism industry. On November 3, 1995, the Company acquired United Whitley Corporation, Williamsburg, Kentucky ("Williamsburg"), and its subsidiary, Bank of Williamsburg, which had assets of $37 million, for 172,000 shares of its common stock. The transaction was accounted for as a pooling-of-interests, but without restatement of prior period financial information, due to lack of materiality. Bank of Williamsburg was merged into Farmers National Bank, Williamsburg, Kentucky, already owned by the Company on the date of acquisition. Through the acquisition, the Company increased the deposit base of an existing affiliate substantially while increasing its operating costs only marginally. Through the merger transaction, the Company was able to move the bank charter of the merged institution to adjacent Laurel County and now has a branch in London, Kentucky, which is among the fastest growing areas in Kentucky. RESULTS OF OPERATIONS 1996 COMPARED TO 1995 Net income for 1995 was $10.8 million compared to $18.8 million for 1996. Earnings per share for 1995 was $1.21 per share compared to $2.06 per share for 1996. All information has been restated due to the acquisition of Woodford on May 31, 1995, which was accounted for as a pooling-of-interests. Net interest income for 1996 increased 14.2% as compared to 1995, rising from $66.0 million in 1995 to $75.4 million in 1996. Noninterest income increased 29.7% from $11.1 million in 1995 to $14.4 million in 1996 while noninterest expense decreased 1.3% from $55.9 million in 1995 to $55.2 million in 1996. Return on average assets increased from 0.66% in 1995 to 1.07% in 1996 and return on average equity increased from 8.27% in 1995 to 13.53% in 1996. Net Interest Income Net interest income increased 14.2% from 1995 to 1996 and was a major contributing factor to the Company's increase in net income. Net interest income increased from $66.0 million in 1995 to $75.4 million in 1996. The increase was primarily due to the increase in average earning assets and the increase in loans as a percentage of total assets which allowed the Company to increase its yield on average earning assets while its cost of interest bearing funds declined slightly. The Company's average earning assets increased from $1.51 billion in 1995 to $1.63 billion in 1996. Average interest bearing liabilities also increased during the period, from $1.32 billion in 1995 to $1.42 billion in 1996. Average interest bearing liabilities as a percentage of average earning assets remained fairly stable, going from 87.4% in 1995 to 87.1% in 1996. 17 The taxable equivalent yield on average interest earning assets increased from 8.86% in 1995 to 8.99% in 1996. The cost of average interest bearing liabilities declined from 4.93% to 4.86% during the same period. As a result of the thirteen basis point increase in yield on average earning assets and the seven basis point reduction in cost of interest bearing funds, the net interest margin increased from 4.54% in 1995 to 4.76% in 1996. The Company was able to increase its yield on average earning assets through investing more of its assets in loans, its highest yielding asset. Loans accounted for 63.5% of total assets as of December 31, 1995 compared to 71.1% as of December 31, 1996. Most of the loan growth came from consumer loans generated from the indirect consumer lending program, which began late in 1995. As of the end of 1996, the Company's indirect consumer loan portfolio exceeded $100 million. The Company was also able to reduce the cost of interest bearing liabilities during the year. This was achieved by implementation of strict adherence to deposit pricing standards, which enabled the Company to reduce the cost of savings and NOW accounts by thirteen basis points while the cost of time deposits increased by only two basis points. By more closely managing its borrowings, the company was also able to reduce its borrowing cost on Federal Home Loan Bank advances by thirty-six basis points. Provision for Loan Losses The provision for loan losses increased from $5.9 million in 1995 to $7.3 million in 1996. Average loans were significantly higher in 1996 increasing 19.6% from $1.02 billion in 1995 to $1.22 billion in 1996. Charge-offs, net of recoveries, as a percentage of average loans outstanding declined from 0.47% in 1995 to 0.37% in 1996 as outstanding loans increased, but net charge-offs increased by a proportionately less amount. The allowance for loan losses increased significantly, rising from $16.1 million at December 31, 1995 to $18.8 million at December 31, 1996. The increase in the reserve is due to a provision in excess of loan charge-offs to increase the reserve proportionally to the increase in loans outstanding. The Company does not believe there are currently any trends, events or uncertainties that are reasonably likely to have a material effect on the volume of its nonperforming loans. Noninterest Income Noninterest income increased 29.7% from $11.1 million in 1995 to $14.4 million in 1996. Service charges on deposit accounts was the largest component of noninterest income and increased from $5.2 million in 1995 to $6.3 million in 1996 as the Company introduced new policies which reduced the amount of fees that were waived. Trust income increased from $1.3 million in 1995 to $1.6 million in 1996 as the trust assets managed increased during the year. Gains on sale of residential mortgage loans increased from $462 thousand to $1.7 million as increased loan demand enabled the Company to a sell larger volume of loans. Other noninterest income increased from $4.1 million in 1995 to $4.7 million in 1996. The largest component of other noninterest income was insurance commissions, which increased 22.2% from $1.1 million in 1995 to $1.6 million in 1996, mainly due to increases in loans. Loans accounted for 71.1% of total assets at December 31, 1996 compared to 63.5% of total assets at December 31, 1995. Securities gains and losses were not a factor in the increase as the Company incurred net securities gains of $88 thousand in 1996 and $12 thousand in 1995. Noninterest Expense Noninterest expense decreased from $55.9 million in 1995 to $55.2 million in 1996. Salaries and employee benefits increased from $24.6 million in 1995 to $28.2 million in 1996 as the number of full-time equivalent employees increased due to acquisitions of new banks and opening of new branches. Occupancy expense increased marginally from $3.9 million in 1995 to $4.0 million in 1996, and equipment costs remained level at $3.7 million for both 1995 and 1996. Data processing costs declined from $2.8 million in 1995 to $2.6 million in 1996 and stationery and printing costs declined from $1.9 million in 1995 to $1.7 million in 1996. Taxes other 18 than payroll, property and income, which consists mainly of Kentucky Franchise taxes on the equity of the affiliate banks, increased slightly from $2.0 million in 1995 to $2.1 million in 1996. FDIC Insurance declined from $3.0 million to $113 thousand as the FDIC reduced premium rates to "well- capitalized" institutions, of which all of the Company's affiliates qualify. Other noninterest expense declined from $13.9 million in 1995 to $12.8 million in 1996, consistent with the Company's cost containment measures introduced late in 1995. 1995 COMPARED TO 1994 Net income for 1995 was $10.8 million compared to $8.2 million for 1994. Earnings per share for 1994 was $0.95 per share compared to $1.21 for 1995. Net Interest Income Net interest income rose from $59.2 million in 1994 to $66.0 million in 1995. The increase in net interest income was due to a higher level of average earning assets and rising interest rates during 1995. The yield on interest earning assets and the cost of interest bearing liabilities both increased during 1995 as compared to 1994. The taxable equivalent yield on average interest earning assets increased from 7.98% in 1994 to 8.86% in 1995. The cost of average interest bearing liabilities increased from 3.97% to 4.93% during the same period. As a result of this the net interest margin increased from 4.51% in 1994 to 4.54% in 1995. Noninterest Income Noninterest income increased 15.2% from $9.7 million in 1994 to $11.1 million in 1995. Service charges on deposit accounts, the largest component, increased from $4.7 million in 1994 to $5.2 million in 1995. During the same period, other noninterest income increased from $2.7 million to $4.1 million and trust income decreased from $1.6 million to $1.3 million. Net gains from the sale of residential mortgage loans decreased from $784 thousand in 1994 to $462 thousand in 1995, due to the rising interest rates in effect during 1995. Securities gains and losses were minimal in both periods, as the Company incurred net securities losses of $45 thousand in 1994 and net securities gains of $12 thousand in 1995. Noninterest Expense Noninterest expense increased from $52.3 million in 1994 to $55.9 million in 1995. Except for two unusual items which decreased significantly, all other categories increased as would be expected in a period of acquisitions. The increases in assets, employees and operational facilities from the 1995 acquisitions all contributed to across the board increases in noninterest expenses. Salaries and benefits increased from $23.0 million in 1994 to $24.6 million in 1995, occupancy expense increased from $3.3 million to $3.9 million, data processing increased from $2.1 million to $2.8 million, stationery & printing costs increased from $1.5 million to $1.9 million and other taxes increased from $1.7 million to $2.0 million while other noninterest expense items increased from $11.1 million in 1994 to $13.9 million in 1995. The two items which decreased significantly were losses associated with mortgage-backed derivative securities and restructuring and reengineering costs. Mortgage-backed derivatives had been purchased for certain trust accounts administered by the Company's affiliates. While these securities are guaranteed by either the Federal Home Loan Mortgage or the Federal National Mortgage Association, and therefore, pose very little, if any credit risk, they exhibited an excessive volatility which led to a significant decline in their market value in 1994 which represented the difference between the book value carried in the customer accounts and the actual market value. The Company purchased the securities from the trust accounts during 1994 and because of the government guarantees. The Company sold these securities in the first quarter of 1997. During the latter part of 1993 and continuing through 1994, the Company intensively examined ways to improve its performance through restructuring its operations and reengineering its work flow processes. As a result of this, the Company downsized its workforce by approximately 9% of total employment. Severance and other related costs of downsizing in the amount of $0.9 million were recognized in 1994. 19 LIQUIDITY The Company's objectives are to ensure that funds are available at the subsidiary banks to meet deposit withdrawals and credit demands without unduly penalizing profitability, and to ensure that funding is available for the parent company to meet the ongoing cash needs while maximizing profitability. The Company continues to identify ways to provide for liquidity on both a current and long-term basis. On a long-term basis, the Banks rely mainly on core deposits, certificates of deposit of $100,000 or more, repayment of principal and interest on loans and securities, as well as federal funds sold and purchased. The subsidiary banks also rely on the sale of securities under repurchase agreements, securities available-for-sale and Federal Home Loan Bank borrowings. Deposits increased marginally from $1.47 billion at December 31, 1995 to $1.48 billion at December 31, 1996. In order to compensate for the lack of funding from deposit growth, the Company increased its borrowings of federal funds purchased and other short-term borrowings from $20.4 million as of December 31, 1995 to $44.6 million at December 31, 1996 and also increased its Federal Home Loan Bank borrowings during the same period. The Bank is also preparing for a securitization of its automobile retail loan portfolio during the second quarter of 1997 to provide additional funding and liquidity. The lack of deposit funding has not affected the Company's ability to fund loans or service its debt obligations. Due to the nature of the markets served by the Company's lending institutions, management believes that the majority of its certificates of deposit of $100,000 or more are no more volatile than its core deposits. During the periods of low interest rates, these deposit balances remained stable as a percentage of total deposits. In addition, arrangements have been made with two correspondent banks for the purchase of federal funds on an unsecured basis, up to an aggregate of $98 million, if necessary, to meet the Company's liquidity needs. The Company owns $230 million of securities designated as available-for-sale and valued at market which are available to meet liquidity needs on a continuing basis. The Company also relies on Federal Home Loan Bank advances for both liquidity and management of its asset/liability position. Often the Company matches the maturity of these advances with pools of residential mortgage loans which are not sold in the secondary market, some of which have maturities of ten to fifteen years. Federal Home Loan Bank advances increased from $63.6 million at December 31, 1995 to $111.0 million at December 31, 1996. The Company generally relies upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash for its investing activities. As is typical of many financial institutions, significant financing activities include deposit gathering, use of short-term borrowing facilities such as federal funds purchased and securities sold under repurchase agreements, and the issuance of long-term debt. The Company has a $17.5 million credit line available which expires June 29, 1997, in the form of a revolving line of credit of which the entire line was available as of December 31, 1996. The Company's primary investing activities include purchases of investment securities and loan originations. In conjunction with maintaining a satisfactory level of liquidity, management monitors the degree of interest rate risk assumed on the balance sheet. The Company monitors its interest rate risk by the use of static and dynamic gap models at the one year interval. The static gap model monitors the difference in interest rate sensitive assets and interest rate sensitive liabilities as a percentage of total assets that mature within the specified time frame. The dynamic gap model goes further in that it assumes that interest rate sensitive assets and liabilities will be reinvested. The Company uses the Sendero system to monitor its interest rate risk. The Company desires an interest sensitivity gap of not more than fifteen percent of total assets at the one year interval. 20 INTEREST RATE SENSITIVITY ANALYSIS The Company's static interest rate gap position as of December 31, 1996 is presented below:
0-3 3-12 TOTAL 1 OVER 1 MONTHS MONTHS YEAR YEAR TOTAL December 31, 1996 -------- --------- ---------- -------- ---------- (IN THOUSANDS) Interest earning assets Securities and deposits............. $ 87,951 $ 149,753 $ 237,704 $130,817 $ 368,521 Loans................. 519,047 283,094 802,141 507,482 1,309,623 -------- --------- ---------- -------- ---------- Total interest earning assets............... $606,998 $ 432,847 $1,039,845 $638,299 $1,678,144 Interest bearing liabilities NOW, money market and savings accounts..... $268,063 $ 147,651 $ 415,714 $ -- $ 415,714 Time deposits......... 236,981 442,824 679,805 185,081 864,886 Federal funds purchased and other short-term borrowings........... 44,585 -- 44,585 -- 44,585 Advances from FHLB.... 61,804 5,123 66,927 44,043 110,970 Long-term debt........ 1,641 -- 1,641 17,495 19,136 -------- --------- ---------- -------- ---------- Total interest bearing liabilities.......... $613,074 $ 595,598 $1,208,672 $246,619 $1,455,291 ======== ========= ========== ======== ========== Interest sensitivity gap For the period........ $ (6,076) $(162,751) $ (168,827) $391,680 $ 222,853 Cumulative............ (6,076) (168,827) (168,827) 222,853 222,853 Cumulative as a percent of earning assets...... (0.36)% (10.06)% (10.06)% 13.28% 13.28%
The Company now uses, on a limited basis, interest rate swaps as an additional tool in managing interest rate risk. As of December 31, 1996, there was outstanding $10 million in notional principal value of interest rate swaps. Interest rate swaps involve an exchange of cash flows based on the notional principal amount and agreed upon fixed and variable interest rates. In this transaction, the Company has agreed to pay a floating interest rate based on LIBOR and receive a fixed interest rate in return. The impact on operations of interest rate swaps was not significant during 1996 and is not expected to be significant during 1997. CAPITAL RESOURCES Total shareholders' equity increased from $133.8 million at December 31, 1995 to $144.8 million at December 31, 1996. The primary source of capital of the Company is retained earnings. Cash dividends per share were $0.66 per share for 1995 and $0.74 per share for 1996. The Company retained 45% of its earnings for 1995 and 64% for 1996. Regulatory guidelines require bank holding companies, commercial banks, and thrifts to maintain certain minimum ratios and define companies as "well capitalized" that sufficiently exceed the minimum ratios. The banking regulators may alter minimum capital requirements as a result of revising their internal policies and their ratings of individual institutions. To be "well capitalized" banks and bank holding companies must maintain a Tier 1 leverage ratio of no less than 5.0%, a Tier 1 risk based ratio of no less than 6.0% and a total risk based ratio of no less than 10.0%. The Company's ratios as of December 31, 1996 were 7.05%, 9.71% and 10.96%, respectively. The Company and all banking affiliates met the criteria for "well capitalized" at December 31, 1996. As of December 31, 1996, management is not aware of any current recommendations by banking regulatory authorities which, if they were to be implemented, would have, or are reasonably likely to have, a material adverse impact on the Company's liquidity, capital resources, or operations. Impact of inflation and changing prices The majority of the Company's assets and liabilities are monetary in nature. Therefore, the Company differs greatly from most commercial and industrial companies that have significant investments in nonmonetary assets, such as fixed assets and inventories. However, inflation does have an important impact on the growth of assets 21 in the banking industry and on the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio. Inflation also affects other expenses, which tend to rise during periods of general inflation. Management believes the most significant impact on financial and operating results is the Company's ability to react to changes in interest rates. Management seeks to maintain an essentially balanced position between interest sensitive assets and liabilities in order to protect against the effects of wide interest rate fluctuations. QUARTERLY FINANCIAL DATA
THREE MONTHS ENDED DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31 - ------------------ ----------- ------------ ------- -------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1996 Net interest income................. $19,945 $19,123 $18,537 $17,750 Net interest income, taxable equivalent basis................... 20,490 19,703 19,142 18,346 Provision for loan losses........... 2,108 2,003 1,686 1,488 Noninterest income.................. 3,822 3,696 3,662 3,259 Noninterest expense................. 14,427 13,700 13,639 13,477 Net income.......................... 4,949 4,906 4,737 4,203 PER COMMON SHARE: Net income, primary................. $ 0.54 $ 0.54 $ 0.52 $ 0.46 Net income, fully diluted........... 0.54 0.54 0.52 0.46 Dividends declared.................. 0.20 0.18 0.18 0.18 COMMON STOCK PRICE: High................................ $ 26.00 $ 23.75 $ 23.75 $ 22.00 Low................................. 20.25 20.75 20.00 18.50 Last trade.......................... 24.50 22.25 21.75 22.00 SELECTED RATIOS: Return on average assets, annualized......................... 1.10% 1.09% 1.09% 0.98% Return on average common equity, annualized......................... 13.69% 13.92% 13.98% 12.42% Net interest margin, annualized..... 4.89% 4.73% 4.78% 4.62% 1995 Net interest income................. $17,437 $16,894 $16,134 $15,569 Net interest income, taxable equivalent basis................... 18,051 17,620 16,721 16,098 Provision for loan losses........... 1,850 1,615 1,322 1,071 Noninterest income.................. 3,342 2,412 2,696 2,666 Noninterest expense................. 15,869 13,755 13,070 13,177 Net income.......................... 2,266 2,734 2,840 2,973 PER COMMON SHARE: Net income, primary................. $ 0.25 $ 0.30 $ 0.32 $ 0.34 Net income, fully diluted........... 0.25 0.30 0.32 0.34 Dividends declared.................. 0.18 0.16 0.16 0.16 COMMON STOCK PRICE: High................................ $ 21.50 $ 23.00 $ 23.50 $ 25.25 Low................................. 19.00 19.50 19.50 22.50 Last trade.......................... 19.25 20.25 20.75 22.50 SELECTED RATIOS: Return on average assets, annualized......................... 0.53% 0.65% 0.72% 0.77% Return on average common equity, annualized......................... 6.96% 8.39% 8.78% 9.56% Net interest margin, annualized..... 4.57% 4.47% 4.57% 4.52%
22 EXECUTIVE OFFICERS OF THE COMPANY Set forth below are the executive officers of the Company, their positions with the Company and the year in which they first became an executive officer or director.
POSITIONS AND DATE FIRST OFFICES BECAME DIRECTOR PRESENT NAME AND AGE CURRENTLY OR EXECUTIVE PRINCIPAL (1) HELD OFFICER OCCUPATION - ------------ ------------------------- --------------- ------------------------- Burlin Cole- Chairman of Board, 1980 Chairman of Board man; 67 President CEO & Director President & CEO Brandt Vice Chairman of Board 1980 Vice Chairman Mullins; 69 & Director Jean R. Executive Vice President, 1992(2) President & Hale; 50 Secretary & Director CEO of the Lead Bank Richard M. Executive Vice President, 1995(3) Executive Vice President, Levy; 38 CFO & Treasurer CFO & Treasurer Ralph Executive Vice President, 1995(4) Executive Vice President, Weickel;39 Sales & Marketing Sales & Marketing Ronald M. Executive Vice President, 1996(5) President and CEO Holt; 49 Trust of Trust Company Mark Gooch; Executive Vice President 1997(6) Executive Vice President 38 Operations Operations John 1997(7) Executive Vice President Shropshire; Executive Vice President & Senior Lender 48 & Senior Lender
- -------- (1) The ages listed for the Company's executive officers are as of February 28, 1997. (2) Prior to becoming an executive officer, Ms. Hale served as Vice President of the Company and as an executive officer of the Lead Bank since 1988. (3) Mr. Levy served as Senior Vice President and Controller of Bank of America Texas, N.A. prior to joining the Company. (4) Mr. Weickel served as Vice President of the Company prior to becoming an executive officer. Mr. Weickel served as Vice President, Manager of Investments, for Boatmen's National Bank of Des Moines, NA, prior to joining the Company in 1993. (5) Mr. Holt served as Executive Vice President and Trust Manager of Bank One Kentucky Corporation prior to joining the Company. (6) Mr. Gooch served as President and Chief Executive Officer of First Security Bank & Trust Co., Whitesburg, Kentucky, an affiliate of the Company until merger with the Lead Bank prior to becoming an executive officer. (7) Mr. Shropshire served as President and Chief Executive Officer of Farmers- Deposit Bank, Flemingsburg, Kentucky, an affiliate of the Company until merger with the Lead Bank prior to becoming an executive officer. 23 DIRECTORS OF THE COMPANY The Company's directors are elected at each annual meeting of the shareholders and hold office until the next election of directors or until their successors are duly elected and qualify. The persons named below, all of whom currently serve as directors of the Company, have been nominated for election to serve until the 1998 Annual Meeting of Shareholders. The following table sets forth certain information respecting the persons nominated to be directors of the Company:
AMOUNT AND POSITIONS NATURE OF NAME AND AND DIRECTOR PRINCIPAL BENEFICIAL PERCENT AGE (1) OFFICES SINCE OCCUPATION (2) OWNERSHIP (3) OF CLASS - ---------- --------------- -------- ---------------------- ------------- -------- Charles J. Director 1988 Baird, Baird, Baird & 71,593(4) * Baird; 47 Jones, P.S.C., Attorneys Burlin Chairman of 1980 Chairman of Board of 389,483(6) 4.3% Coleman; Board of Directors, President & 67(5) Directors, CEO--Community President & CEO Trust Bancorp, Inc. Nick A. Director 1980 President--Unit Coal 31,645 * Cooley; Corporation 63 William A. Director 1990 Chairman of the 100,970(7) 1.1% Graham, Advisory Board-- Jr.; 60 Fleming County Region--Community Trust Bank, N.A. Jean R. Executive VP, 1993 President & CEO-- 26,548(8) * Hale; 50(5) Secretary & Community Trust Director Bank, N.A. Brandt Vice Chairman & 1980 Retired President- 71,069(9) * Mullins; Director Community Trust 69(5) Bank, NA M. Lynn Director 1993 President--Knott Floyd 55,091(10) * Parrish; Land Co., Inc. 47 Ernest M. Director 1980 President and General 54,067(11) * Rogers; Manager--Rogers 69 Petroleum Services, Inc. Porter P. Director 1995 Chairman of the 40,635(12) * Welch; 71 Advisory Board-- Woodford County Region--Community Trust Bank, NA All direc- 857,465(13) tors as a group 9.4%
(see footnotes on the next page) 24 - -------- * Less than 1 percent. (1) The ages listed for the Directors of the Company are as of February 28, 1997. (2) Each of the nominees has been engaged in the principal occupation specified above for five years or more. (3) Under the rules of the Commission, a person is deemed to beneficially own a security if the person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to beneficially own any shares which that person has the right to acquire beneficial ownership within sixty days. Shares of common stock subject to options exercisable within sixty days are deemed outstanding for computing the percentage of class of the person holding such options but are not deemed outstanding for computing the percentage of class for any other person. Unless otherwise indicated, the named persons have sole voting and investment power with respect to shares held by them. (4) Includes 35,093 shares in trust for W.J. Baird's grandchildren over which Mr. Baird is trustee with the power to vote and invest such shares. (5) Burlin Coleman is also a director of the Lead Bank, the Savings Bank and Trust Company of Kentucky. Jean Hale is also a director of and Trust Company of Kentucky. Brandt Mullins is also a director of West Liberty. (6) Includes the following shares beneficially owned by Burlin Coleman: 253,671 shares held in trust over which Mr. Coleman has sole voting and investment power; 53,999 shares in which Mr. Coleman shares voting power pursuant to a power of attorney; 395 shares held directly by Mr. Coleman; and 81,418 shares held in IRA over which Mr. Coleman has sole voting and investment power. Excludes 8,770 shares held by Mr. Coleman's wife, over which Mr. Coleman has no voting or investment power. (7) Includes 5,709 shares that Mr. Graham may acquire pursuant to options exercisable within sixty days of the Record Date and 868 shares held in the ESOP, which Mr. Graham has the power to vote. (8) Includes 8,995 shares which Mrs. Hale may acquire pursuant to options exercisable within sixty days of the Record Date and 2,214 shares held in the ESOP, which Mrs. Hale has the power to vote. Excludes 4,625 shares held by Mrs. Hale's husband, over which Mrs. Hale has no voting or investment power. (9) Includes 68,444 shares held in trust, which Mr. Mullins has the power to vote. Excludes 21,375 shares held by Mr. Mullins' wife, over which Mr. Mullins has no voting or investment power. (10) Excludes 600 shares held by Mr. Parrish's wife as custodian for their minor child, over which Mr. Parrish has no voting or investment power. (11) Excludes 15,674 shares held by Mr. Rogers' wife, over which Mr. Rogers has no voting or investment power. (12) Excludes 40,000 shares held by Mr. Welch's wife, over which Mr. Welch has no voting or investment power. (13) Includes 16,364 shares which may be acquired by all directors as a group pursuant to options exercisable within sixty days of March 15, 1997. 25 SELECTED STATISTICAL INFORMATION The following tables set forth certain statistical information relating to the Company and its subsidiaries on a consolidated basis and should be read together with the consolidated financial statements of the Company. CONSOLIDATED AVERAGE BALANCE SHEETS AND TAXABLE EQUIVALENT INCOME/EXPENSE AND YIELDS/RATES
1996 1995 1994 ---------------------------- ---------------------------- ---------------------------- AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE BALANCES INTEREST RATE BALANCES INTEREST RATE BALANCES INTEREST RATE ---------- -------- ------- ---------- -------- ------- ---------- -------- ------- (IN THOUSANDS) EARNING ASSETS Loans, net of unearned (1)(2)(3).............. $1,215,243 $119,370 9.82% $1,021,637 $101,511 9.94% $ 872,045 $ 78,911 9.05% Securities U.S. Treasuries and agencies.............. 277,641 17,641 6.35 301,263 19,123 6.35 316,552 18,794 5.94 State & political subdivisions(3)....... 57,652 4,568 7.92 55,263 4,668 8.45 52,344 4,692 8.96 Other securities....... 72,610 4,655 6.41 78,510 5,011 6.38 73,951 4,370 5.91 Federal funds sold...... 8,490 483 5.69 50,398 3,057 6.07 47,488 1,996 4.20 Interest bearing deposits............... 896 56 6.25 1,469 112 7.62 3,370 207 6.14 ---------- -------- ---- ---------- -------- ---- ---------- -------- ---- Total earning assets.... $1,632,532 $146,773 8.99% $1,508,540 $133,482 8.86% $1,365,750 $108,970 7.98% Less: Allowance for loan losses................ (17,637) (15,336) (13,444) ---------- ---------- ---------- 1,614,895 1,493,204 1,352,306 NON-EARNING ASSETS Cash and due from banks. 54,120 50,846 45,173 Premises and equipment, net.................... 46,460 43,725 38,403 Other assets............ 46,534 43,148 34,748 ---------- ---------- ---------- Total assets............ $1,762,009 $1,630,923 $1,470,630 ========== ========== ========== INTEREST BEARING LIABILITIES Deposits Savings and demand deposits.............. $ 422,158 $ 12,722 3.01% $ 386,956 $ 12,166 3.14% $ 392,784 $ 11,446 2.91% Time deposits.......... 861,566 47,854 5.55 804,884 44,507 5.53 671,863 28,443 4.23 Federal funds purchased and securities sold under repurchase agreements............. 25,363 1,258 4.96 25,934 1,435 5.53 30,208 1,234 4.09 Other short-term borrowings............. 17 1 5.88 1,443 78 5.41 2,935 90 3.07 Advances from Federal Home Loan Bank......... 90,666 5,356 5.91 71,917 4,506 6.27 68,022 4,132 6.07 Long-term debt.......... 22,795 1,901 8.34 27,328 2,300 8.42 26,739 2,025 7.57 ---------- -------- ---- ---------- -------- ---- ---------- -------- ---- Total interest bearing liabilities............ $1,422,565 $ 69,092 4.86% $1,318,462 $ 64,992 4.93% $1,192,551 $ 47,370 3.97% ---------- -------- ---- ---------- -------- ---- ---------- -------- ---- NONINTEREST BEARING LIABILITIES Demand deposits......... 184,071 168,108 151,897 Other liabilities....... 16,448 13,573 10,017 Total liabilities....... 1,623,084 1,500,143 1,354,465 ---------- ---------- ---------- Shareholders' equity.... 138,925 130,780 116,165 ---------- ---------- ---------- Total liabilities and shareholders' equity... $1,762,009 $1,630,923 $1,470,630 ========== ========== ========== Net interest income..... $ 77,681 $ 68,490 $ 61,600 ======== ======== ======== Net interest spread..... 4.13% 3.93% 4.01% ==== ==== ==== Benefit of interest free funding................ 0.63% 0.61% 0.50% ==== ==== ==== Net interest margin..... 4.76% 4.54% 4.51% ==== ==== ====
- ------- (1)Interest includes fees on loans of $4,289, $3,203 and $2,300 in 1996, 1995 and 1994, respectively. (2)Loan balances include principal balances on nonaccrual loans. (3)Tax exempt income on securities and loans is reported on a fully taxable equivalent basis using a 35% rate. 26 NET INTEREST DIFFERENTIAL The following table illustrates the approximate effect on net interest differentials of volume and rate changes between 1996 and 1995 and also between 1995 and 1994.
TOTAL CHANGE CHANGE DUE TO TOTAL CHANGE CHANGE DUE TO ------------ ---------------- ------------ ---------------- 1996/1995 VOLUME RATE 1995/1994 VOLUME RATE ------------ ------- ------- ------------ ------- ------- (IN THOUSANDS) INTEREST INCOME Loans................. $17,859 $19,030 $(1,171) $22,600 $14,380 $ 8,220 U. S. Treasury and federal agencies..... (1,482) (1,482) -- 329 (931) 1,260 Tax exempt state and political subdivisions......... (100) 197 (297) (24) 255 (279) Other securities...... (356) (379) 23 641 278 363 Federal funds sold.... (2,574) (2,395) (179) 1,061 130 931 Interest bearing deposits............. (56) (39) (17) (95) (137) 42 ------- ------- ------- ------- ------- ------- Total interest income. 13,291 14,932 (1,641) 24,512 13,975 10,537 INTEREST EXPENSE Savings and demand deposits............. 556 1,075 (519) 720 (171) 891 Time deposits......... 3,347 3,146 201 16,064 6,309 9,755 Federal funds purchased and securities sold under repurchase agreements........... (177) (31) (146) 201 (192) 393 Other short-term borrowings........... (77) (119) 42 (12) (60) 48 Advances from Federal Home Loan Bank....... 850 1,120 (270) 374 241 133 Long-term debt........ (399) (378) (21) 275 46 229 ------- ------- ------- ------- ------- ------- Total interest expense.............. 4,100 4,813 (713) 17,622 6,173 11,449 ------- ------- ------- ------- ------- ------- Net interest income..... $ 9,191 $10,119 $ (928) $ 6,890 $ 7,802 $ (912) ======= ======= ======= ======= ======= =======
For purposes of the above table, changes which are not solely due to rate or volume are allocated based on a percentage basis, using the absolute values of rate and volume variance as a basis for percentages. Income is stated at a fully taxable equivalent basis, assuming a 35% tax rate. INVESTMENT PORTFOLIO The maturity distribution and weighted average interest rates of securities at December 31, 1996 is as follows:
ESTIMATED MATURITY AT DECEMBER 31, 1996 -------------------------------------------------------------------------------------- AFTER 10 TOTAL FAIR WITHIN 1 YEAR 1-5 YEARS 5-10 YEARS YEARS VALUE AMORTIZED ------------- -------------- ------------- ------------- -------------- COST AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT ------- ----- -------- ----- ------- ----- ------- ----- -------- ----- --------- (IN THOUSANDS) Available-for-sale U. S. Treasury......... $16,205 6.23% $ 21,186 6.39% $ -- 0.00% $ -- 0.00% $ 37,391 6.28% $ 37,139 U. S. government agencies and corporations.......... 10,874 6.99 105,501 7.06 10,228 6.60 7,314 10.41 133,917 7.20 134,217 State and municipal obligations........... -- 0.00 15 7.57 -- 0.00 -- 0.00 15 7.57 15 Other securities....... 27,656 5.97 5,561 6.62 11,968 6.44 13,444 6.73 58,629 6.30 59,562 ------- ---- -------- ---- ------- ---- ------- ----- -------- ---- -------- Total................... $54,735 6.25% $132,263 6.93% $22,196 6.51% $20,758 8.03% $229,952 6.82% $230,933 ------- ---- -------- ---- ------- ---- ------- ----- -------- ---- --------
27
ESTIMATED MATURITY AT DECEMBER 31, 1996 -------------------------------------------------------------------------------------- AFTER 10 TOTAL FAIR WITHIN 1 YEAR 1-5 YEARS 5-10 YEARS YEARS VALUE AMORTIZED ------------- -------------- ------------- ------------- -------------- COST AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT ------- ----- -------- ----- ------- ----- ------- ----- -------- ----- --------- (IN THOUSANDS) Held-to-maturity U. S. government agencies and corporations........... $ 3,414 4.67% $ 57,160 5.82% $11,498 4.53% $ -- 0.00% $ 72,072 5.56% $69,495 State and municipal obligations........... 1,241 9.00 20,211 7.28 21,058 7.08 11,581 8.93 54,091 7.59 54,563 Other securities....... 0 0.00 11,570 5.86 -- 0.00 -- 0.00 11,570 5.86 11,325 ------- ---- -------- ---- ------- ---- ------- ---- -------- ---- ------- Total................... $ 4,655 5.82% $ 88,941 6.16% $32,556 6.18% $11,581 8.93% $137,733 6.38% 135,383 ------- ---- -------- ---- ------- ---- ------- ---- -------- ---- ------- Total Securities........ $59,390 6.22% $221,204 6.62% $54,752 6.32% $32,339 8.35% $367,685 6.66% -- ======= ==== ======== ==== ======= ==== ======= ==== ======== ==== =======
The calculations of the weighted average interest rates for each maturity category are based on yield weighted by the respective costs of the securities. The weighted average rates on state and political subdivisions are computed on a taxable equivalent basis using a 35% tax rate. For purposes of the above presentation, maturities of mortgage-backed pass through certificates and collateralized mortgage obligations are based on estimated maturities. Excluding those holdings of the investment portfolio in U.S. Treasury securities and other agencies of the U.S. Government, there were no securities of any one issuer which exceeded 10% of the shareholder's equity of the Company at December 31, 1996. LOAN PORTFOLIO
DECEMBER 31 (IN THOUSANDS) ---------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- -------- -------- -------- Commercial: Secured by real estate............... $ 270,315 $ 258,541 $235,611 $210,514 $221,646 Other................. 234,793 192,127 183,533 196,296 175,850 ---------- ---------- -------- -------- -------- Total commercial.... 505,108 450,668 419,144 406,810 397,496 ---------- ---------- -------- -------- -------- Real estate construction........... 79,069 51,539 45,308 34,241 26,058 Real estate mortgage.... 411,067 398,288 290,998 274,017 291,318 Consumer................ 310,582 208,662 143,085 128,995 124,569 Equipment lease financing.............. 3,797 5,911 7,919 9,872 14,130 ---------- ---------- -------- -------- -------- Total loans......... $1,309,623 $1,115,068 $906,454 $853,935 $853,661 ========== ========== ======== ======== ======== Percent of total year- end loans Commercial: Secured by real estate............... 20.64% 23.19% 25.99% 24.65% 25.96% Other................. 17.93 17.23 20.25 22.99 20.60 ---------- ---------- -------- -------- -------- Total commercial.... 38.57 40.42 46.24 47.64 46.56 Real estate construction........... 6.04 4.62 5.00 4.01 3.05 Real estate mortgage.... 31.39 35.72 32.10 32.09 34.13 Consumer................ 23.71 18.71 15.79 15.10 14.60 Equipment lease financing.............. 0.29 0.53 0.87 1.16 1.66 ---------- ---------- -------- -------- -------- Total loans......... 100.00% 100.00% 100.00% 100.00% 100.00% ========== ========== ======== ======== ========
The total loans above are net of unearned income. 28 The following table shows the amounts of loans (excluding residential mortgages of 1-4 family residences, consumer loans and lease financing) which, based on the remaining scheduled repayments of principal are due in the periods indicated. Also, the amounts are classified according to sensitivity to changes in interest rates (fixed, variable).
MATURITY AT DECEMBER 31, 1996 (IN THOUSANDS) ----------------------------------- AFTER ONE BUT WITHIN AFTER WITHIN FIVE FIVE ONE YEAR YEARS YEARS TOTAL -------- -------- -------- -------- Commercial, financial and agricultural...... $138,073 $164,337 $202,698 $505,108 Real estate--construction................... 24,097 28,664 26,308 79,069 -------- -------- -------- -------- $162,170 $193,001 $229,006 $584,177 ======== ======== ======== ======== Rate sensitivity Predetermined rate.......................... $ 38,819 $ 59,547 $ 47,059 $145,425 Adjustable rate............................. 123,351 133,454 181,947 438,752 -------- -------- -------- -------- $162,170 $193,001 $229,006 $584,177 ======== ======== ======== ========
NONPERFORMING ASSETS
DECEMBER 31 (IN THOUSANDS) ------------------------------------------- 1996 1995 1994 1993 1992 ------- ------- ------- ------- ------- Nonaccrual loans.................. $10,156 $ 9,433 $ 8,829 $11,186 $ 5,417 Restructured loans................ 630 918 -- -- 4,022 90 days or more past due and still accruing interest................ 5,800 3,947 3,401 3,637 4,875 ------- ------- ------- ------- ------- Total nonperforming loans....... 16,586 14,298 12,230 14,823 14,314 Foreclosed properties............. 1,059 1,927 4,320 3,635 7,061 ------- ------- ------- ------- ------- Total nonperforming assets...... $17,645 $16,225 $16,550 $18,458 $21,375 ======= ======= ======= ======= ======= Nonperforming assets to total loans plus foreclosed properties. 1.35% 1.45% 1.83% 2.18% 2.51% Allowance to nonperforming loans.. 113.50 112.47 106.12 90.04 95.96
Nonaccrual, past due and restructured loans
AS A % AS A % ACCRUING AS A % OF LOAN OF LOAN LOANS OF LOAN BALANCES BALANCES PAST DUE BALANCES NONACCRUAL BY RESTRUCTURED BY 90 DAYS BY LOANS CATEGORY LOANS CATEGORY OR MORE CATEGORY BALANCES (IN THOUSANDS) ---------- -------- ------------ -------- -------- -------- ---------- DECEMBER 31, 1996 Commercial loans--real estate secured......... $ 4,817 1.78% $409 0.15% $1,266 0.47% $ 270,315 Commercial loans--other. 3,217 1.35 221 0.09 1,398 0.59 238,590 Consumer loans--real estate secured......... 1,690 0.34 -- -- 2,225 0.45 490,136 Consumer loans--other... 432 0.14 -- -- 911 0.29 310,582 ------- ---- ---- ---- ------ ---- ---------- Total.................. $10,156 0.78% $630 0.05% $5,800 0.44% $1,309,623 ======= ==== ==== ==== ====== ==== ========== DECEMBER 31, 1995 Commercial loans--real estate secured......... $ 3,264 1.26% $918 0.36% $1,428 0.55% $ 258,541 Commercial loans--other. 3,048 1.54 -- -- 237 0.12 198,038 Consumer loans--real estate secured......... 2,873 0.64 -- -- 1,335 0.30 449,827 Consumer loans--other... 248 0.12 -- -- 947 0.45 208,662 ------- ---- ---- ---- ------ ---- ---------- Total.................. $ 9,433 0.85% $918 0.08% $3,947 0.35% $1,115,068 ======= ==== ==== ==== ====== ==== ==========
The allowance for loan losses balance is maintained by management at a level considered adequate to cover anticipated losses that are based on past loss experience, general economic conditions, information about specific 29 borrower situations including their financial position and collateral values, and other factors and estimates which are subject to change over time. In 1996, gross interest income that would have been recorded on nonaccrual loans had the loans been current in accordance with their original terms amounted to $1.1 million. Interest income actually recorded and included in net income for the period was $0.3 million, leaving $0.8 million of interest income not recognized during the period. Discussion of the Nonaccrual Policy The accrual of interest income on loans is discontinued when the collection of interest and principal in full is not expected. When interest accruals are discontinued, interest income accrued in the current period is reversed. Any loans past due 90 days or more must be well secured and in the process of collection to continue accruing interest. Potential Problem Loans When management has serious doubts as to the ability of borrowers to comply with repayment terms, the loans are placed on nonaccrual status. Foreign Outstandings None Loan Concentrations The Company has no concentration of loans exceeding 10% of total loans which is not otherwise disclosed at December 31, 1996. 30 ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (IN THOUSANDS)
1996 1995 1994 1993 1992 ---------- ---------- -------- -------- -------- Allowance for loan losses, beginning of year................... $ 16,082 $ 12,978 $ 13,346 $ 13,736 $ 11,530 Loans charged off: Commercial, secured by real estate...... 378 1,278 1,442 1,538 1,831 Commercial, other.... 1,136 1,646 3,902 2,140 2,210 Real Estate Mortgage. 880 514 407 598 1,005 Consumer loans....... 4,594 2,594 1,786 1,606 1,377 ---------- ---------- -------- -------- -------- Total charge-offs.. 6,988 6,032 7,537 5,882 6,423 Recoveries of loans previously charged off: Commercial, secured by real estate...... 174 159 12 147 152 Commercial, other.... 609 331 395 333 503 Real Estate Mortgage. 312 44 66 58 135 Consumer loans....... 1,351 740 630 512 528 ---------- ---------- -------- -------- -------- Total recoveries... 2,446 1,274 1,103 1,050 1,318 Net charge-offs: Commercial, secured by real estate...... 204 1,119 1,430 1,391 1,679 Commercial, other.... 527 1,315 3,507 1,807 1,707 Real Estate Mortgage. 568 470 341 540 870 Consumer loans....... 3,243 1,854 1,156 1,094 849 ---------- ---------- -------- -------- -------- Total net charge- offs.............. 4,542 4,758 6,434 4,832 5,105 Allowance of acquired banks................ 0 2,004 0 0 0 Provisions charged against operations... 7,285 5,858 6,066 4,442 7,311 ---------- ---------- -------- -------- -------- Balance, end of year.... $ 18,825 $ 16,082 $ 12,978 $ 13,346 $ 13,736 ========== ========== ======== ======== ======== Allocation of allowance, end of year Commercial, secured by real estate. $ 3,305 $ 3,095 $ 3,649 $ 2,650 $ 2,812 Commercial, other..... 2,870 2,300 2,349 1,921 2,130 Real Estate Construction......... 152 135 93 57 186 Real Estate Mortgage.. 790 1,044 905 1,659 1,945 Consumer.............. 2,248 1,574 1,291 1,271 1,475 Equipment lease financing............ 46 71 108 91 147 Unallocated........... 9,414 7,863 4,583 5,697 5,041 ---------- ---------- -------- -------- -------- Balance, end of year.... $ 18,825 $ 16,082 $ 12,978 $ 13,346 $ 13,736 ========== ========== ======== ======== ======== Allocation of allowance, end of year Commercial, secured by real estate. $ 3,305 $ 3,095 $ 3,649 $ 2,650 $ 2,812 Commercial, other..... 2,807 2,300 2,349 1,921 2,130 Real Estate Construction......... 152 135 93 57 186 Real Estate Mortgage.. 790 1,044 905 1,659 1,945 Consumer.............. 2,248 1,574 1,291 1,271 1,457 Equipment lease financing............ 46 71 108 91 147 Unallocated........... 9,414 7,863 4,583 5,697 5,041 ---------- ---------- -------- -------- -------- Balance, end of year.... $ 18,825 $ 16,082 $ 12,978 $ 13,346 $ 13,736 ========== ========== ======== ======== ======== Average loans outstanding, net of unearned interest...... $1,215,243 $1,021,637 $872,045 $849,202 $857,532 Loans outstanding at end of year, net of unearned interest...... $1,309,623 $1,115,068 $906,454 $853,935 $853,661 Net charge-offs to average loan type Commercial, secured by real estate.......... 0.08% 0.39% 0.60% 0.59% 0.95% Commercial, other..... 0.24% 0.66% 0.94% 0.96% 0.80% Real Estate Mortgage.. 0.12% 0.13% 0.13% 0.18% 0.41% Consumer loans........ 1.27% 1.02% 0.78% 0.62% 0.57% Total................ 0.37% 0.47% 0.74% 0.57% 0.60% Other ratios Allowance to net loans, end of year... 1.44% 1.44% 1.43% 1.56% 1.61% Provision for loan losses to average loans................ 0.60% 0.57% 0.70% 0.82% 0.84%
Management uses an internal analysis to determine the adequacy of the loan loss reserve and charges to the provision for loan losses. This analysis is based on net charge-off experience for prior years, current delinquency levels and risk factors based on the local economy and relative experience of the lending staff. This analysis is completed quarterly and forms the basis for allocation of the loan loss reserve and what charges to provision may be required. 31 AVERAGE DEPOSITS AND OTHER BORROWED FUNDS
1996 1995 1994 ---------- ---------- ---------- (IN THOUSANDS) DEPOSITS: Non-interest bearing deposits............... $ 184,071 $ 168,108 $ 151,897 NOW accounts................................ 170,410 151,781 132,270 Money market deposits....................... 94,653 82,733 76,053 Savings..................................... 157,094 152,442 184,461 Certificates of deposit > $100,000.......... 265,005 242,081 174,532 Certificates of deposit < $100,000 and other time deposits.............................. 596,560 562,803 497,331 ---------- ---------- ---------- Total Deposits............................ $1,467,793 $1,359,948 $1,216,544 OTHER BORROWED FUNDS: Federal funds purchased and securities sold under repurchase agreements................ $ 25,363 $ 25,934 $ 30,208 Other short-term borrowings................. 17 1,443 2,935 Advances from Federal Home Loan Bank........ 90,666 71,917 68,022 Long-term debt.............................. 22,795 27,328 26,739 ---------- ---------- ---------- Total Other Borrowed Funds.............. 138,841 126,622 127,904 Total Deposits and Other Borrowed Funds. $1,606,634 $1,486,570 $1,344,448 ========== ========== ==========
Maturities of time deposits of $100,000 or more outstanding at December 31, 1996 are summarized as follows:
CERTIFICATES TIME OF DEPOSIT DEPOSITS TOTAL ------------ -------- -------- (IN THOUSANDS) 3 months or less................................ $ 70,360 $ 0 $ 70,360 Over 3 through 6 months......................... 65,493 4,796 70,289 Over 6 through 12 months........................ 66,390 0 66,390 Over 12 through 60 months....................... 54,451 0 54,451 Over 60 months.................................. 4,906 0 4,906 -------- ------ -------- $261,600 $4,796 $266,396 ======== ====== ========
SHORT-TERM BORROWINGS The Company did not have any category of short-term borrowings for which the average balance outstanding during the reported periods was 30% or more of shareholders' equity at the end of the reported periods. 32 DESCRIPTION OF THE PREFERRED SECURITIES The Preferred Securities will be issued pursuant to the terms of the CTBI Trust Agreement. The CTBI Trust Agreement is qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Initially, State Street Bank and Trust Company will be the Property Trustee and will act as trustee for the purpose of complying with the Trust Indenture Act. The terms of the Preferred Securities will include those stated in the CTBI Trust Agreement and those made part of the CTBI Trust Agreement by the Trust Indenture Act. This summary of the material terms and provisions of the Preferred Securities and the CTBI Trust Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the CTBI Trust Agreement, including the definitions therein of certain terms, and the Trust Indenture Act. Wherever particular defined terms of the CTBI Trust Agreement (as amended or supplemented from time to time) are referred to herein, such defined terms are incorporated by reference herein. The form of the CTBI Trust Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. GENERAL Pursuant to the terms of the CTBI Trust Agreement, the Administrative Trustees, on behalf of CTBI Trust, will issue the Preferred Securities and the Common Securities (collectively, the "Trust Securities"). The Preferred Securities will represent undivided preferred beneficial interests in CTBI Trust and the holders thereof will be entitled to a preference in certain circumstances with respect to Distributions and amounts payable on redemption or liquidation over the Common Securities of CTBI Trust, as well as other benefits as described in the CTBI Trust Agreement. The Preferred Securities will rank pari passu, and payments will be made thereon pro rata, with the Common Securities of CTBI Trust except as described under "--Subordination of Common Securities." Legal title to the Subordinated Debentures will be held by the Property Trustee in trust for the benefit of the holders of the Preferred Securities and Common Securities. The Guarantee executed by the Company for the benefit of the holders of the Preferred Securities will be a guarantee on a subordinated basis with respect to the Preferred Securities, but will not guarantee payment of Distributions or amounts payable on redemption or liquidation of such Preferred Securities when CTBI Trust does not have funds on hand available to make such payments. See "Description of Guarantee." DISTRIBUTIONS Payment of Distributions. Distributions on each Preferred Security will be payable at the annual rate of % of the stated Liquidation Amount of $25, accruing from the date of original issuance and payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, to the holders of the Preferred Securities on the relevant record dates (each date on which Distributions are payable in accordance with the foregoing, a "Distribution Date"). The record date will be, for so long as the Preferred Securities remain in book-entry form, one Business Day prior to the relevant Distribution Date and, in the event the Preferred Securities are not in book-entry form, the 15th day of the month in which the relevant Distribution Date occurs. Distributions will accumulate from the date of original issuance. The first Distribution Date for the Preferred Securities will be June 30, 1997. The amount of Distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which Distributions are payable on the Preferred Securities is not a Business Day, then payment of the Distributions payable on such date will be made on the next succeeding day that is a Business Day (and without any additional Distributions, interest or other payment in respect of any such delay), in each case with the same force and effect as if made on the date such payment was originally payable. As used in this Prospectus, a "Business Day" shall mean any day other than a Saturday or a Sunday, or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the corporate trust office of the Property Trustee or the Debenture Trustee is closed for business. 33 Extension Period. So long as no Event of Default under the Indenture has occurred and is continuing, the Company has the right under the Indenture to defer the payment of interest on the Subordinated Debentures at any time and from time to time for a period not exceeding 20 consecutive quarters with respect to each such period (each, an "Extension Period"), provided that no Extension Period may extend beyond the Stated Maturity of the Subordinated Debentures. As a consequence of any such election, quarterly Distributions on the Preferred Securities will be deferred by CTBI Trust during any such Extension Period. Distributions to which holders of the Preferred Securities are entitled will accumulate additional Distributions thereon at the rate per annum of % thereof, compounded quarterly from the relevant Distribution Date. The term "Distributions" as used herein shall include any such additional Distributions. During any such Extension Period, the Company may not, and may not permit any subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior in interest to the Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Subordinated Debentures (other than (a) dividends or distributions in Company common stock, (b) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may defer the payment of interest, provided that no Extension Period may exceed 20 consecutive quarters, or extend beyond the Stated Maturity of the Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all amounts then due, the Company may elect to begin a new Extension Period. Subject to the foregoing, there is no limitation on the number of times that the Company may elect to begin an Extension Period. The Company has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. Cumulative Distributions. The funds of CTBI Trust available for distribution to holders of its Preferred Securities will be limited to payments under the Subordinated Debentures. See "Description of Subordinated Debentures." If the Company does not make interest payments on the Subordinated Debentures, the Property Trustee will not have funds available to pay Distributions on the Preferred Securities. The payment of Distributions (if and to the extent CTBI Trust has funds legally available for the payment of such Distributions and cash sufficient to make such payments) is guaranteed by the Company. See "Description of Guarantee." REDEMPTION The Company will have the right to redeem the Subordinated Debentures (i) on or after March 31, 2007, in whole at any time or in part from time to time, or (ii) at any time, in whole (but not in part), upon the occurrence of a Tax Event, an Investment Company Event or a Capital Event, in each case subject to receipt of prior approval by the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. Mandatory Redemption. Upon the repayment or redemption, in whole or in part, of any Subordinated Debentures, whether at Stated Maturity or upon earlier redemption as provided in the Indenture, the proceeds from such repayment or redemption shall be applied by the Property Trustee to redeem a Like Amount (as defined below) of the Trust Securities, upon not less than 30 nor more than 60 days notice, at a redemption price (the "Redemption Price") equal to the aggregate Liquidation Amount of such Trust Securities plus accumulated but unpaid Distributions thereon to the date of redemption (the "Redemption Date"). See "Description of Subordinated Debentures--Redemption." If less than all of the Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds from such repayment or redemption shall be allocated to the redemption of the Preferred Securities and the Common Securities pro rata. 34 Distribution of Subordinated Debentures. Subject to the Company having received prior approval of the Federal Reserve if so required under applicable capital guidelines or policies of the Federal Reserve, the Company will have the right at any time to liquidate CTBI Trust and, after satisfaction of the liabilities of creditors of CTBI Trust as provided by applicable law, cause the Subordinated Debentures to be distributed to the holders of Preferred Securities and Common Securities in the liquidation of CTBI Trust. Tax Event Redemption, Investment Company Event Redemption or Capital Event Redemption. If a Tax Event, an Investment Company Event or a Capital Event in respect of the Preferred Securities and Common Securities shall occur and be continuing, the Company has the right to redeem the Subordinated Debentures in whole (but not in part) and thereby cause a mandatory redemption of the % Preferred Securities and Common Securities in whole (but not in part) at the Redemption Price within 90 days following the occurrence of such Tax Event, Investment Company Event or Capital Event. In the event a Tax Event, Investment Company Event or Capital Event in respect of the Preferred Securities and Common Securities has occurred and is continuing and the Company does not elect to redeem the Subordinated Debentures and thereby cause a mandatory redemption of such Preferred Securities and Common Securities or to liquidate CTBI Trust and cause the Subordinated Debentures to be distributed to holders of such Preferred Securities and Common Securities in liquidation of CTBI Trust as described below, such Preferred Securities will remain outstanding and, in the event of a Tax Event (but not an Investment Company Event or a Capital Event) Additional Sums (as defined below) may be payable on the Subordinated Debentures. "Additional Sums" means the additional amounts as may be necessary in order that the amount of Distributions then due and payable by CTBI Trust on the outstanding Preferred Securities and Common Securities of CTBI Trust shall not be reduced as a result of any additional taxes, duties and other governmental charges to which CTBI Trust has become subject as a result of a Tax Event. "Like Amount" means (i) with respect to a redemption of Trust Securities, Trust Securities having a Liquidation Amount (as defined below) equal to that portion of the principal amount of Subordinated Debentures to be contemporaneously redeemed in accordance with the Indenture, allocated to the Common Securities and to the Preferred Securities based upon the relative aggregate Liquidation Amounts of such classes and the proceeds of which will be used to pay the Redemption Price of such Trust Securities, and (ii) with respect to a distribution of Subordinated Debentures to holders of Trust Securities in connection with a dissolution or liquidation of CTBI Trust, Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the holder to whom such Subordinated Debentures are distributed. "Liquidation Amount" means the stated amount of $25 per Trust Security. Redemption Procedures. Preferred Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the applicable proceeds from the contemporaneous redemption of the Subordinated Debentures. Redemptions of the Preferred Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that CTBI Trust has funds on hand available for the payment of such Redemption Price. See also "Description of Preferred Securities--Subordination of Common Securities." If CTBI Trust gives a notice of redemption in respect of its Preferred Securities, then, by 12:00 noon, Eastern Standard Time, on the Redemption Date, to the extent funds are available, the Property Trustee, in its capacity as paying agent, will pay the Redemption Price to the holders of such Preferred Securities. See "Book-Entry Issuance." If such Preferred Securities are no longer in book-entry form, the Property Trustee, to the extent funds are available, will irrevocably deposit with the paying agent for such Preferred Securities funds sufficient to pay the aggregate Redemption Price and will give such paying agent irrevocable instructions and authority to pay the Redemption Price to the holders thereof upon surrender of their certificates evidencing such Preferred Securities. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Preferred Securities called for redemption shall be payable to the holders of such Preferred Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds 35 deposited as required, then upon the date of such deposit, all rights of the holders of such Preferred Securities so called for redemption will cease, except the right of the holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Preferred Securities will cease to be outstanding. In the event that any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any additional Distribution, interest or other payment in respect of any such delay). In the event that payment of the Redemption Price in respect of Preferred Securities called for redemption is improperly withheld or refused and not paid either by CTBI Trust or by the Company pursuant to the Guarantee, Distributions on such Preferred Securities will continue to accrue at the then applicable rate, from the Redemption Date originally established by CTBI Trust for such Preferred Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. See "Description of Guarantee." Subject to applicable law (including, without limitation, United States federal securities law), the Company or its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. Payment of the Redemption Price on the Preferred Securities and any distribution of Subordinated Debentures to holders of Preferred Securities shall be made to the applicable record holders thereof as they appear on the register for such Preferred Securities on the relevant record date, which date shall be one Business Day prior to the relevant Redemption Date or liquidation date, as applicable; provided, however, that in the event that any Preferred Securities are not in book-entry form, the relevant record date for such Preferred Securities shall be a date at least 15 days prior to the Redemption Date or liquidation date, as applicable. If less than all of the Preferred Securities and Common Securities issued by CTBI Trust are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such Preferred Securities and Common Securities to be redeemed shall be allocated pro rata to the Preferred Securities and the Common Securities based upon the relative Liquidation Amounts of such classes. The particular Preferred Securities to be redeemed shall be selected by the Property Trustee from the outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $25 or an integral multiple of $25 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25. The Property Trustee shall promptly notify the trust registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of the CTBI Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate to the portion of the aggregate Liquidation Amount of Preferred Securities which has been or is to be redeemed. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Trust Securities to be redeemed at its registered address. Unless the Company defaults in payment of the Redemption Price on the Subordinated Debentures, on and after the Redemption Date interest will cease to accrue on such Subordinated Debentures or portions thereof (and distributions will cease to accrue on the related Preferred Securities or portions thereof) called for redemption. SUBORDINATION OF COMMON SECURITIES Payment of Distributions on, and the Redemption Price of, the Preferred Securities and Common Securities, as applicable, shall be made pro rata based on the Liquidation Amount of the Preferred Securities and Common Securities; provided, however, that if on any Distribution Date or Redemption Date a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution on, or Redemption Price of, any of the Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of such Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all of the outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the 36 case of payment of the Redemption Price, the full amount of such Redemption Price on all of the outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, or Redemption Price of, the Preferred Securities then due and payable. In the case of any Event of Default resulting from a Debenture Event of Default, the Company, as holder of the Common Securities, will be deemed to have waived any right to act with respect to any such Event of Default under the CTBI Trust Agreement until the effect of all such Events of Default with respect to such Preferred Securities have been cured, waived or otherwise eliminated. Until any such Events of Default under the CTBI Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the holders of the Preferred Securities and not on behalf of the Company as holder of the Common Securities, and only the holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. LIQUIDATION DISTRIBUTION UPON TERMINATION The amount payable on the Preferred Securities in the event of any liquidation of CTBI Trust is $25 per Preferred Security plus accrued and unpaid Distributions thereon to the date of payment, which may be in the form of a distribution of such amount in Subordinated Debentures, subject to certain exceptions. See "Description of the Preferred Securities--Liquidation Distribution Upon Termination." The Company, as the holder of the Common Securities, will have the right at any time to terminate CTBI Trust and cause the Subordinated Debentures to be distributed to the holders of the Preferred Securities. Such right is subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. In addition, pursuant to the CTBI Trust Agreement, CTBI Trust shall automatically terminate upon expiration of its term and shall earlier terminate on the first to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the Company; (ii) the distribution of a Like Amount of the Subordinated Debentures to the holders of its Trust Securities, if the Company, as Depositor, has given written direction to the Property Trustee to terminate CTBI Trust (which direction is optional and wholly within the discretion of the Company, as Depositor); (iii) redemption of all of the Preferred Securities as described under "Description of Preferred Securities--Redemption;" and (iv) the entry of an order for the dissolution of CTBI Trust by a court of competent jurisdiction. If an early termination occurs as described in clause (i), (ii) or (iv) above, CTBI Trust shall be liquidated by the Trustees as expeditiously as the Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of CTBI Trust as provided by applicable law, to the holders of such Trust Securities a Like Amount of the Subordinated Debentures, unless such distribution is determined by the Property Trustee not to be practical, in which event such holders will be entitled to receive out of the assets of CTBI Trust available for distribution to holders, after satisfaction of liabilities to creditors of CTBI Trust as provided by applicable law, an amount equal to, in the case of holders of Preferred Securities, the aggregate of the Liquidation Amount plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If such Liquidation Distribution can be paid only in part because CTBI Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by CTBI Trust on the Preferred Securities shall be paid on a pro rata basis. The holder(s) of the Common Securities will be entitled to receive distributions upon any such liquidation pro rata with the holders of the Preferred Securities, except that if a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. After the liquidation date fixed for any distribution of Subordinated Debentures for Preferred Securities (i) such Preferred Securities will no longer be deemed to be outstanding, (ii) The Depository Trust Company (the "Depositary") or its nominee, as the record holder of the Preferred Securities, will receive a registered global 37 certificate or certificates representing the Subordinated Debentures to be delivered upon such distribution and (iii) any certificates representing Preferred Securities not held by the Depositary or its nominee will be deemed to represent the Subordinated Debentures having a principal amount equal to the Liquidation Amount of such Preferred Securities, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on the Preferred Securities until such certificates are presented to the Securities Registrar or their agent for transfer or reissuance. Under current United States federal income tax law and interpretations and assuming, as expected, CTBI Trust is treated as a grantor trust, a distribution of the Subordinated Debentures should not be a taxable event to holders of the Preferred Securities. Should there be a change in law, a change in legal interpretation, a Tax Event or other circumstances, however, the distribution could be a taxable event to holders of the Preferred Securities. See "Certain Federal Income Tax Consequences." If the Company elects neither to redeem the Subordinated Debentures prior to maturity, nor to liquidate CTBI Trust and distribute the Subordinated Debentures to holders of the Preferred Securities, the Preferred Securities will remain outstanding until the repayment of the Subordinated Debentures. If the Company elects to liquidate CTBI Trust and thereby causes the Subordinated Debentures to be distributed to holders of the Preferred Securities in liquidation of CTBI Trust, the Company shall continue to have the right to shorten or extend the maturity of such Subordinated Debentures, subject to certain conditions. See "Description of Subordinated Debentures-- General." There can be no assurance as to the market prices for the Preferred Securities or the Subordinated Debentures that may be distributed in exchange for Preferred Securities if a dissolution and liquidation of CTBI Trust were to occur. Accordingly, the Preferred Securities that an investor may purchase, or the Subordinated Debentures that the investor may receive on dissolution and liquidation of CTBI Trust, may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. EVENTS OF DEFAULT AND NOTICE Any one of the following events constitutes an "Event of Default" under the CTBI Trust Agreement (an "Event of Default") with respect to the Preferred Securities (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) the occurrence of a Debenture Event of Default under the Indenture (see "Description of Subordinated Debentures--Debenture Events of Default"); or (ii) default by the Property Trustee in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (iii) default by the Property Trustee in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (iv) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in the CTBI Trust Agreement (other than a covenant or warranty a default in the performance of which or the breach of which is dealt with in clauses (ii) or (iii) above), and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Trustee or Trustees by the holders of at least 25% in aggregate Liquidation Amount of the outstanding Preferred Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the CTBI Trust Agreement; or (v) the occurrence of certain events of bankruptcy or insolvency with respect to the Property Trustee and the failure by the Company to appoint a successor Property Trustee within 60 days thereof. Within five Business Days after the occurrence of any Event of Default actually known to the Property Trustee, the Property Trustee shall transmit notice of such Event of Default to the holders of the Preferred Securities, the Administrative Trustees and the Company, as Depositor, unless such Event of Default shall have 38 been cured or waived. The Company, as Depositor, and the Administrative Trustees are required to file annually with the Property Trustee a certificate as to whether or not they are in compliance with all the conditions and covenants applicable to them under each Trust Agreement. If a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a preference over the Common Securities upon termination of CTBI Trust as described above. See "--Liquidation Distribution Upon Termination." The existence of an Event of Default does not entitle the holders of Preferred Securities to accelerate the maturity thereof. REMOVAL OF CTBI TRUST TRUSTEES Unless a Debenture Event of Default shall have occurred and be continuing, any Securities Trustee may be removed at any time by the holders of the Common Securities. If a Debenture Event of Default has occurred and is continuing, the Property Trustee and the Delaware Trustee may be removed at such time by the holders of at least 25% in Liquidation Amount of the outstanding Preferred Securities. In no event will the holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees, which voting rights are vested exclusively in the Company as the holder of the Common Securities. No resignation or removal of a Securities Trustee and no appointment of a successor trustee shall be effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the applicable Trust Agreement. CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property, as defined in the Indenture, may at the time be located, the Company, as the holder of the Common Securities, and the Administrative Trustees shall have power to appoint one or more persons either to act as a co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such person or persons in such capacity any property, title, right or power deemed necessary or desirable, subject to the provisions of the applicable Trust Agreement. In case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. MERGER OR CONSOLIDATION OF TRUSTEES Any person into which the Property Trustee, the Delaware Trustee or any Administrative Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any person resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any person succeeding to all or substantially all the corporate trust business of such Trustee, shall be the successor of such Trustee under each Trust Agreement, provided such person shall be otherwise qualified and eligible. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF CTBI TRUST CTBI Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other person, except as described below. CTBI Trust may, at the request of the Company, with the consent of the Administrative Trustees and without the consent of the holders of the Preferred Securities, merge with or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any State; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of CTBI Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) the Company expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee in its capacity as the holder of the Subordinated Debentures, (iii) the Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on The Nasdaq Stock Market's National Market or any national securities exchange or other organization on which the Preferred Securities are then listed, if any, (iv) 39 such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, (v) such successor entity has a purpose identical to that of CTBI Trust, (vi) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Company has received an opinion from independent counsel to CTBI Trust experienced in such matters to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither CTBI Trust nor such successor entity will be required to register as an investment company under the Investment Company Act and (vii) the Company or any permitted successor or assignee owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, CTBI Trust shall not, except with the consent of holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause CTBI Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT Except as provided below and under "Description of Guarantee--Amendments and Assignment" and as otherwise required by law and the CTBI Trust Agreement, the holders of the Preferred Securities will have no voting rights. The CTBI Trust Agreement may be amended from time to time by the Company, the Property Trustee and the Administrative Trustees, without the consent of the holders of the Preferred Securities (i) to cure any ambiguity, correct or supplement any provisions in the CTBI Trust Agreement that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under the CTBI Trust Agreement, which shall not be inconsistent with the other provisions of the CTBI Trust Agreement, or (ii) to modify, eliminate or add to any provisions of the CTBI Trust Agreement to such extent as shall be necessary to ensure that CTBI Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that CTBI Trust will not be required to register as an "investment company" under the Investment Company Act; provided, however, that in the case of clause (i), such action shall not adversely affect in any material respect the interests of any holder of Trust Securities, and any amendments of such CTBI Trust Agreement shall become effective when notice thereof is given to the holders of Trust Securities. The CTBI Trust Agreement may be amended by the Trustees and the Company with (i) the consent of holders representing not less than a majority in the aggregate Liquidation Amount of the outstanding Trust Securities, and (ii) receipt by the Trustees of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect CTBI Trust's status as a grantor trust for United States federal income tax purposes or CTBI Trust's exemption from status as an "investment company" under the Investment Company Act. Notwithstanding anything in this paragraph to the contrary, without the consent of each holder of Trust Securities, such CTBI Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a holder of Trust Securities to institute suit for the enforcement of any such payment on or after such date. So long as any Subordinated Debentures are held by the Property Trustee, the Property Trustee shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Property Trustee with respect to the Subordinated Debentures, (ii) waive any past default that is waivable under the Indenture, (iii) exercise any right to rescind or 40 annul a declaration that the principal of all the Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the holders of at least a majority in aggregate Liquidation Amount of all outstanding Preferred Securities; provided, however, that where a consent under the Indenture would require the consent of each holder of Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior consent of each holder of the Preferred Securities. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the holders of the Preferred Securities except by subsequent vote of the holders of the Preferred Securities. The Property Trustee shall notify each holder of Preferred Securities of any notice of default with respect to the Subordinated Debentures. In addition to obtaining the foregoing approvals of the holders of the Preferred Securities, prior to taking any of the foregoing actions, the Property Trustee shall obtain an opinion of counsel experienced in such matters to the effect that CTBI Trust will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of such action. Any required approval of holders of Preferred Securities may be given at a meeting of holders of Preferred Securities convened for such purpose or pursuant to written consent. The Property Trustee will cause a notice of any meeting at which holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be given to each holder of record of Preferred Securities in the manner set forth in the CTBI Trust Agreement. No vote or consent of the holders of Preferred Securities will be required for CTBI Trust to redeem and cancel its Preferred Securities in accordance with the CTBI Trust Agreement. Notwithstanding the fact that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Company, the Trustees or any affiliate of the Company or any Trustee, shall, for purposes of such vote or consent, be treated as if they were not outstanding. GLOBAL PREFERRED SECURITIES The Preferred Securities will be represented by one or more global certificates registered in the name of the Depositary or its nominee ("Global Preferred Security"). Beneficial interests in the Preferred Securities will be shown on, and transfers thereof will be effected only through, records maintained by participants in the Depositary. Except as described below, Preferred Securities in certificated form will not be issued in exchange for the global certificates. See "Book-Entry Issuance." A global security shall be exchangeable for Preferred Securities registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a depositary for such global security and no successor depositary shall have been appointed, or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the Depositary is required to be so registered to act as such Depositary, (ii) the Company in its sole discretion determines that such global security shall be so exchangeable, or (iii) there shall have occurred and be continuing an Event of Default under the Indenture. Any global security that is exchangeable pursuant to the preceding sentence shall be exchangeable for definitive certificates registered in such names as the Depositary shall direct. It is expected that such instructions will be based upon directions received by the Depositary with respect to ownership of beneficial interests in such global security. In the event that Preferred Securities are issued in definitive form, such Preferred Securities will be in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Preferred Securities represented by a global security will be made to the Depositary, as the depositary for the Preferred Securities. In the event Subordinated Debentures are issued in definitive form, principal and Distributions will be payable, the transfer of the Preferred Securities will be registrable, and Preferred Securities will be exchangeable for Preferred Securities of other denominations of a like aggregate 41 Liquidation Amount, at the corporate office of the Property Trustee in Boston, Massachusetts, or at the offices of any paying agent or transfer agent appointed by the Administrative Trustees, provided that payment of any Distribution may be made at the option of the Administrative Trustees by check mailed to the address of the persons entitled thereto or by wire transfer. In addition, if the Preferred Securities are issued in certificated form, the record dates for payment of Distributions will be the 15th day of the month in which the relevant Distribution Date occurs. For a description of the terms of the depositary arrangements relating to payments, transfers, voting rights, redemptions and other notices and other matters, see "Book-Entry Issuance." Upon the issuance of a Global Preferred Security, and the deposit of such Global Preferred Security with or on behalf of the Depositary, the Depositary for such Global Preferred Security or its nominee will credit, on its book- entry registration and transfer system, the respective aggregate Liquidation Amounts of the individual Preferred Securities represented by such Global Preferred Securities to the accounts of persons having accounts with the Depositary ("Participants"). Such accounts shall be designated by the dealers, underwriters or agents with respect to such Preferred Securities. Ownership of beneficial interests in a Global Preferred Security will be limited to Participants or persons that may hold interests through Participants. Ownership of beneficial interests in such Global Preferred Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depositary or its nominee (with respect to interests of Participants) and the records of Participants (with respect to interests of persons who hold through Participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Preferred Security. So long as the Depositary for a Global Preferred Security, or its nominee, is the registered owner of such Global Preferred Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Preferred Securities represented by such Global Preferred Security for all purposes under the Indenture governing such Preferred Securities. Except as provided below, owners of beneficial interests in a Global Preferred Security will not be entitled to have any of the individual Preferred Securities represented by such Global Preferred Security registered in their names, will not receive or be entitled to receive physical delivery of any such Preferred Securities in definitive form and will not be considered the owners or holders thereof under the Indenture. None of the Company, CTBI Trust, the Property Trustee, any Paying Agent, or the Securities Registrar for such Preferred Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Preferred Security representing such Preferred Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for Preferred Securities or its nominee, upon receipt of any payment of the Liquidation Amount, Redemption Price or Distributions in respect of the Global Preferred Security immediately will credit Participants' accounts with payments in amounts proportionate to their respective beneficial interest in the aggregate Liquidation Amount of such Global Preferred Security as shown on the records of such Depositary or its nominee. The Company also expects that payments by Participants to owners of beneficial interests in such Global Preferred Security held through such Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name." Such payments will be the responsibility of such Participants. If the Depositary for the Preferred Securities is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, CTBI Trust will issue individual Preferred Securities in exchange for the Global Preferred Security. In addition, CTBI Trust may at any time and in its sole discretion, subject to any limitations described herein relating to such Preferred Securities, determine not to have any Preferred Securities represented by one or more Global Preferred Securities and, in such event, will issue individual Preferred Securities in exchange for the Global Preferred Security or Securities representing the Preferred Securities. Further, if CTBI Trust so specifies with respect to the Preferred 42 Securities, an owner of a beneficial interest in a Global Preferred Security representing Preferred Securities may, on terms acceptable to the Company, the Property Trustee and the Depositary for such Global Preferred Security, receive individual Preferred Securities in exchange for such beneficial interests, subject to any limitations described herein. In any such instance, an owner of a beneficial interest in a Global Preferred Security will be entitled to physical delivery of individual Preferred Securities represented by such Global Preferred Security equal in Liquidation Amount to such beneficial interest and to have such Preferred Securities registered in its name. Individual Preferred Securities so issued will be issued in denominations, unless otherwise specified by CTBI Trust, of $25 and integral multiples thereof. PAYMENT AND PAYING AGENCY Payments in respect of the Preferred Securities shall be made to the paying agent, which shall credit the relevant accounts at the Depositary on the applicable Distribution Dates or, if any Preferred Securities are not held by the Depositary, such payments shall be made by check mailed to the address of the holder entitled thereto as such address shall appear on the register of holders of Preferred Securities. The paying agent shall initially be the Property Trustee ("Paying Agent") and any co-paying agent chosen by the Property Trustee and acceptable to the Administrative Trustees. The Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Property Trustee and the Company. In the event that the Property Trustee shall no longer be the Paying Agent, the Administrative Trustees shall appoint a successor (which shall be a bank or trust company acceptable to the Administrative Trustees) to act as Paying Agent. REGISTRAR AND TRANSFER AGENT The Property Trustee will act as registrar and transfer agent for the Preferred Securities. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of CTBI Trust, but upon payment of any tax or other governmental charges that may be imposed in connection with any transfer or exchange. CTBI Trust will not be required to register or cause to be registered the transfer of Preferred Securities after such Preferred Securities have been called for redemption. INFORMATION CONCERNING THE PROPERTY TRUSTEE The Property Trustee, other than upon the occurrence and during the continuance of an Event of Default, undertakes to perform only such duties as are specifically set forth in the CTBI Trust Agreement and, after such Event of Default, must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the Property Trustee is under no obligation to exercise any of the powers vested in it by the CTBI Trust Agreement at the request of any holder of Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. If no Event of Default has occurred and is continuing and the Property Trustee is required to decide between alternative causes of action, construe ambiguous provisions in the CTBI Trust Agreement or is unsure of the application of any provision of the CTBI Trust Agreement, and the matter is not one on which holders of Preferred Securities are entitled under the CTBI Trust Agreement to vote, then the Property Trustee shall take such action as is directed by the Company and if not so directed, shall take such action as it deems advisable and in the best interests of the holders of the Trust Securities and will have no liability except for its own bad faith, negligence or willful misconduct. MISCELLANEOUS The Administrative Trustees are authorized and directed to conduct the affairs of and to operate CTBI Trust in such a way that CTBI Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act or classified as an association taxable as a corporation for United States federal income tax purposes and so that the Subordinated Debentures will be treated as indebtedness of the Company for United Stated federal income tax purposes. In this connection, the Company and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust of CTBI Trust or the CTBI Trust Agreement, that the Company and the Administrative Trustees determine in their discretion to be necessary or desirable for such purposes, as long as such action does not materially adversely affect the interests of the holders of the related Preferred Securities. 43 DESCRIPTION OF SUBORDINATED DEBENTURES The Subordinated Debentures will be issued under the Indenture, dated as of , 1997 ("Indenture"), between the Company and the Debenture Trustee. The following summary of the material terms and provisions of the Subordinated Debentures and the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Indenture, which has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and to the Trust Indenture Act. The Indenture will be qualified under the Trust Indenture Act. Whenever particular defined terms of the Indenture are referred to herein, such defined terms are incorporated herein or therein by reference. Concurrently with the issuance of the Preferred Securities, CTBI Trust will invest the proceeds thereof, together with the consideration paid by the Company for the Common Securities, in the Subordinated Debentures issued by the Company. The Subordinated Debentures will be issued as unsecured debt under the Indenture. GENERAL The Subordinated Debentures will bear interest at the annual rate of % of the principal amount thereof, payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year (each, an "Interest Payment Date") beginning June 30, 1997, to the person in whose name each Subordinated Debenture is registered, subject to certain exceptions, at the close of business on the Business Day next preceding such Interest Payment Date. Interest will begin to accrue from the date of original issuance of the Subordinated Debentures. It is anticipated that, until the liquidation, if any, of CTBI Trust, the Subordinated Debentures will be held in the name of the Property Trustee in trust for the benefit of the holders of the Preferred Securities. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date such payment was originally payable. Accrued interest that is not paid on the applicable Interest Payment Date will bear additional interest on the amount thereof (to the extent permitted by law) at the rate per annum of % thereof, compounded quarterly. The term "interest" as used herein shall include quarterly interest payments, interest on quarterly interest payments not paid on the applicable Interest Payment Date and Additional Sums (as defined below), as applicable. The Subordinated Debentures will mature on March 31, 2027. Such date may be shortened at any time by the Company to any date not earlier than March 31, 2007, subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. Such date may also be extended at any time at the election of the Company but in no event to a date later than March 31, 2036, provided that at the time such election is made and at the time of extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Subordinated Debentures, and (iii) CTBI Trust is not in arrears on payments of Distributions on the Preferred Securities and no deferred Distributions are accumulated. In the event that the Company elects to shorten or extend the Stated Maturity of the Subordinated Debentures, it shall give notice to the Debenture Trustee, and the Debenture Trustee shall give notice of such shortening or extension to the holders of the Subordinated Debentures no more than 180 days and no less than 90 days prior to the effectiveness thereof. The Subordinated Debentures will be unsecured and will rank junior and be subordinate in right of payment to all Senior Debt and Subordinated Debt of the Company and, in certain circumstances relating to the dissolution, winding-up, liquidation or reorganization of the Company, to all Additional Senior Obligations of the Company. See "--Subordination." Because the Company is a holding company, the right of the Company to participate in any distribution of assets of any of the Banks, upon any such Bank's liquidation or reorganization or otherwise (and thus the ability of holders of the Preferred Securities to benefit indirectly from such distribution), is subject to the prior claims of creditors of that Bank, except to the extent that the Company may itself be recognized as a creditor of such Bank. Accordingly, the Subordinated Debentures will be effectively 44 subordinated to all existing and future liabilities of the Banks, and holders of Subordinated Debentures should look only to the assets of the Company for payments on the Subordinated Debentures. The Indenture does not limit the incurrence or issuance of other secured or unsecured debt of the Company, including Senior Debt, Subordinated Debt or Additional Senior Obligations, whether under the Indenture or any existing indenture or other indenture that the Company may enter into in the future or otherwise. See "--Subordination." The Indenture does not contain provisions that afford holders of the Subordinated Debentures protection in the event of a highly leveraged transaction or other similar transaction involving the Company that may adversely affect such holders. OPTION TO EXTEND INTEREST PAYMENT PERIOD So long as no Event of Default under the Indenture has occurred and is continuing, the Company has the right under the Indenture at any time during the term of the Subordinated Debentures to defer the payment of interest at any time or from time to time for a period not exceeding 20 consecutive quarters (each such period an "Extension Period"), provided that no Extension Period may extend beyond the Stated Maturity of the Subordinated Debentures. At the end of such Extension Period, the Company must pay all interest then accrued and unpaid (together with interest thereon at the annual rate of %, compounded quarterly, to the extent permitted by applicable law). During an Extension Period, interest will continue to accrue and holders of Subordinated Debentures (or holders of Preferred Securities while such series is outstanding) will be required to accrue interest income for United States federal income tax purposes. See "Certain Federal Income Tax Consequences-- Potential Extension of Interest Payment Period and Original Issue Discount." During any such Extension Period, the Company may not, and may not permit any Bank or other subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including other Subordinated Debentures) that rank pari passu with or junior in interest to the Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu or junior in interest to the Subordinated Debentures (other than (a) dividends or distributions in Company common stock, (b) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee, and (d) purchases of common stock related to rights under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period may exceed 20 consecutive quarters or extend beyond the Stated Maturity of the Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all amounts then due on any Interest Payment Date, the Company may elect to begin a new Extension Period subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company must give the Property Trustee, the Administrative Trustees and the Debenture Trustee notice of its election of such Extension Period at least one Business Day prior to the earlier of (i) the date the Distributions on the Preferred Securities would have been payable except for the election to begin such Extension Period or (ii) the date the Administrative Trustees are required to give notice to the Nasdaq Stock Market National Market or other applicable self-regulatory organization, or to holders of such Preferred Securities on the record date for the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. The Debenture Trustee shall give notice of the Company's election to begin a new Extension Period to the holders of the Preferred Securities. Subject to the foregoing, there is no limitation on the number of times that the Company may elect to begin an Extension Period. SHORTENING OR EXTENDING MATURITY DATE The Subordinated Debentures will mature on March 31, 2027. Such date may be shortened at any time by the Company to any date not earlier than March 31, 2007, subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. 45 Such date may also be extended at any time at the election of the Company, but in no event to a date later than March 31, 2036, provided that at the time such election is made and at the time of extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Subordinated Debentures, and (iii) CTBI Trust is not in arrears on payments of Distributions on the Preferred Securities and no deferred Distributions are accumulated. In the event that the Company elects to shorten or extend the Stated Maturity of the Subordinated Debentures, it shall give notice to the Debenture Trustee, and the Debenture Trustee shall give notice of such shortening or extension to the holders of the Subordinated Debentures no more than 180 days and no less than 90 days prior to the effectiveness thereof. ADDITIONAL SUMS If CTBI Trust is required to pay any additional taxes, duties or other governmental charges as a result of a Tax Event, the Company will pay as additional amounts on the Subordinated Debentures such amounts ("Additional Sums") as shall be required so that the Distributions payable by CTBI Trust shall not be reduced as a result of any such additional taxes, duties or other governmental charges. REDEMPTION Subject to the Company having received prior approval of the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve, the Subordinated Debentures are redeemable prior to maturity at the option of the Company (i) on or after March 31, 2007, in whole at any time or in part from time to time or (ii) at any time in whole (but not in part) upon the occurrence and during the continuance of a Tax Event, an Investment Company Event or a Capital Event, in each case at a redemption price equal to the accrued and unpaid interest on the Subordinated Debentures so redeemed to the date fixed for redemption, plus 100% of the principal amount thereof. "Tax Event" means the receipt by the Company of an opinion of independent counsel (which may be counsel to the Company) experienced in such matters to the effect that, as a result of any amendment to, or change in (including any announced prospective change), the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Subordinated Debentures under the Indenture, there is more than an insubstantial risk that (i) interest payable by the Company on the Subordinated Debentures is not, or within 90 days after the date of such opinion will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, (ii) CTBI Trust is, or will be within 90 days after the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Subordinated Debentures, or (iii) CTBI Trust is, or will be within 90 days after the date of such opinion, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. An "Investment Company Event" means the receipt by CTBI Trust of an opinion of independent counsel (which may be counsel to the Company) experienced in such matters to the effect that, as a result of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that CTBI Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act, which change becomes effective on or after the date of original issuance of the Preferred Securities. A "Capital Event" means that CTBI Trust has received an opinion of independent counsel (which may be counsel to the Company) experienced in such matters that the Company cannot, or within 90 days after the date of such opinion, will not be permitted by the applicable regulatory authorities, due to a change in law, regulation, policy or guideline or interpretation or application of law or regulation, policy or guideline, to account for the Preferred Securities as Tier I Capital under the capital guidelines or policies of the Federal Reserve. 46 Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of Subordinated Debentures to be redeemed at its registered address. Unless the Company defaults in payment of the redemption price, on and after the redemption date interest ceases to accrue on such Subordinated Debentures or portions thereof called for redemption. The Subordinated Debentures will not be subject to any sinking fund. DISTRIBUTION UPON LIQUIDATION As described under "Description of Preferred Securities--Liquidation Distribution Upon Termination," under certain circumstances involving the termination of CTBI Trust, the Subordinated Debentures may be distributed to the holders of the Preferred Securities in liquidation of CTBI Trust after satisfaction of liabilities to creditors of CTBI Trust as provided by applicable law. If distributed to holders of Preferred Securities in liquidation, it is anticipated that the Subordinated Debentures will initially be issued in the form of one or more global securities and the Depositary, or any successor depositary for the Preferred Securities, will act as depositary for the Subordinated Debentures. It is anticipated that the depositary arrangements for the Subordinated Debentures would be substantially identical to those in effect for the Preferred Securities. If the Subordinated Debentures are distributed to the holders of Preferred Securities upon the liquidation of CTBI Trust, the Company will use its best efforts to list the Subordinated Debentures on The Nasdaq Stock Market's National Market or such stock exchanges, if any, on which the Preferred Securities are then listed. There can be no assurance as to the market price of any Subordinated Debentures that may be distributed to the holders of Preferred Securities. RESTRICTIONS ON CERTAIN PAYMENTS The Company will covenant, as to the Subordinated Debentures, that if at such time (i) there shall have occurred any event (a) that with the giving of notice or the lapse of time, or both, would constitute an "Event of Default" under the Indenture and (b) in respect of which the Company shall not have taken reasonable steps to cure, or (ii) the Company shall have given notice of its election of an Extension Period as provided in the Indenture with respect to the Subordinated Debentures and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing, it will not, and will not permit any subsidiary of the Company to, (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock or (2) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities of the Company that rank pari passu with or junior in interest to the Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu or junior in interest to the Subordinated Debentures (other than (a) dividends or distributions in Company common stock, (b) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to rights under any of the Company's benefit plans for its directors, officers or employees). SUBORDINATION In the Indenture, the Company has covenanted and agreed that any Subordinated Debentures issued thereunder will be subordinate and junior in right of payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations to the extent provided in the Indenture. Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt restructuring or similar proceedings in connection with any insolvency or bankruptcy proceeding of the Company, the holders of Senior Debt, Subordinated Debt and Additional Senior Obligations will first be entitled to receive payment in full of principal of (and premium, if any) and interest, if any, on such Senior Debt, Subordinated Debt and Additional Senior Obligations before the holders of Subordinated Debentures will be entitled to receive any payment in respect of the principal of or interest, if any, on the Subordinated Debentures. 47 In the event of the acceleration of the maturity of any Subordinated Debentures, the holders of all Senior Debt, Subordinated Debt and Additional Senior Obligations outstanding at the time of such acceleration will first be entitled to receive payment in full of all amounts due thereon (including any amounts due upon acceleration) before the holders of Subordinated Debentures will be entitled to receive any payment in respect of the principal of or interest, if any, on the Subordinated Debentures; provided, however, that holders of Subordinated Debt shall not be entitled to receive payment of any such amounts to the extent that such Subordinated Debt is by its terms subordinated to trade creditors. No payments on account of principal or interest, if any, in respect of the Subordinated Debentures may be made if there shall have occurred and be continuing a default in any payment with respect to Senior Debt, Subordinated Debt or Additional Senior Obligations or an event of default with respect to any Senior Debt, Subordinated Debt or Additional Senior Obligations resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default. "Debt" means with respect to any person, whether recourse is to all or a portion of the assets of such person and whether or not contingent, (i) every obligation of such person for money borrowed; (ii) every obligation of such person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such person; (iv) every obligation of such person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such person; and (vi) every obligation of the type referred to in clauses (i) through (v) of another person and all dividends of another person the payment of which, in either case, such person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. "Senior Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Subordinated Debentures or to other Debt which is pari passu with, or subordinated to, the Subordinated Debentures; provided, however, that Senior Debt shall not be deemed to include (i) any Debt of the Company which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Company, (ii) any Debt of the Company to any of its subsidiaries, (iii) Debt to any employee of the Company, (iv) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Subordinated Debentures as a result of the subordination provisions of the Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject, (v) Debt which constitutes Subordinated Debt, and (vi) any other debt securities issued pursuant to the Indenture. "Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in Bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of the Indenture or thereafter incurred, which is by its terms expressly provided to be junior and subordinate to other Debt of the Company (other than the Subordinated Debentures). "Additional Senior Obligations" means all indebtedness of the Company whether incurred on or prior to the date of the Indenture or thereafter incurred, for claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Additional Senior Obligations do not include claims in respect of Senior Debt or Subordinated Debt or obligations which, by their terms, are expressly stated to be not superior in right of payment to the Subordinated 48 Debentures or to rank pari passu in right of payment with the Subordinated Debentures. For purposes of this definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978, as amended. The Indenture places no limitation on the amount of additional Senior Debt that may be incurred by the Company. The Company expects from time to time to incur additional indebtedness constituting Senior Debt, Subordinated Debt and Additional Senior Obligations. DENOMINATIONS, REGISTRATION AND TRANSFER Initially, the Subordinated Debentures will be registered in the name of the Property Trustee. If the Subordinated Debentures are distributed to the holders of the Preferred Securities upon the liquidation of CTBI Trust, it is anticipated that the Subordinated Debentures will then be represented by global certificates registered in the name of the Depositary or its nominee. Beneficial interests in the Subordinated Debentures will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary. If the Subordinated Debentures are maintained by the Depositary, it is anticipated that substantially the same procedures will be applicable to the Subordinated Debentures as are described under "Description of the Preferred Securities--Global Preferred Securities." See also "Book-Entry Issuance." The Company will appoint the Debenture Trustee as securities registrar under the Indenture (the "Securities Registrar"). Subordinated Debentures may be presented for exchange as provided above, and may be presented for registration of transfer (with the form of transfer endorsed thereon, or a satisfactory written instrument of transfer, duly executed), at the office of the Securities Registrar. The Company may at any time rescind the designation of any such registrar or approve a change in the location through which any such registrar acts, provided that the Company maintains a registrar in the place of payment, as defined in the Indenture. The Company may at any time designate additional transfer agents with respect to the Subordinated Debentures. In the event of any redemption, neither the Company nor the Debenture Trustee shall be required to (i) issue, register the transfer of or exchange Subordinated Debentures during a period beginning at the opening of business 15 days before the day of selection for redemption of Subordinated Debentures and ending at the close of business on the day of mailing of the relevant notice of redemption or (ii) transfer or exchange any Subordinated Debentures so selected for redemption, except, in the case of any Subordinated Debentures being redeemed in part, any portion thereof not to be redeemed. PAYMENT AND PAYING AGENTS Payment of principal of and any interest on the Subordinated Debentures will be made at the office of the Debenture Trustee in the City of Boston, Massachusetts, except that at the option of the Company payment of any interest may be made (i) except in the case of a Global Subordinated Debenture, by check mailed to the address of the person entitled thereto as such address shall appear in the securities register or (ii) by transfer to an account maintained by the person entitled thereto as specified in the securities register, provided that proper transfer instructions have been received by the record date. Payment of any interest on Subordinated Debentures will be made to the person in whose name such Subordinated Debentures is registered at the close of business on the record date for such interest payment, except in the case of Defaulted Interest. The Company may at any time designate additional Paying Agents or rescind the designation of any paying agent; however the Company will at all times be required to maintain a paying agent in each place of payment for the Subordinated Debentures. Any moneys deposited with the Debenture Trustee or any Paying Agent, or then held by the Company in trust, for the payment of the principal of or interest on the Subordinated Debentures and remaining unclaimed for two years after such principal or interest has become due and payable shall, at the request of the Company, be repaid to the Company and the holder of such Subordinated Debenture shall thereafter look, as a general unsecured creditor, only to the Company for payment thereof. 49 MODIFICATION OF INDENTURE From time to time the Company and the Debenture Trustee may, without the consent of the holders of the Subordinated Debentures, amend, waive or supplement the Indenture for specified purposes, including, among other things, curing ambiguities, defects or inconsistencies (provided that any such action does not materially adversely affect the interests of the holders of the Subordinated Debentures or the Preferred Securities so long as they remain outstanding) and qualifying, or maintaining the qualification of, the Indenture under the Trust Indenture Act. The Indenture contains provisions permitting the Company and the Debenture Trustee, with the consent of the holders of not less than a majority in principal amount of the outstanding Subordinated Debentures, to modify the Indenture in a manner affecting the rights of the holders of the Subordinated Debentures; provided, that no such modification may, without the consent of the holder of each outstanding Subordinated Debenture, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce the percentage of principal amount of Subordinated Debentures, the holders of which are required to consent to any such modification of the Indenture, provided that so long as any of the Preferred Securities remain outstanding, no such modification may be made that adversely affects the holders of such Preferred Securities in any material respect, and no termination of the Indenture may occur, and no waiver of any Debenture Event of Default or compliance with any covenant under the Indenture may be effective, without the prior consent of the holders of at least a majority of the aggregate Liquidation Amount of the Preferred Securities unless and until the principal of the Subordinated Debentures and all accrued and unpaid interest thereon have been paid in full and certain other conditions are satisfied. DEBENTURE EVENTS OF DEFAULT The Indenture provides that any one or more of the following described events with respect to the Subordinated Debentures that has occurred and is continuing constitutes an event of default ("Debenture Event of Default") with respect to the Subordinated Debentures: (i) failure for 30 days to pay any interest on the Subordinated Debentures, when due (subject to the deferral of any due date in the case of an extension Period); or (ii) failure to pay any principal on the Subordinated Debentures when due whether at maturity, upon redemption by declaration or otherwise; or (iii) failure to observe or perform in any material respect certain other covenants contained in the Indenture for 90 days after written notice to the Company from the Debenture Trustee or the holders of at least 25% in aggregate outstanding principal amount of the Subordinated Debentures; or (iv) certain events in bankruptcy, insolvency or reorganization of the Company. The holders of a majority in aggregate outstanding principal amount of the Subordinated Debentures have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Subordinated Debentures may declare the principal due and payable immediately upon a Debenture Event of Default. The holders of a majority in aggregate outstanding principal amount of the Subordinated Debentures may annul such declaration and waive the default if the default (other than the non-payment of the principal of the Subordinated Debentures which has become due solely by such acceleration) has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Debenture Trustee. Should the holders of the Subordinated Debentures fail to annul such declaration and waive such default, the holders of a majority in aggregate Liquidation Amount of the Preferred Securities shall have such right. The Company is required to file annually with the Debenture Trustee a certificate as to whether or not the Company is in compliance with all the conditions and covenants applicable to it under the Indenture. In case a Debenture Event of Default shall occur and be continuing the Property Trustee will have the right to declare the principal of and the interest on such Subordinated Debentures, and any other amounts payable under the Indenture, to be forthwith due and payable and to enforce its other rights as a creditor with respect to such Subordinated Debentures. 50 ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES If a Debenture Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Subordinated Debentures on the date such interest or principal is otherwise payable, a holder of Preferred Securities may institute a legal proceeding directly against the Company for enforcement of payment to such holder of the principal of or interest on such Subordinated Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such holder ("Direct Action"). The Company may not amend the Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of the holders of all of the Preferred Securities. The Company shall have the right under the Indenture to set-off any payment made to such holder of Preferred Securities by the Company in connection with a Direct Action. The holders of the Preferred Securities would not be able to exercise directly any remedies other than those set forth in the preceding paragraph available to the holders of the Subordinated Debentures unless there shall have been an Event of Default under the CTBI Trust Agreement. See "Description of Preferred Securities--Events of Default and Notice." CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS The Indenture provides that the Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless (i) in case the Company consolidates with or merges into another Person or conveys or transfers its properties and assets substantially as an entirety to any Person, the successor Person is organized under the laws of the United States or any state or the District of Columbia, and such successor Person expressly assumes the Company's obligations on the Subordinated Debentures issued under the Indenture; (ii) immediately after giving effect thereto, no Debenture Event of Default, and no event which, after notice or lapse of time or both, would become a Debenture Event of Default, shall have occurred and be continuing; and (iii) certain other conditions as prescribed in the Indenture are met. The general provisions of the Indenture do not afford holders of the Subordinated Debentures protection in the event of a highly leveraged or other transaction involving the Company that may adversely affect holders of the Subordinated Debentures. SATISFACTION AND DISCHARGE The Indenture provides that when, among other things, all Subordinated Debentures not previously delivered to the Debenture Trustee for cancellation (i) have become due and payable or (ii) will become due and payable at their Stated Maturity within one year, and the Company deposits or causes to be deposited with the Debenture Trustee funds, in trust, for the purpose and in an amount in the currency or currencies in which the Subordinated Debentures are payable sufficient to pay and discharge the entire indebtedness on the Subordinated Debentures not previously delivered to the Debenture Trustee for cancellation, for the principal and interest to the date of the deposit or to the Stated Maturity, as the case may be, then the Indenture will cease to be of further effect (except as to the Company's obligations to pay all other sums due pursuant to the Indenture and to provide the officers' certificates and opinions of counsel described therein), and the Company will be deemed to have satisfied and discharged the Indenture. GOVERNING LAW The Indenture and the Subordinated Debentures will be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. INFORMATION CONCERNING THE DEBENTURE TRUSTEE The Debenture Trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee is under no obligation to exercise any of the powers vested in it by the Indenture at the request of any holder of 51 Subordinated Debentures, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The Debenture Trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Debenture Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. The Company will covenant in the Indenture, as to the Subordinated Debentures, that if and so long as (i) CTBI Trust is the holder of all such Subordinated Debentures, (ii) a Tax Event in respect of CTBI Trust has occurred and is continuing and (iii) the Company has elected, and has not revoked such election, to pay Additional Sums (as defined under "Description of the Preferred Securities--Redemption") in respect of the Preferred Securities, the Company will pay to CTBI Trust such Additional Sums. The Company will also covenant, as to the Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership of the Common Securities of CTBI Trust to which Subordinated Debentures have been issued, provided that certain successors which are permitted pursuant to the Indenture may succeed to the Company's ownership of the Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate CTBI Trust, except upon prior approval of the Federal Reserve if then so required under applicable capital guidelines or policies of the Federal Reserve, and (a) in connection with a distribution of Subordinated Debentures to the holders of the Preferred Securities in liquidation of CTBI Trust, or (b) in connection with certain mergers, consolidations or amalgamations permitted by the CTBI Trust Agreement and (iii) to use its reasonable efforts, consistent with the terms and provisions of the CTBI Trust Agreement, to cause CTBI Trust to remain classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes. BOOK-ENTRY ISSUANCE The Depositary will act as securities depositary for all of the Preferred Securities. The Preferred Securities will be issued only as fully-registered securities registered in the name of Cede & Co. (the Depositary's nominee). One or more fully-registered global certificates will be issued for the Preferred Securities and will be deposited with the Depositary. The Depositary is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. The Depositary holds securities that its Participants deposit with the Depositary. The Depositary also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. "Direct Participants" include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The Depositary is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the Depositary system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain custodial relationships with Direct Participants, either directly or indirectly ("Indirect Participants"). The rules applicable to the Depositary and its Participants are on file with the Commission. Purchases of Preferred Securities within the Depositary system must be made by or through Direct Participants, which will receive a credit for the Preferred Securities on the Depositary's records. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from the Depositary of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Preferred Securities, except in the event that use of the book-entry system for the Preferred Securities of CTBI Trust is discontinued. 52 The Depositary has no knowledge of the actual Beneficial Owners of the Preferred Securities; the Depositary's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by the Depositary to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners and the voting rights of Direct Participants, Indirect Participants and Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices will be sent to Cede & Co. as the registered holder of the Preferred Securities. If less than all of the Preferred Securities are being redeemed, the Depositary will determine by lot or pro rata the amount of the Preferred Securities of each Direct Participant to be redeemed. Although voting with respect to the Preferred Securities is limited to the holders of record of the Preferred Securities, in those instances in which a vote is required, neither the Depositary nor Cede & Co. will itself consent or vote with respect to Preferred Securities. Under its usual procedures, the Depositary would mail an omnibus proxy (the "Omnibus Proxy") to the relevant Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts such Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Distribution payments on the Preferred Securities will be made by the relevant Trustee to the Depositary. The Depositary's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on the Depositary's records unless the Depositary has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such Participant and not of the Depositary, the relevant Trustee, CTBI Trust or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of Distributions to the Depositary is the responsibility of the relevant Trustee, disbursement of such payments to Direct Participants is the responsibility of the Depositary, and disbursements of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. The Depositary may discontinue providing its services as securities depositary with respect to any of the Preferred Securities at any time by giving reasonable notice to the relevant Trustee and the Company. In the event that a successor securities depositary is not obtained, definitive Preferred Security certificates representing such Preferred Securities are required to be printed and delivered. The Company, at its option, may decide to discontinue use of the system of book-entry transfers through the Depositary (or a successor depositary). After a Debenture Event of Default, the holders of a majority in liquidation preference of Preferred Securities may determine to discontinue the system of book-entry transfers through the Depositary. In any such event, definitive certificates for such Preferred Securities will be printed and delivered. The information in this section concerning the Depositary and the Depositary's book-entry system has been obtained from sources that CTBI Trust and the Company believe to be accurate, but CTBI Trust and the Company assume no responsibility for the accuracy thereof. Neither CTBI Trust nor the Company has any responsibility for the performance by the Depositary or its Participants of their respective obligations as described herein or under the rules and procedures governing their respective operation. In the event that CTBI Trust is terminated and the Subordinated Debentures are distributed to the holders of the Preferred Securities the depository arrangements and book-entry system applicable thereto will be substantially similar to those applicable to the Preferred Securities. See "Description of Preferred Securities--Global Preferred Securities." 53 DESCRIPTION OF GUARANTEE The Preferred Securities Guarantee Agreement (the "Guarantee") will be executed and delivered by the Company concurrently with the issuance of the Preferred Securities for the benefit of the holders of the Preferred Securities. State Street Bank and Trust will act as indenture trustee under the Guarantee for the purposes of compliance with the Trust Indenture Act, and the Guarantee will be qualified as an Indenture under the Trust Indenture Act. The following summary of the material terms and provisions of the Guarantee does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the Guarantee Agreement, including the definitions therein of certain terms, and the Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The Guarantee Trustee will hold the Guarantee for the benefit of the holders of the Preferred Securities. GENERAL The Guarantee will be an irrevocable guarantee on a subordinated basis of CTBI Trust's obligations under the Preferred Securities, but will apply only to the extent that CTBI Trust has funds sufficient to make such payments, and is not a guarantee of collection. The Company will irrevocably agree to pay in full on a subordinated basis, to the extent set forth herein, the Guarantee Payments (as defined below) to the holders of the Preferred Securities, as and when due, regardless of any defense, right of set-off or counterclaim that CTBI Trust may have or assert other than the defense of payment. The following payments with respect to the Preferred Securities, to the extent not paid by or on behalf of CTBI Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and unpaid Distributions required to be paid on the Preferred Securities, to the extent that CTBI Trust has funds on hand available therefor at such time, (ii) the Redemption Price with respect to any Preferred Securities called for redemption to the extent that CTBI Trust has funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of CTBI Trust (unless the Subordinated Debentures are distributed to holders of the Preferred Securities), the lesser of (a) the Liquidation Distribution and (b) the amount of assets of CTBI Trust remaining available for distribution to holders of Preferred Securities. The Company's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Company to the holders of the Preferred Securities or by causing CTBI Trust to pay such amounts to such holders. Third party creditors of CTBI Trust may proceed directly against the Company under the Agreement as to Expenses and Liabilities (as defined below), regardless of whether such creditors had notice of the Agreement as to Expenses and Liabilities. If the Company does not make interest payments on the Subordinated Debentures held by CTBI Trust, CTBI Trust will not be able to pay Distributions on the Preferred Securities and will not have funds legally available therefor. The Guarantee will rank subordinate and junior in right of payment to all other liabilities of the Company. See "--Status of the Guarantee." Because the Company is a holding company, the right of the Company to participate in any distribution of assets of any subsidiary upon such subsidiary's liquidation or reorganization or otherwise, is subject to the prior claims of creditors of that subsidiary, except to the extent the Company may itself be recognized as a creditor of that subsidiary. Accordingly, the Company's obligations under the Guarantee will be effectively subordinated to all existing and future liabilities of the Company's subsidiaries, and claimants should look only to the assets of the Company for payments thereunder. Except as otherwise described herein, the Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Company, including Senior Debt, whether under the Indenture, any other indenture that the Company may enter into in the future, or otherwise. The Company has, through the Guarantee, the CTBI Trust Agreement, the Subordinated Debentures, the Indenture and the Expense Agreement, taken together, fully, irrevocably and unconditionally guaranteed all of CTBI Trust's obligations under the Preferred Securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined 54 operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of CTBI Trust's obligations under the Preferred Securities. See "Relationship Among the Preferred Securities, the Subordinated Debentures and the Guarantee." STATUS OF THE GUARANTEE The Guarantee will constitute an unsecured obligation of the Company and will rank subordinate and junior in right of payment to all other liabilities of the Company. The Guarantee will constitute a guarantee of payment and not of collection. For example, the guaranteed party may institute a legal proceeding directly against the Company to enforce its rights under the Guarantee without first instituting a legal proceeding against any other person or entity. The Guarantee will be held for the benefit of the holders of the Preferred Securities. The Guarantee will not be discharged except by payment of the Guarantee Payments in full to the extent not paid by CTBI Trust or upon distribution of the Subordinated Debentures to the holders of the Preferred Securities. The Guarantee does not place a limitation on the amount of other liabilities that may be incurred by the Company. The Company expects from time to time to incur additional liabilities. AMENDMENTS AND ASSIGNMENT Except with respect to any changes which do not materially adversely affect the rights of holders of the Preferred Securities (in which case no vote will be required), the Guarantee may not be amended without the prior approval of the holders of not less than a majority of the aggregate Liquidation Amount of the outstanding Preferred Securities. See "Description of the Preferred Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and agreements contained in the Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the holders of the Preferred Securities then outstanding. EVENTS OF DEFAULT An event of default under the Guarantee will occur upon the failure of the Company to perform any of its payment or other obligations thereunder. The holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under the Guarantee. Any holder of Preferred Securities may institute a legal proceeding directly against the Company to enforce its rights under the Guarantee without first instituting a legal proceeding against CTBI Trust, the Guarantee Trustee or any other person or entity. The Company, as guarantor, is required to file annually with the Guarantee Trustee a certificate as to whether or not the Company is in compliance with all the conditions and covenants applicable to it under the Guarantee. INFORMATION CONCERNING THE GUARANTEE TRUSTEE The Guarantee Trustee, other than during the occurrence and continuance of a default by the Company in performance of the Guarantee, undertakes to perform only such duties as are specifically set forth in the Guarantee and, after default with respect to the Guarantee, must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the Guarantee Trustee is under no obligation to exercise any of the powers vested in it by the Guarantee at the request of any holder of any Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. 55 TERMINATION OF THE GUARANTEE The Guarantee will terminate and be of no further force and effect upon full payment of the Redemption Price of the Preferred Securities, upon full payment of the amounts payable upon liquidation of CTBI Trust or upon distribution of the Subordinated Debentures to the holders of the Preferred Securities. The Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of the Preferred Securities must restore payment of any sums paid under such Preferred Securities or the Guarantee. GOVERNING LAW The Guarantee will be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. THE AGREEMENT AS TO EXPENSES AND LIABILITIES Pursuant to the Agreement as to Expenses and Liabilities entered into by the Company under the CTBI Trust Agreement ("Agreement as to Expenses and Liabilities"), the Company will irrevocably and unconditionally guarantee to each person or entity to whom CTBI Trust becomes indebted or liable, the full payment of any costs, expenses or liabilities of CTBI Trust, other than obligations of CTBI Trust to pay to the holders of the Preferred Securities or other similar interests in CTBI Trust of the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SUBORDINATED DEBENTURES AND THE GUARANTEE FULL AND UNCONDITIONAL GUARANTEE Payments of Distributions and other amounts due on the Preferred Securities (to the extent CTBI Trust has funds available for the payment of such Distributions) are irrevocably guaranteed by the Company as and to the extent set forth under "Description of Guarantee." The Company and CTBI Trust believe that, taken together, the Company's obligations under the Subordinated Debentures, the Indenture, the CTBI Trust Agreement, the Agreement as to Expenses and Liabilities, and the Guarantee provide, in the aggregate, a full, irrevocable and unconditional guarantee of payment of Distributions and other amounts due on the Preferred Securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of CTBI Trust's obligations under the Preferred Securities. If and to the extent that the Company does not make payments on the Subordinated Debentures, CTBI Trust will not pay Distributions or other amounts due on the Preferred Securities. The Guarantee does not cover payment of Distributions when CTBI Trust does not have sufficient funds to pay such Distributions. In such event, the remedy of a holder of Preferred Securities is to institute a legal proceeding directly against the Company for enforcement of payment of such Distributions to such holder. The obligations of the Company under the Guarantee are subordinate and junior in right of payment to all other liabilities of the Company. SUFFICIENCY OF PAYMENTS As long as payments of interest and other payments are made when due on the Subordinated Debentures, such payments will be sufficient to cover Distributions and other payments due on the Preferred Securities, primarily because (i) the aggregate principal amount of the Subordinated Debentures will be equal to the sum of the aggregate stated Liquidation Amount of the Preferred Securities and Common Securities; (ii) the interest rate and interest and other payment dates on the Subordinated Debentures will match the Distribution rate and Distribution and other payment dates for the Preferred Securities; (iii) the Company shall pay for all and any costs, expenses and liabilities of CTBI Trust except CTBI Trust's obligations to holders of the Preferred Securities; and (iv) the CTBI Trust Agreement further provides that CTBI Trust will not engage in any activity that is not consistent with the limited purposes of CTBI Trust. 56 Notwithstanding anything to the contrary in the Indenture, the Company has the right to set-off any payment it is otherwise required to make thereunder with and to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee. ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES A holder of any Preferred Security may institute a legal proceeding directly against the Company to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee, CTBI Trust or any other person or entity. A default or event of default under any Senior Debt, Subordinated Debt or Additional Senior Obligations of the Company would not constitute a Debenture Event of Default. However, in the event of payment defaults under, or acceleration of, Senior Debt, Subordinated Debt or Additional Senior Obligations of the Company, the subordination provisions of the Indenture provide that no payments may be made in respect of the Subordinated Debentures until such Senior Debt, Subordinated Debt or Additional Senior Obligations has been paid in full or any payment default thereunder has been cured or waived. Failure to make required payments on the Subordinated Debentures would constitute an Event of Default. LIMITED PURPOSE OF CTBI TRUST The Preferred Securities evidence a beneficial interest in CTBI Trust, and CTBI Trust exists for the sole purpose of issuing the Preferred Securities and Common Securities and investing the proceeds thereof in Subordinated Debentures. A principal difference between the rights of a holder of a Preferred Security and a holder of a Subordinated Debenture is that a holder of a Subordinated Debenture is entitled to receive from the Company the principal amount of and interest accrued on Subordinated Debentures held, while a holder of Preferred Securities is entitled to receive Distributions from CTBI Trust (or from the Company under the Guarantee) if and to the extent CTBI Trust has funds available for the payment of such Distributions. RIGHTS UPON TERMINATION Upon any voluntary or involuntary termination, winding-up or liquidation of CTBI Trust involving the liquidation of the Subordinated Debentures, the holders of the Preferred Securities will be entitled to receive, out of assets held by CTBI Trust, the Liquidation Distribution in cash. See "Description of Preferred Securities--Liquidation Distribution Upon Termination." Upon any voluntary or involuntary liquidation or bankruptcy of the Company, the Property Trustee, as holder of the Subordinated Debentures, would be a subordinated creditor of the Company, subordinated in right of payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations as set forth in the Indenture, but entitled to receive payment in full of principal and interest before any stockholders of the Company receive payments or distributions. Since the Company is the guarantor under the Guarantee and has agreed to pay for all costs, expenses and liabilities of CTBI Trust (other than CTBI Trust's obligations to the holders of its Preferred Securities), the positions of a holder of the Preferred Securities and a holder of the Subordinated Debentures relative to other creditors and to stockholders of the Company in the event of liquidation or bankruptcy of the Company are expected to be substantially the same. CERTAIN FEDERAL INCOME TAX CONSEQUENCES GENERAL This section is a summary of the material United States federal income tax considerations that may be relevant to the purchasers of Preferred Securities and represents the opinion of Greenebaum Doll & McDonald PLLC, counsel to the Company, insofar as it relates to matters of law and legal conclusions. The conclusions expressed herein are based upon current provisions of the Internal Revenue Code of 1986, as amended ("Code"), the regulations promulgated thereunder and current administrative rulings and court decisions, all of which are 57 subject to change at any time, with possible retroactive effects. Subsequent changes may cause tax consequences to vary substantially from the consequences described below. See "--Effect of Proposed Changes in Tax Laws." Furthermore, the authorities on which this summary is based are subject to various interpretations, and it is therefore possible that the federal income tax treatment of the purchase, ownership and disposition of Preferred Securities may differ from the treatment described below. No attempt has been made in the following discussion to comment on all United States federal income tax matters affecting purchasers of Preferred Securities. Moreover, the discussion generally focuses on holders of Preferred Securities who are individual citizens or residents of the United States and who acquire Preferred Securities on their original issue at their offering price and hold Preferred Securities as capital assets. The discussion has only limited application to dealers in securities, corporations, estates, trusts or nonresident aliens and does not address all the tax consequences that may be relevant to holders who may be subject to special tax treatment, such as, for example, banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax- exempt investors, or persons that will hold the Preferred Securities as a position in a "straddle," as part of a "synthetic security" or "hedge," as part of a "conversion transaction" or other integrated investment, or as other than a capital asset. This summary also does not address the tax consequences to persons that have a functional currency other than the U.S. dollar or the tax consequences to shareholders, partners or beneficiaries of a holder of Preferred Securities. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of any state or local government or of any foreign government that may be applicable to the Preferred Securities. Each prospective investor should consult, and should rely exclusively on, the investor's own tax advisors in analyzing the federal, state, local and foreign tax consequences of the purchase, ownership or disposition of Preferred Securities. CLASSIFICATION OF THE SUBORDINATED DEBENTURES The Company intends to take the position that the Subordinated Debentures will be classified for United States federal income tax purposes as indebtedness of the Company under current law. No assurance can be given, however, that such position of the Company will not be challenged by the Internal Revenue Service or, if challenged, that such a challenge will not be successful. The remainder of this discussion assumes that the Subordinated Debentures will be classified for United States federal income tax purposes as indebtedness of the Company. CLASSIFICATION OF CTBI TRUST With respect to the Preferred Securities, Greenebaum Doll & McDonald PLLC, counsel to the Company, has rendered its opinion generally to the effect that, under current law and assuming full compliance with the terms of the CTBI Trust Agreement and Indenture, CTBI Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation. Accordingly, for United States federal income tax purposes, each holder of Preferred Securities generally will be treated as owning an undivided beneficial interest in the Subordinated Debentures, and each holder will be required to include in its return any income, gain, loss or expense with respect to its allocable share of the Subordinated Debentures. POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT The Company's option to extend the interest payment period on the Subordinated Debentures may cause the indebtedness to be issued with original issue discount ("OID"). Under recently issued Treasury regulations 58 (the "Regulations"), a contingency that stated interest will not be timely paid that is "remote" will be ignored in determining whether such debt instrument is issued with OID. As a result of the terms and conditions of the Subordinated Debentures that prohibit certain payments with respect to the Company's capital stock and indebtedness if the Company elects to extend interest payment periods, the Company believes that the likelihood of its exercising its option to defer payments is remote. Based on the foregoing, the Company intends to take the position that the Subordinated Debentures will not be considered to be issued with OID at the time of their original issuance. If this position is sustained, a holder of Preferred Securities should include in gross income such holder's allocable share of interest on the Subordinated Debentures in accordance with its own method of tax accounting. There can be no assurance, however, that the Internal Revenue Service will not successfully contest the Company's position. If the Internal Revenue Service were successful in such a contention, then all of the stated interest payments on the Subordinated Debentures would be treated as OID. In such case, the holders of the Preferred Securities would be required to include OID in income on an economic accrual basis regardless of whether any interest is actually paid or their method of tax accounting, but will not be required to report actual payments of interest as taxable income. If the Company's position that there is no OID initially is upheld, but the Company exercises its option to defer any payment of interest, the Subordinated Debentures would at the time of such exercise be treated as issued with OID, and all stated interest thereafter payable on the Subordinated Debentures would be treated as OID. In such event, the holders of the Preferred Securities would be required to account for the OID as stated in the immediately preceding paragraph. Consequently, a holder of Preferred Securities would be required to include in gross income OID even though the Company would not make any actual interest payments during an Extension Period. MARKET DISCOUNT AND ACQUISITION PREMIUM Holders of Preferred Securities other than a holder who purchased the Preferred Securities upon original issuance may be considered to have acquired their undivided interests in the Subordinated Debentures with "market discount" or "acquisition premium" as such phrases are defined for United States federal income tax purposes. Such holders are advised to consult their tax advisors as to the income tax consequences of the acquisition, ownership and disposition of the Preferred Securities. RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF CTBI TRUST Under certain circumstances, as described under "Description of the Preferred Securities--Redemption," the Subordinated Debentures may be distributed to holders of Preferred Securities upon a liquidation of CTBI Trust. Under current United States federal income tax law, such a distribution would be treated as a nontaxable exchange to each such holder and would result in such holder having an aggregate tax basis in the Subordinated Debentures received in the liquidation equal to such holder's aggregate tax basis in the Preferred Securities immediately before the distribution. A holder's holding period in the Subordinated Debentures so received in liquidation of CTBI Trust would include the period for which such holder held the Preferred Securities. If, however, a Tax Event occurs which results in CTBI Trust being treated as an association taxable as a corporation, the distribution would likely constitute a taxable event to CTBI Trust and to holders of the Preferred Securities. Each holder of Preferred Securities would recognize gain or loss as if such holder exchanged the Preferred Securities for the subordinated Debentures it received upon liquidation of CTBI Trust. Under certain circumstances described herein, the Subordinated Debentures may be redeemed for cash and the proceeds of such redemption distributed to holders in redemption of their Preferred Securities. Under current law, such a redemption would, for United States federal income tax purposes, constitute a taxable disposition, and a holder would recognize gain or loss as if the holder sold such Preferred Securities for cash. See "Description of Preferred Securities-- Redemption." 59 DISPOSITION OF PREFERRED SECURITIES A holder of Preferred Securities that sells Preferred Securities will recognize gain or loss equal to the difference between its adjusted tax basis for the Preferred Securities and the amount realized on the sale of such Preferred Securities. Assuming that the Company's position that there is no OID initially is upheld, and that the Company does not exercise its option to defer payment of interest on the Subordinated Debentures, a Preferred Security holder's adjusted tax basis for the Preferred Securities generally will be its initial purchase price. If the Subordinated Debentures are deemed to have been issued initially with OID, or OID results due to the Company's deferral of any interest payment, a Preferred Security holder's adjusted tax basis for the Preferred Securities generally will be its initial purchase price, increased by OID previously included in such holder's gross income to the date of disposition and decreased by distributions and other payments received on the Preferred Securities since the date the Subordinated Debentures are deemed to have OID. Such gain or loss generally will be a capital gain or loss (except to the extent any amount realized is treated as a payment of accrued interest with respect to such holder's pro rata share of the Subordinated Debentures) and will be a long-term capital gain or loss if the Preferred Securities have been held for more than one year. The Preferred Securities may trade at a price that does not accurately reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. A holder that disposes of its Preferred Securities between record dates for payments of distributions thereon will be required to include as ordinary income either OID (if applicable) or accrued but unpaid interest on the Subordinated Debentures through the date of disposition. To the extent the amount realized is less than the holder's adjusted tax basis, a holder will generally recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. EFFECT OF PROPOSED CHANGES IN TAX LAWS On February 6, 1997, the revenue portion of President Clinton's 1998 budget proposal (the "Budget Proposal") was released. The Budget Proposal would generally deny deductions for interest on an instrument issued by a corporation that has a maximum weighted average maturity of more than 40 years. The Budget Proposal would also generally deny deductions for interest on an instrument issued by a corporation that has a maximum term of more than 15 years and that is not shown as indebtedness on the separate balance sheet of the issuer filed with the Commission or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet filed with the Commission. The above described provisions of the Budget Proposal are proposed to be effective generally for instruments issued on or after the date of first Congressional committee action. Since the Subordinated Debentures cannot have a term exceeding 40 years, the first of the above described Budget Proposals would be inapplicable. Furthermore, since the Company intends to reflect the Preferred Securities as long-term debt on its consolidated balance sheet filed with the Commission (although it will treat the transaction as a minority interest for regulatory reporting), as currently drafted, the Budget Proposal would not appear to apply to the Subordinated Debentures. There can be no assurance, however, that similar legislation which would apply to the Subordinated Debentures will not be enacted, and such legislation could be retroactive in effect. If any such legislation were enacted, the Company would be unable to deduct interest on the Subordinated Debentures. Such a change could give rise to a Tax Event, which would permit the Company to cause a redemption of the Preferred Securities before March 31, 2007. BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of OID accrued on the Preferred Securities held of record by individual citizens or residents of the United States, or certain trusts, estates, and partnerships, will be reported to the Internal Revenue Service on Forms 1099, which forms should be mailed to such holders of Preferred Securities by January 31 following each calendar year. Payments made on, and proceeds from the sale of, the Preferred Securities may be subject to a 60 "backup" withholding tax (currently at 31%) unless the holder complies with certain identification and other requirements. Any amounts withheld under the backup withholding rules will be allowed as a credit against the holder's United States federal income tax liability provided the required information is provided to the Internal Revenue Service. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS. PLAN OF DISTRIBUTION The Preferred Securities and the Subordinated Debentures will be offered for sale and distributed by the Company and CTBI Trust, as the case may be, by Morgan Keegan & Company, Inc. and J.J.B. Hilliard, W.L. Lyons, Inc. (the "Underwriters"). The Underwriters will be obligated to purchase all of the Preferred Securities on or before the date this Prospectus is first delivered to offeree. It is the intention of the Company and CTBI Trust that, within 30 days of the effective date of the Registration Statement of which this Prospectus is a part, that the Preferred Securities will be trading on The Nasdaq Stock Market's National Market under the trading symbol "CTBIP." UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement among Morgan Keegan & Company, Inc., J.J.B. Hilliard, W.L. Lyons, Inc., the Company and CTBI Trust, the Underwriters have, severally and not jointly, agreed to purchase from CTBI Trust, and CTBI Trust has agreed to sell to the Underwriters, the respective numbers of the Preferred Securities set forth opposite their respective names below.
NUMBER OF NAME OF UNDERWRITER PREFERRED SECURITIES ------------------- -------------------- Morgan Keegan & Company, Inc......................... J.J.B. Hilliard, W.L. Lyons, Inc..................... --------- Total............................................ =========
The Underwriting Agreement provides that the obligations of the Underwriters thereunder are subject to approval of certain legal matters by counsel and to various other conditions, including, among other things, the continuing accuracy of the representations and warranties of the Company and CTBI Trust contained in the Underwriting Agreement, the performance by the Company and CTBI Trust of their obligations under the Underwriting Agreement and the receipt of certain opinions of counsel in form and substance reasonably satisfactory to counsel for the Underwriters. The nature of the Underwriters obligations is such that they are committed to purchase and pay for all of the Preferred Securities, if any are purchased. The Underwriters propose to offer the Preferred Securities directly to the public at the initial public offering price set forth on the cover page of this Prospectus. The Underwriters have advised the Company and CTBI Trust that sales of the Preferred Securities to certain dealers may be made at a concession not in excess of $ per Preferred Security, and that the Underwriters may allow, and such dealers may reallow, discounts not in excess of $ per Preferred Security on sales to certain other dealers. After the public offering, the offering price and other selling terms may be changed by the Underwriters. 61 In view of the fact that the proceeds from the sale of the Preferred Securities will be used to purchase the Subordinated Debentures issued by the Company, the Underwriting Agreement provides that the Company will pay as Underwriters' Compensation for the Underwriters' arranging the investment therein of such proceeds an amount of $ per Preferred Security for the accounts of the several Underwriters. CTBI Trust has granted to the Underwriters an option, exercisable during a thirty-day period after the date of this Prospectus, to purchase up to 180,000 shares of Preferred Securities at the public offering price, all as described on the cover page hereof, solely to cover over-allotments, if any. The Company has also agreed to pay the Underwriters the same commission described in the immediately preceding paragraph in the event the Underwriters exercise this option. Prior to this offering, there has been no public market for the Preferred Securities. The Preferred Securities have been approved for listing on The Nasdaq Stock Market's National Market, subject to notice of issuance. Trading of the Preferred Securities on Nasdaq Stock Market's National Market is expected to commence within 30 days after the initial delivery of the Preferred Securities. The Underwriters have advised the Company that they intend to make a market in the Preferred Securities prior to commencement of trading on The Nasdaq Stock Market's National Market, but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of or the existence of the trading market for the Preferred Securities. The Company and CTBI Trust have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Certain of the Underwriters or their affiliates have provided from time to time, and expect to provide in the future, investment banking services to the Company and its affiliates, for which such Underwriters or their affiliates have received or will receive customary fees and commissions. At the request of the Company, up to 120,000 Preferred Securities have been reserved for sale to certain individuals, including directors, officers and employees of the Company and member of their families. VALIDITY OF PREFERRED SECURITIES Certain matters of Delaware law relating to the validity of the Preferred Securities will be passed upon, upon behalf of CTBI Trust, by Richards, Layton & Finger, special Delaware counsel to CTBI Trust. The validity of the Subordinated Debentures and the Preferred Securities Guarantee and certain matters relating thereto will be passed upon for Community Trust Bancorp, Inc. by Greenebaum Doll & McDonald PLLC, Lexington, Kentucky. Counsel for the Underwriters, King & Spalding, will pass upon certain legal matters for the Underwriters. EXPERTS The consolidated financial statements for the year ended December 31, 1996 of Community Trust Bancorp, Inc. appearing in Community Trust Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements for the year ended December 31, 1995 and each of the two years in the period ending December 31, 1995 of Community Trust Bancorp, Inc. appearing in Community Trust Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996, have been audited by Crowe, Chisek & Company LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Nicholas R. Glancy, a Member of Greenebaum Doll & McDonald PLLC who participated in the preparation of this Registration Statement beneficially owns 2,812 shares of the common stock of the Company. 62 AVAILABLE INFORMATION This Prospectus constitutes a part of a combined Registration Statement on Form S-3 (together with all amendments, exhibits and schedules thereto, the "Registration Statement") filed by the Company and CTBI Trust with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder, with respect to this offering. This Prospectus does not contain all of the information set forth in such Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission, although it does include a summary of the material terms of the Indenture and the CTBI Trust Agreement (each as defined herein). Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to the Company, CTBI Trust and the Preferred Securities. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and, in each instance, reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information filed by the Company with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices at Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661, and Seven World Trade Center, New York, New York 10048. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is listed on the National Association of Securities Dealers Automated Quotation/National Market System ("Nasdaq"), 1735 K Street, N.W., Washington, D.C. 20006 under the symbol "CTBI." If available, such reports and other information may also be accessed through the Commission's electronic data gathering, analysis and retrieval system ("EDGAR") via electronic means, including the Commission's web site on the Internet (http://www.sec.gov). No separate financial statements of the CTBI Trust have been included or incorporated by reference herein. The Company and CTBI Trust do not consider that such financial statements would be material to holders of the Preferred Securities because CTBI Trust is a newly formed special purpose entity, has no operating history or independent operations and is not engaged in and does not propose to engage in any activity other than holding as trust assets the Subordinated Debentures and issuing the Trust Securities. See "Description of the Preferred Securities," "Description of Subordinated Debentures" and "Description of Guarantee." In addition, the Company does not expect that CTBI Trust will be filing reports under the Exchange Act with the Commission. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company pursuant to Section 13 of the Exchange Act are incorporated by reference in this Prospectus: (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and (b) Current Report on Form 8-K dated January 17, 1997. All documents filed by the Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment to this Registration Statement which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the filing date of such documents. Any statement contained in this Prospectus or in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to 63 the extent that a statement contained herein or in the original Section 10(a) prospectus (as regards any statement in any previously filed document incorporated by reference herein), or a statement in any subsequently filed document that is also incorporated by reference herein or a statement in any subsequent Section 10(a) prospectus, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference herein (other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to Community Trust Bancorp, Inc., 208 North Mayo Trail, Pikeville, Kentucky 41501; Attention: Chief Financial Officer. 64 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN- FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CTBI TRUST, THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF CTBI TRUST OR THE COMPANY SINCE SUCH DATE HEREOF. ------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary........................................................ 1 Risk Factors.............................................................. 6 Use of Proceeds........................................................... 12 Accounting Treatment...................................................... 12 The Company............................................................... 13 Capitalization............................................................ 14 Selected Consolidated Financial Data of the Company....................... 15 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................... 16 Quarterly Financial Data.................................................. 22 Executive Officers of the Company......................................... 23 Directors of the Company.................................................. 24 Selected Statistical Information.......................................... 26 Description of the Preferred Securities................................... 33 Description of Subordinated Debentures.................................... 44 Book-Entry Issuance....................................................... 52 Description of Guarantee.................................................. 54 Relationship Among the Preferred Securities, the Subordinated Debentures and the Guarantee ....................................................... 56 Certain Federal Income Tax Consequences................................... 57 Plan of Distribution...................................................... 61 Underwriting.............................................................. 61 Validity of Preferred Securities.......................................... 62 Experts................................................................... 62 Available Information..................................................... 63 Incorporation of Certain Documents by Reference........................... 63
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1,200,000 PREFERRED SECURITIES CTBI PREFERRED CAPITAL TRUST % CUMULATIVE TRUSTPREFERRED SECURITIES (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY) GUARANTEED TO THE EXTENT SET FORTH HEREIN BY LOGO ---------------- PROSPECTUS ---------------- MORGAN KEEGAN & COMPANY, INC. J.J.B. HILLIARD, W.L. LYONS, INC. , 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance and distribution of the securities being registered, other than underwriting compensation, are: Registration Fee................................................ $ 10,455 Legal Fees and Expenses......................................... 100,000 Accounting Fees and Expenses.................................... 5,000 Printing Expenses............................................... 30,000 Blue Sky Registration Fees and Expenses......................... 2,000 Trustees' Fees.................................................. 20,000 Stock Exchange Listing Fees..................................... 1,000 NASD Filing Fee................................................. 3,950 Miscellaneous Expenses.......................................... 2,595 -------- Total....................................................... $175,000 ========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Article VI of the Company's Articles of Incorporation, as amended, provides that any person who was or is a party or threatened party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Company: (a) shall be indemnified (and may be indemnified if made a party to such proceeding by reason of the fact that he is or was serving as a Company employee or agent, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) by the Company against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding (other than a derivative suit), even if he is not successful on the merits, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company (and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful); (b) shall be indemnified (and may be indemnified if made a party to such proceeding by reason of the fact that he is or was serving as a Company employee or agent, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise) for expenses of a derivative suit (a suit by a shareholder alleging a breach by a director or officer of a duty owed to the Company), even if he is not successful on the merits, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company provided that no such indemnification may be made in accordance with this clause (b) if he is adjudged liable to the Company, unless a court determines that, despite such adjudication, but in view of all the circumstances, he is entitled to indemnification; and (c) shall be indemnified by the Company for all expenses of such litigation when he is successful on the merits. The indemnification described in clauses (a) and (b) above shall be made only upon a determination, by (i) a majority vote of the disinterested directors, or (ii) the stockholders, that indemnification is proper because the applicable standard of conduct has been met. The Board of Directors or the stockholders may authorize the advancement of litigation expenses to a director or officer upon receipt of an undertaking by such director or officer to repay such expenses if it is ultimately determined that he is not entitled to be indemnified for them. The indemnification and the advancement of expenses provided for by Article VI are not deemed exclusive of any rights the indemnitee may have under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise. Article X of the Company's Articles of Incorporation, as amended, provides that a director of the Company shall not be personally liable to the Company or its shareholders for monetary damages for breach of his duties as a director, provided that this provision will not eliminate or limit the liability of a director for the following: (a) for any transaction in which the director's personal financial interest is in conflict with the financial interests II-1 of the Company or its shareholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or are known to the director to be a violation of law; (c) for any vote for or assent to an unlawful distribution to shareholders as prohibited under Section 271B.8-330 of the Kentucky Revised Statutes; or (d) for any transaction from which the director derived an improper personal benefit. Article X is applicable with respect to any such breach of duties by a director of the Company as a director notwithstanding that such director thereafter ceases to be a director. Article X inures to the personal benefit of such director's heirs, executors and administrators. ITEM 16. EXHIBITS. 1.1 --Form of Underwriting Agreement. 3.1 --Articles of Incorporation, with all amendments thereto (Exhibit 4.1 to Registration Statement No. 33-35138 is incorporated herein by reference). 3.2 --By-laws (Exhibit 4.2 to Registration Statement No. 33-35138 is incorporated herein by reference). 4.1 --Certificate of Trust of CTBI Trust. 4.2 --Trust Agreement of CTBI Trust. 4.3 --Form of Amended and Restated Trust Agreement of Company. 4.4 --Form of Indenture between Community Trust Bancorp, Inc. and State Street Bank and Trust Company, as Trustee. 4.5 --Form of Subordinated Debenture of Community Trust Bancorp, Inc. (included in Exhibit 4.3 above). 4.6 --Form of Preferred Security Certificate of CTBI Trust (included in Exhibit 4.2 above). 4.7 --Form of Preferred Security Guarantee of Community Trust Bancorp, Inc. 5.1 --Opinion of Greenebaum Doll & McDonald PLLC as to the validity of the issuance of the Subordinated Debentures and the Guarantee to be issued by the Company 5.2 --Opinion of Richards Layton & Finger, special Delaware Counsel, as to the validity of the issuance of the Preferred Securities to be issued by CTBI Preferred Capital Trust. 8.1 --Opinion of Greenebaum Doll & McDonald PLLC as to certain federal income tax matters. 12.1 --Computation of ratio of earnings to fixed charges (included in Schedule on page 15 of Prospectus). 12.2 --Computation of ratio of earnings to fixed charges plus preferred dividend requirements (included in Schedule on page 15 of Prospectus). 23.1 --Consent of Ernst & Young, LLP. 23.2 --Consent of Crowe, Chizek and Company LLP 23.3 --Consent of Greenebaum Doll & McDonald PLLC (included in Exhibit 5.1 above). 23.4 --Consent of Greenebaum Doll & McDonald PLLC (included in Exhibit 8.1 above). 23.5 --Consent of Richards Layton & Finger (included in Exhibit 5.2 above). 24.1 --Powers of Attorney (included in signatures page of this Registration Statement) and Resolution. 25.1 --Statement of Eligibility under Trust Indenture Act of 1939, as amended, of State Street Bank and Trust Company, as Property Trustee. 25.2 --Statement of Eligibility under Trust Indenture Act of 1939, as amended, of State Street Bank and Trust Company, as Guarantee Trustee. 25.3 --Statement of Eligibility under Trust Indenture Act of 1939, as amended, of State Street Bank and Trust Company, as Indenture Trustee.
II-2 ITEM 17. UNDERTAKINGS. (a) Filings incorporating subsequent Exchange Act documents by reference. The undersigned Registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Filing of Registration Statement on Form S-3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing, the Registrants have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrants of expenses incurred or paid by a director, officer or controlling person of Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (c) Rule 430A Undertaking. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PIKEVILLE, COMMONWEALTH OF KENTUCKY, ON MARCH 26, 1997. Community Trust Bancorp, Inc. /s/ Richard M. Levy By: _________________________________ Richard M. Levy Executive Vice President Chief Financial Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS RICHARD M. LEVY AND JEAN R. HALE AND EACH OF THEM, WITH FULL POWER TO ACT WITHOUT THE OTHER, HIS OR HER TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT EACH SUCH ATTORNEY-IN-FACT AND AGENT, OR HIS OR HER SUBSTITUTE, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THEIR CAPACITIES AND ON THE DATE INDICATED.
NAME AND SIGNATURE TITLE DATE ------------------ ----- ---- /s/ Burlin Coleman Director, Chairman of the March 26, 1997 ____________________________________ Board, and Chief Executive Burlin Coleman Officer Director March 26, 1997 ____________________________________ Charles J. Baird /s/ Jean R. Hale Director, Secretary and March 26, 1997 ____________________________________ Executive Vice President Jean R. Hale Director March 26, 1997 ____________________________________ Nick A. Cooley
II-4 Director March 26, 1997 ____________________________________ William A. Graham, Jr. /s/ Brandt Mullins Director March 26, 1997 ____________________________________ Brandt Mullins /s/ M. Lynn Parrish Director March 26, 1997 ____________________________________ M. Lynn Parrish /s/ Ernest M. Rogers Director March 26, 1997 ____________________________________ Ernest M. Rogers Director March 26, 1997 ____________________________________ Porter P. Welch /s/ Richard M. Levy Chief Financial Officer March 26, 1997 ____________________________________ Richard M. Levy
II-5 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CTBI TRUST CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PIKEVILLE, COMMONWEALTH OF KENTUCKY, ON MARCH 26, 1997. CTBI Preferred Capital Trust By: COMMUNITY TRUST BANCORP, INC. as depositor /s/ Richard M. Levy By: _________________________________ Richard M. Levy Executive Vice President Chief Financial Officer II-6 EX-1.1 2 UNDERWRITING AGREEMENT EXHIBIT 1.1 CTBI PREFERRED CAPITAL TRUST FORM OF UNDERWRITING AGREEMENT April __, 1997 MORGAN KEEGAN & COMPANY, INC. J.J.B. HILLIARD, W.L. LYONS, INC. c/o Morgan Keegan & Company, Inc. 50 Front Street Memphis, Tennessee 38103 Dear Sirs: CTBI Preferred Capital Trust (the "Trust"), a statutory business trust organized under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12 of the Delaware Business Code, 12 Del. C. Section 3801 et seq.), and Community Trust Bancorp, Inc., a Kentucky corporation (the "Company", and together with the Trust, the "Offerors"), as depositor of the Trust and as guarantor, propose, upon the terms and conditions set forth herein, to issue and sell 1,200,000 shares of ___% Cumulative Trust Preferred Securities (with a liquidation amount equal to $25 per Preferred Security) to Morgan Keegan & Company, Inc. and J.J.B. Hilliard, W.L. Lyons, Inc. (collectively, the "Underwriters"), severally and not jointly, in the respective amounts set forth on Schedule A hereto (the "Firm Preferred Securities") and, at the election of the Underwriters, up to an additional 180,000 shares of such securities (the "Option Preferred Securities") solely to cover over-allotments, if any. The Firm Preferred Securities and the Option Preferred Securities are herein collectively referred to as the "Preferred Securities." The Preferred Securities and Common Securities (as defined herein) are to be issued pursuant to the terms of an Amended and Restated Trust Agreement, dated as of April __, 1997 (the "Trust Agreement"), among the Company, as depositor, Jean R. Hale and Richard M. Levy, as administrative trustees (the "Administrative Trustees"), State Street Bank and Trust Company ("Trust Company"), as property trustee ("Property Trustee"), and Wilmington Trust Company, as Delaware trustee ("Delaware Trustee" and, together with the Property Trustee and the Administrative Trustees, the "Trustees"), and the holders from time to time of undivided interests in the assets of the Trust. The Preferred Securities will be guaranteed by the Company on a subordinated basis and subject to certain limitations with respect to distributions and payments upon liquidation, redemption or otherwise (the "Guarantee") pursuant to a Guarantee Agreement, dated as of April __, 1997 (the "Guarantee Agreement"), between the Company and Trust Company, as trustee (the "Guarantee Trustee"). The assets of the Trust will consist of ____% Subordinated Debentures, due March 31, 2027 (the "Subordinated Debentures"), of the Company which will be issued under a Subordinated Indenture, dated as of April __, 1997 (the "Indenture"), between the Company and Trust Company, as indenture trustee (the "Indenture Trustee"). Under certain circumstances, the Subordinated Debentures will be distributable to the holders of undivided beneficial interests in the assets of the Trust. Section 1. Representations and Warranties of the Offerors. The Offerors jointly and severally represent and warrant to and agree with each of the Underwriters that: (a) The Company and the Trust have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333- _____) and a related preliminary prospectus for the registration of (i) the Preferred Securities, (ii) the Guarantee and (iii) the Subordinated Debentures under the Securities Act of 1933, as amended (the "1933 Act"), and the applicable rules and regulations thereunder (the "1933 Act Regulations"). The Company and the Trust have prepared and filed such amendments thereto, if any, and such amended preliminary prospectuses, if any, as may have been required to the date hereof, and will file such additional amendments thereto and such amended prospectuses as may hereafter be required. The registration statement has been declared effective under the 1933 Act by the Commission, and no stop order suspending the effectiveness of the registration statement has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Offerors, threatened by the Commission. The term "Registration Statement" as used in this Agreement shall mean such registration statement at the time such registration statement became effective (the "Effective Time") including any prospectus included with such Registration Statement, each document incorporated therein by reference and, in the event any post-effective amendment thereto becomes effective prior to the Closing Time (as hereinafter defined), shall also mean such registration statement as so amended; provided, however, that such term shall also include all Rule 430A Information deemed to be included in such registration statement at the time such registration statement becomes effective as provided by Rule 430A of the 1933 Act Regulations. The term "Preliminary Prospectus" shall mean any preliminary prospectus included in the Registration Statement at the Effective Time and each document incorporated therein by reference. The term "Prospectus" as used in this Agreement shall mean the final prospectus relating to the Preferred Securities in the form in which it is filed with the Commission after the date hereof pursuant to Rule 424(b) of the 1933 Act Regulations and each document incorporated therein by reference. The term "Rule 430A Information" means information with respect to the Preferred Securities and the offering thereof permitted pursuant to Rule 430A of the 1933 Act Regulations to be omitted from the Registration Statement when it became effective. (b) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and no proceedings for that purpose have been instituted or threatened by the Commission or the state securities or blue sky authority of any jurisdiction, and each Preliminary Prospectus and any amendment or supplement thereto, at the time of filing thereof, conformed in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions 2 made in reliance upon and in conformity with information furnished in writing to the Offerors by an Underwriter expressly for use in the Registration Statement. (c) When the Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act Regulations, when any amendment to the Registration Statement becomes effective, when any amendment or supplement to the Prospectus is filed with the Commission and at the Closing Time and Date of Delivery (as hereinafter defined), (i) the Registration Statement, the Prospectus and any amendments thereof and supplements thereto will conform in all material respects with the applicable requirements of the 1933 Act and the 1933 Act Regulations, and (ii) neither the Registration Statement, the Prospectus nor any amendment or supplement thereto will 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 not misleading; provided, however, that this representation and warranty shall not apply to (A) that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended (the "1939 Act"), of the Property Trustee, the Indenture Trustee and the Guarantee Trustee, and (B) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Offerors by an Underwriter expressly authorizing its use in the Registration Statement. (d) Each document incorporated by reference in the Registration Statement (an "Incorporated Document"), as of the date such Incorporated Document was filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder, and when read together with the other information in the Preliminary Prospectus or Prospectus (as applicable), as of the date hereof and at the Closing Time, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the rules and regulations thereunder and when read together with the other information in the Prospectus, as of the date hereof and at the Closing Time, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (e) The conditions for the use by the Company and the Trust of a registration statement on Form S-3 set forth in the General Instructions to Form S-3 have been satisfied and the Company and the Trust are entitled to use such form for the transactions contemplated herein. (f) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Kentucky with all requisite 3 corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. The Company is qualified to transact business as a foreign corporation and is in good standing in each of the jurisdictions in which the ownership or leasing of its properties or the nature or conduct of its business requires such qualification, except where the failure to do so would not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and its consolidated subsidiaries taken as a whole. The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. (g) The subsidiaries of the Company that are engaged in the banking business, savings and loan business or trust business are listed on Schedule B hereto (the "Principal Subsidiaries"). Each of the Principal Subsidiaries is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization with all requisite power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. Each of the Principal Subsidiaries is authorized to transact business in each of the jurisdictions in which the ownership or leasing of its properties or the nature of or conduct of its business requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and its consolidated subsidiaries taken as a whole. All of the issued and outstanding shares of capital stock of each Principal Subsidiary has been duly authorized and validly issued, and is fully paid and non-assessable and is owned by the Company free and clear of any security interest, pledge, lien or other encumbrance except for the pledge of the shares of Community Trust Bank, FSB, one of the Principal Subsidiaries, pursuant to a revolving credit agreement of the Company. (h) The Indenture has been duly qualified under the 1939 Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other laws of general applicability relating to or affecting creditors' rights, or by general principles of equity whether considered at law or in equity (the "Permitted Exceptions"). (i) The Trust Agreement has been duly qualified under the 1939 Act and has been duly authorized by the Company and, upon execution and delivery thereof by the Company and the Administrative Trustees, and assuming due authorization, execution and delivery thereof by the Property Trustee and the Delaware Trustee, the Trust Agreement will, as of the Closing Time, be a valid and binding agreement of the Company and the Administrative Trustees, enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (j) The Guarantee has been duly qualified under the 1939 Act and has been duly authorized by the Company and, upon execution and delivery thereof by the Company, the Guarantee will, as of the Closing Time, be a valid and binding agreement of the Company, 4 enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (k) The Subordinated Debentures have been duly authorized and, when executed by the Company, authenticated by the Indenture Trustee, issued in accordance with the Indenture and delivered to the Trust against payment therefor as described in the Registration Statement and the Prospectus, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (l) The Preferred Securities have been duly authorized by the Trust Agreement and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued undivided beneficial interests in the assets of the Trust, and the issuance of such Preferred Securities will not be subject to any preemptive or similar rights. The Common Securities to be issued to the Company have been authorized by the Trust Agreement and, when executed in accordance with the terms of the Trust Agreement and delivered to the Company against payment therefor as described in the Registration Statement and the Prospectus, will represent validly issued undivided beneficial interests in the assets of the Trust. (m) This Agreement has been duly authorized, executed and delivered by each of the Offerors and constitutes a valid and binding agreement of each of them, enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions and except to the extent enforcement of the indemnification provisions set forth in Section 6 of this Agreement may be limited by federal or state securities laws or the public policy underlying such laws. (n) No authorization, approval, consent or order of, or any filing or declaration with, any court or governmental authority or agency is necessary in connection with the issuance and sale of the Common Securities or the offering of the Preferred Securities, the Subordinated Debentures or the Guarantee hereunder or the consummation of the transactions contemplated hereby, except as may have been obtained under the 1933 Act and the 1933 Act Regulations, the 1939 Act and the rules and regulations thereunder and such as may be required by the National Association of Securities Dealers, Inc. (the "NASD") in connection with the purchase and distribution by the Underwriters of the Preferred Securities and such as may be required under state securities laws. (o) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, there has been no material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Trust or the Company and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business. 5 (p) The Company's obligations under the Guarantee Agreement are subordinate and junior in right of payment to all liabilities of the Company and are pari passu with the most senior preferred stock issued by the Company. (q) The Subordinated Debentures are subordinated and junior in right of payment to all "Senior Obligations" (as defined in the Indenture) of the Company. (r) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and compliance by the Company with its obligations hereunder will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Principal Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any of the Principal Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of the Principal Subsidiaries is subject (except for conflicts, breaches and defaults which would not, individually or in the aggregate, be materially adverse to the Company and its subsidiaries taken as a whole or materially adverse to the transactions contemplated by this Agreement), nor will such action result in any material violation of the provisions of the articles of incorporation or by-laws of the Company or any Principal Subsidiary, or any applicable law, administrative regulation or administrative or court decree. (s) Except as disclosed in the Prospectus, there is no action, suit or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the best knowledge of the Offerors, threatened, against or affecting the Company, any Principal Subsidiary or the Trust that is required to be disclosed in the Prospectus, other than actions, suits or proceedings that are not reasonably expected, individually or in the aggregate, to have a material adverse effect on the condition, financial or otherwise, or in the earnings or business affairs of the Company or the Trust, whether or not arising in the ordinary course of business. (t) The Trust possesses adequate certificates, authorities or permits issued by the appropriate state, federal or local regulatory agencies or bodies to conduct the business now operated by it, and the Trust has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding would materially and adversely affect the condition, financial or otherwise, or the earnings or business affairs of the Trust. (u) The execution, delivery and performance of this Agreement, the issuance and sale of the Preferred Securities and the Common Securities, and the consummation of the transactions contemplated herein and compliance by the Trust with its obligations hereunder have been duly authorized by all necessary action (corporate or otherwise) on the part of the 6 Trust and do not and will not result in any violation of the Trust Agreement or Certificate of Trust and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust under (A) any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Trust is a party or by which it may be bound or to which any of its properties may be subject or (B) any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, or any regulatory body or administrative agency or other governmental body having jurisdiction over the Trust, or any of its properties (except for conflicts, breaches, violations or defaults which would not, individually or in the aggregate, be materially adverse to the Trust, or materially adverse to the transactions contemplated by this Agreement). (v) The Company's authorized, issued and outstanding capital stock is as disclosed in the Prospectus. All of the issued shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and conform to the description of the Company's capital stock contained in the Prospectus. (w) The financial statements of the Company and its consolidated subsidiaries included or incorporated in the Registration Statement and Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of operations and cash flows for the Company and its consolidated subsidiaries for the periods specified, all in conformity with generally accepted accounting principles applied on a consistent basis. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as otherwise stated in the Registration Statement and the Prospectus, there has not been (i) any material change in the capital stock, long-term debt, obligations under capital leases or short-term borrowings of the Company or the Principal Subsidiaries, or (ii) any material adverse change, or any development which could reasonably be seen as involving a prospective material adverse change, in or affecting the business, prospects, properties, assets, results of operations or condition (financial or other) of the Company or the Principal Subsidiaries other than developments, if any, generally affecting the banking business in the United States. (x) Ernst & Young, who have examined and are reporting upon the audited financial statements and schedules included in the Registration Statement, are, and were during the periods covered by their reports included in the Registration Statement and the Prospectus, independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations. (y) The descriptions in the Registration Statement and the Prospectus of the contracts, leases and other legal documents therein described present fairly the information required to be shown, and there are no contracts, leases, or other documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which are not described or filed as required. 7 (z) Each of the Company's and the Principal Subsidiaries' respective systems of internal accounting controls taken as a whole is sufficient to meet the broad objectives of internal accounting control insofar as those objectives pertain to the prevention or detection of errors or irregularities in amounts that would be material in relation to the Company's or the Principal Subsidiaries' financial statements; and, none of the Company, the Principal Subsidiaries, or any employee or agent thereof, has made any payment of funds of the Company or the Principal Subsidiaries, or received or retained any funds and no funds of the Company or the Principal Subsidiaries, have been set aside to be used for any payment, in each case in violation of any law, rule or regulation. (aa) Neither of the Offerors is, and upon the issuance and sale of the Preferred Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus neither will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). Section 2. Sale and Delivery of the Preferred Securities to the Underwriters; Closing. (a) On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Trust agrees to issue and sell to each of the Underwriters the Firm Preferred Securities, and each Underwriter agrees, severally and not jointly, to purchase from the Trust the number of Preferred Securities set forth opposite the name of such Underwriter in Schedule A, at a price per Capital Security of $25 per share. In the event and to the extent that the Underwriters shall exercise the election to purchase Option Preferred Securities as provided below, the Trust agrees to issue and sell to the Underwriters, and the Underwriters agree to purchase from the Trust, at the same purchase price per Capital Security set forth in the first sentence of this Section 2, the number of shares of Option Preferred Securities as to which such election shall have been exercised. If the option is exercised as to all or any portion of the Option Preferred Securities, the Option Preferred Securities as to which the option is exercised shall be purchased by the Underwriters, severally and not jointly, in proportion to their purchases of the Firm Preferred Securities. As compensation to the Underwriters for their commitments hereunder, and in view of the fact that the proceeds of the sale of the Preferred Securities will be used by the Trust to purchase the Subordinated Debentures of the Company, the Company hereby agrees to pay at the Closing Time and the Date of Delivery, if applicable, to Morgan Keegan & Company, Inc., for the accounts of the several Underwriters, an amount equal to $[__] per Capital Security for the Preferred Securities to be delivered at the Closing Time and on the Date of Delivery, respectively. (b) In addition, on the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Trust hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional 180,000 8 shares of Option Preferred Securities at the same purchase price as shall be applicable to the Firm Preferred Securities. The option hereby granted will expire if not exercised within the thirty (30) day period after the date of the Prospectus by giving written notice to the Trust. The option granted hereby may be exercised in whole or in part (but not more than once), only for the purpose of covering over-allotments that may be made in connection with the offering and distribution of the Firm Preferred Securities. The notice of exercise shall set forth the number of Option Preferred Securities as to which the several Underwriters are exercising the option, and the time and date of payment and delivery thereof. Such time and date of delivery (the "Date of Delivery") shall be determined by you but shall not be later than three full business days after the exercise of such option, nor in any event prior to the Closing Time. If the option is exercised as to all or any portion of the Option Preferred Securities, the Option Preferred Securities as to which the option is exercised shall be purchased by the Underwriters, severally and not jointly, in proportion to their purchases of the Firm Preferred Securities. (c) Payment of the purchase price for and delivery of certificates in definitive form representing the Firm Preferred Securities shall be made at the offices of Morgan Keegan & Company, Inc., 50 Front Street, Memphis, Tennessee 38103 or at such other place as shall be agreed upon by the Company, the Trust and you, at 10:00 a.m., either (i) on the third full business day after the execution of this Agreement, or (ii) at such other time not more than ten full business days thereafter as you, the Company and the Trust shall determine (unless, in either case, postponed pursuant to the term hereof), (such date and time of payment and delivery being herein called the "Closing Time"). In addition, in the event that any or all of the Option Preferred Securities are purchased by the Underwriters, payment of the purchase price for and delivery of certificates in definitive form representing the Option Preferred Securities shall be made at the offices of Morgan Keegan & Company, Inc. in the manner set forth above, or at such other place as the Company, the Trust and you shall determine, on the Date of Delivery as specified in the notice from you to the Trust. Payment for the Firm Preferred Securities and the Option Preferred Securities shall be made to the Trust by wire transfer in same-day funds to the accounts designated to the Underwriters in writing by the Trust against delivery to you for the respective accounts of the Underwriters of the Shares to be purchased by them. At the Closing Time and the Date of Delivery, if applicable, the Company will pay, or cause to be paid, the commission payable at such time to the Underwriters under this Section 2 hereof by wire transfer in same-day funds to the account or accounts designated to the Company in writing by Morgan Keegan & Company, Inc., on behalf of the several Underwriters. (d) The Preferred Securities to be purchased by each Underwriter hereunder will be represented by one or more definitive global Preferred Securities in book entry form which will be deposited by or on behalf of the Trust with The Depository Trust Company ("DTC") or its designated custodian. The Trust will deliver the Preferred Securities to Morgan Keegan & Company, Inc. for the account of each 9 Underwriter, against payment to the Trust as provided in Paragraph (c) of this Section 2. (e) You intend to offer the Preferred Securities to the public as set forth in the Prospectus, but after the initial public offering of such Preferred Securities you may in your discretion vary the public offering price. Section 3. Certain Covenants of the Company and the Trust. The Company and the Trust covenant and agree with each Underwriter as follows: (a) The Trust and the Company will prepare the Prospectus in a form approved by the Underwriters, will comply with the requirements of Rule 430A and will file such Prospectus with the Commission pursuant to Rule 424(b) not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement. The Trust and the Company will notify the Underwriters immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall have become effective and of the filing of the Prospectus pursuant to Rule 424(b), (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Preferred Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for such purpose. The Trust and the Company will make every reasonable effort to prevent the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Trust and the Company will deliver to the Underwriters one manually executed copy of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference into the Prospectus), such number of conformed copies of the Registration Statement as originally filed and of each amendment thereto (including documents incorporated by reference into the Prospectus by without exhibits) as such Underwriters may reasonably request and copies of each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus. (c) The Trust and the Company will furnish to the Underwriters, from time to time during the period when the Prospectus is required to be delivered under the 1933 Act, such additional number of copies of the Prospectus (as amended or supplemented, if 10 applicable) as they may reasonable request for the purposes contemplated by the 1933 Act or the 1933 Act Regulations. (d) The Trust and the Company will deliver to the Underwriters notice of their intention to prepare or file any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus which the Trust and the Company propose for use by the Underwriters in connection with the offering of the Preferred Securities and which differs from the prospectus on file at the Commission at the time the Registration Statement became effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations, will furnish the Underwriters and counsel for the Underwriters with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement or use any such prospectus to which the Underwriters or counsel for the Underwriters shall reasonably object. (e) If any event shall occur as a result of which it is necessary to amend or supplement the Prospectus (as then amended or supplemented) in order to ensure that the Prospectus does not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or it is necessary to amend or supplement the Prospectus to comply with the 1933 Act or any other law, the Company and the Trust will forthwith prepare and furnish, at the Company's expense, to the Underwriters, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or so that the Prospectus will comply with the 1933 Act or such other law, as the case may be. (f) The Trust and the Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13, 14, or 15 of the Exchange Act. (g) The Company and the Trust will use their respective best efforts to qualify the Preferred Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any Underwriter shall reasonably request and to pay all reasonable expenses (including reasonable fees and disbursements of counsel) in connection with such qualification and the printing of any memoranda concerning the aforesaid qualification; provided, however, that neither Offeror shall be required to qualify to do business in any jurisdiction where it is not now qualified or to take any action which would subject it to general or unlimited service of process in any jurisdiction where they are not now subject. (h) During the period beginning on the date hereof and continuing to and including the Date of Delivery, the Company and the Trust will not to offer, sell, contract to sell or otherwise dispose of (other than in an offering made exclusively outside the United 11 States) any securities of the Company or the Trust substantially similar to the Preferred Securities or any securities convertible into or exchangeable for the Preferred Securities without the prior written consent of the Underwriters. (i) During the period when the Preferred Securities are outstanding, the Company will not be or become an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the 1940 Act. (j) Neither the Company nor the Trust shall enter into any contractual agreement with respect to the distribution of the Preferred Securities except for the arrangements with the Underwriters. (k) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 90 days after the close of the period covered thereby, an "earning statement" (which need not be audited) complying with the provisions of Rule 158 of the 1933 Act Regulations and, covering a period of at least 12 consecutive months beginning on the first day of the Company's first full fiscal quarter after the effective date (as defined in Rule 158) of the Registration Statement. (l) The Company and the Trust will use proceeds received from the sale of the Preferred Securities in the manner specified in the Prospectus under "Use of Proceeds." (m) For a period of five years after the Closing Time the Trust and the Company will furnish to the Underwriters copies of all reports and communications delivered to the Trust's shareholders or to holders of the Preferred Securities and will also furnish copies of all reports (excluding exhibits) filed with the Commission on Forms 8-K, 10-Q and 10-K, and all other reports and information furnished to its shareholders generally, not later than the time such reports are first furnished to its shareholders generally. Section 4. Payment of Expenses. The Company will pay and bear all costs, fees and expenses incident to the performance of the Offerors obligations under this Agreement (excluding fees and expenses of counsel for the Underwriters, except as specifically set forth below), including (a) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits), as originally filed and as amended, the Preliminary Prospectuses, the Prospectus and any amendments or supplements thereto, and the cost of furnishing copies thereof to the Underwriters, (b) the preparation, printing and distribution of this Agreement, the Indenture, the Guarantee Agreement, the Trust Agreement, the certificates representing the Preferred Securities, the Blue Sky Memoranda and any instruments or documents relating to any of the foregoing, (c) the issuance and delivery of the Preferred Securities to the Underwriters, including any transfer taxes payable upon the sale of the Preferred Securities to the Underwriters (other than transfer taxes on resales by the Underwriters), (d) the fees and disbursements of the Company's and the Trust's counsel and accountants, (e) the qualification of the Preferred Securities, the Subordinated Debentures and the Guarantee under the applicable securities laws in accordance with the terms of 12 this Agreement, including filing fees and fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the Blue Sky Memoranda, (f) all costs, fees and expenses in connection with the notification to the Nasdaq Stock Market of the proposed issuance of the Preferred Securities, (g) filing fees relating to the review of the offering by the NASD, (h) the transfer agent's and registrar's fees and all miscellaneous expenses referred to in Part II of the Registration Statement, (i) costs related to travel and lodging incurred by the Company and its representatives relating to meetings with and presentations to prospective purchasers of the Preferred Securities reasonably determined by the Underwriters to be necessary or desirable to effect the sale of the Preferred Securities to the public, (j) the fees and expenses of the Indenture Trustee, the Guarantee Trustee and the Trustees, including the fees and disbursements of counsel for any such Trustees, (k) any fees payable in connection with the ratings, if any, of the Preferred Securities and Subordinated Debentures, and (l) all other costs and expenses incident to the performance of the Company's or the Trust's obligations hereunder (including costs incurred in closing the purchase of the Option Preferred Securities, if any) that are not otherwise specifically provided for in this section. The Company, upon your request, will provide funds in advance for filing fees in connection with "blue sky" qualifications. If the sale of the Preferred Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 5 hereof is not satisfied, because of any termination pursuant to Section 8 hereof or because of any refusal, inability or failure on the part of the Company or the Trust to perform any agreement herein or comply with any provision hereof other than by reason of default by any of the Underwriters, the Company will reimburse the Underwriters severally on demand for all reasonable out-of-pocket expenses, including fees and disbursements of Underwriters' counsel, reasonably incurred by the Underwriters in reviewing the Registration Statement and the Prospectus, and in investigating and making preparations for the marketing of the Preferred Securities. Section 5. Conditions of Underwriters' Obligations. The obligations of the Underwriters to purchase and pay for (i) the Firm Preferred Securities that they have respectively agreed to purchase pursuant to this Agreement (and any Option Preferred Securities as to which the option granted in Section 2 has been exercised and the Date of Delivery determined by you is the same as the Closing Time) at the Closing Time and (ii) the Option Preferred Securities at the Date of Delivery of the Option Shares, are subject to the accuracy of the representations and warranties of the Offerors contained herein as of the Closing Time or the Date of Delivery, as the case may be, and to the accuracy of the representations and warranties of the Offerors contained in certificates of any officer of the Company or trustees of the Trust delivered pursuant to the provisions hereof, to the performance by the Offerors of their obligations hereunder, and to the following further conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or shall be pending or, to your knowledge or the knowledge of the Offerors, shall be contemplated by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the satisfaction of counsel for the 13 Underwriters. If the Company and the Trust have elected to rely upon Rule 430A, a Prospectus containing the Rule 430A Information shall have been filed with the Commission in accordance with Rule 424(b) (or a post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A). (b) At the Closing Time, you shall have received a favorable opinion of Greenebaum Doll & McDonald PLLC, counsel for the Company and the Trust, dated as of the Closing Time, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Kentucky withh the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus, and is duly registered as a banking holding company under the Bank Holding Company Act of 1956, as amended. The Company is qualified to transact business as a foreign corporation and is in good standing in each of the jurisdictions in which the ownership or leasing of the Company's properties or the nature or conduct of its business requires such qualification, except where the failure to do so would not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and its consolidated subsidiaries taken as a whole. (ii) Each of the Principal Subsidiaries is validly existing and in good standing under the laws of the jurisdiction of its organization. Each such entity has all requisite power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement and the Prospectus. Each such entity is duly qualified to do business and is in good standing in each other jurisdiction in which the ownership or leasing of its properties or the nature or conduct of its business requires such qualification, except where the failure to do so would not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and its consolidated subsidiaries taken as a whole. (iii) All of the issued and outstanding shares of capital stock of each Principal Subsidiary has been duly authorized and validly issued, and is fully paid and non-assessable and the Company is the sole record owner of the outstanding capital stock of each of the Principal Subsidiaries. (iv) This Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the 14 Underwriters, constitutes a valid and binding agreement of the Company, enforceable i n accordance with its terms, except to the extent enforceability may be limited by the Permitted Exceptions and except to the extent that enforcement of the indemnification provisions set forth in Section 6 of this Agreement may be limited by federal or state securities laws or the public policy underlying such laws. (v) No authorization, approval, consent or order of, or filing or declaration with, any court or governmental agency or body is necessary for the valid authorization, issuance, sale and delivery of the Preferred Securities, the execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby, except such as have been obtained under the 1933 Act and the 1933 Act Regulations, the 1939 Act and the rules and regulations thereunder and such as may be necessary under state securities laws or required by the NASD in connection with the purchase and distribution of the Preferred Securities by the Underwriters, as to which such counsel need express no opinion. (vi) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms and provisions of, or (with or without the giving notice or the passage of time or both) constitute a default under, the charter or by-laws of the Company or the Principal Subsidiaries, respectively, or, under any indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument to which the Company or the Principal Subsidiaries, respectively, is a party or to which the Company or the Principal Subsidiaries, respectively, any of their respective properties or other assets, is subject; or, to such counsel's knowledge, any applicable statute, judgment, decree, order, rule or regulation of any court or governmental agency or body; or to such counsel's knowledge, result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or the Subsidiaries, respectively. (vii) The statements set forth in the Registration Statement and the Prospectus under the captions "Description of Preferred Securities," "Description of Subordinated Debentures," "Description of Guarantee" and "Relationship among the Preferred Securities, the Subordinated Debentures and the Guarantee," insofar as they purport to describe the provisions of the laws and documents referred to therein, fairly summarize the matters described therein. (viii) The Indenture has been duly qualified under the 1939 Act and has been duly authorized, executed and delivered by the Company and is a valid and 15 binding agreement of the Company, enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (ix) The Trust Agreement has been duly qualified under the 1939 Act and has been duly authorized, executed and delivered by the Company and the Administrative Trustees, and assuming due authorization, execution and delivery thereof by the Property Trustee and the Delaware Trustee, the Trust Agreement is a valid and binding agreement of the Company and the Administrative Trustees enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (x) The Guarantee has been duly qualified under the 1939 Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (xi) The Subordinated Debentures have been duly authorized and executed by the Company and, when authenticated by the Indenture Trustee, in accordance with the Indenture and delivered to the Trust against payment therefor as described in the Registration Statement and the Prospectus, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except to the extent that enforceability may be limited by the Permitted Exceptions. (xii) To such counsel's knowledge, there is not pending or threatened any action, suit, proceeding, inquiry or investigation against the Company, the Principal Subsidiaries or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, before or brought by any court or governmental agency or body or board of arbitrators, that are required to be described in the Registration Statement or the Prospectus but are not described as required. (xiii) The Registration Statement has become effective under the 1933 Act and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or is pending or contemplated under the 1933 Act. Other than financial statements and other financial and operating data and schedules contained therein, as to which counsel need express no opinion, the Registration Statement, all Preliminary Prospectuses, the Prospectus and any amendment or supplement thereto, appear on their face to conform as to form in all material respects with the requirements of the 16 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations thereunder. (xiv) The statements of law or legal conclusions and opinions set forth in the Registration Statement under the caption "Certain United States Federal Income Tax Consequences," subject to the assumptions and conditions described therein, constitute such counsel's opinion. (xv) The Trust is not an "investment company," or a company "controlled" by an "investment company," within the meaning of the 1940 Act. (xvi) The descriptions in the Prospectus of statutes, regulations, legal or governmental proceedings are accurate and present fairly a summary of the information required to be shown under the 1933 Act and the 1933 Act Regulations. Such counsel also shall state that they have no reason to believe that the Registration Statement, or any further amendment thereto made prior to the Closing Time or the Date of Delivery, as the case may be, on its effective date and as of the Closing Time or the Date of Delivery, as the case may be, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, or any amendment or supplement thereto made prior to the Closing Time or the Date of Delivery, as the case may be, as of its issue date and as of the Closing Time or the Date of Delivery, as the case may be, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that such counsel need express no belief regarding the financial statements and related schedules and other financial data contained in the Registration Statement, any amendment thereto, or the Prospectus, or any amendment or supplement thereto). In rendering the opinions set forth in Section 5(b), such counsel may rely on the following: (A) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, upon an opinion or opinions (in form and substance reasonably satisfactory to Underwriters' counsel) of other counsel familiar with the applicable laws, and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and certificates or 17 other written statements of officers or departments of various jurisdictions, having custody of documents respecting the existence or good standing of the Company provided that copies of all such opinions, statements or certificates shall be delivered to Underwriters' counsel. The opinion of counsel for the Company shall state that the opinion of any other counsel, or certificate or written statement, on which such counsel is relying is in form satisfactory to such counsel and that you and they are justified in relying thereon. (c) At the Closing Time, you shall have received a favorable opinion from King & Spalding counsel for the Underwriters, dated as of the Closing Time, with respect to the issuance and sale of the Preferred Securities, the Registration Statement, the Prospectus and other related matters as the Underwriters may reasonably require, and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass on such matters. (d) The favorable opinion of Richards, Layton & Finger, special Delaware counsel to the Offerors, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act; all filings required under the laws of the State of Delaware with respect to the formation and valid existence of the Trust as a business trust have been made; the Trust has all necessary power and authority to own property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement, the Preferred Securities and the Common Securities. (ii) Assuming due authorization, execution and delivery by the Company and the Trustees, the Trust Agreement is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability thereof may be limited by the Permitted Exceptions. (iii) The Common Securities have been duly authorized by the Trust Agreement and are validly issued and represent undivided beneficial interests in the assets of the Trust. (iv) The Preferred Securities have been duly authorized by the Trust Agreement and are validly issued and, subject to the terms of the Trust Agreement, when delivered to and paid for by the Underwriters 18 pursuant to this Agreement, will be validly issued, fully paid and non-assessable beneficial interests in the assets of the Trust; the holders of the Preferred Securities will, subject to the terms of the Trust Agreement, be entitled to the same limitation of personal liability under Delaware law as is extended to stockholders of private corporations for profit; and the issuance of the Preferred Securities is not subject to preemptive or other similar rights. (v) This Agreement has been duly authorized by the Trust. (vi) The issuance and sale by the Trust of the Preferred Securities and the Common Securities, the execution, delivery and performance by the Trust of this Agreement, the consummation by the Trust of the transactions contemplated hereby and the compliance by the Trust with its obligations hereunder will not violate (A) any of the provisions of the Certificate of Trust or the Trust Agreement or (B) any applicable Delaware law or administrative regulation. (e) The favorable opinion of Richards, Layton & Finger, special Delaware counsel to the Delaware Trustee, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of Delaware with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Trust Agreement. (ii) The execution, delivery and performance by the Delaware Trustee of the Trust Agreement has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. The Trust Agreement has been duly executed and delivered by the Delaware Trustee, and constitutes the legal, valid and binding obligation of the Delaware Trustee, enforceable against the Delaware Trustee in accordance with its terms, except as enforceability thereof may be limited by the Permitted Exceptions. (iii) The execution, delivery and performance of the Trust Agreement by the Delaware Trustee does not conflict with or constitute a breach of the articles of organization or bylaws of the Delaware Trustee. (iv) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for 19 the execution, delivery or performance by the Delaware Trustee of the Trust Agreement. (f) The favorable opinion, dated as of Closing Time, of Bingham Dana & Gould, counsel of Trust Company, as Indenture Trustee under the Indenture, as Guarantee Trustee under the Guarantee Agreement, and as Property Trustee under the Trust Agreement, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) Trust Company is a state chartered trust company, duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Trust Agreement, the Indenture and the Guarantee Agreement. (ii) The execution, delivery and performance by the Indenture Trustee of the Indenture, the execution, delivery and performance by the Property Trustee of the Trust Agreement, and the execution, delivery and performance by the Guarantee Trustee of the Guarantee Agreement have been duly authorized by all necessary corporate action on the part of the Indenture Trustee, the Property Trustee and the Guarantee Trustee, respectively. The Indenture has been duly executed and delivered by the Indenture Trustee, and constitutes the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms, except as enforceability thereof may be limited by the Permitted Exceptions. The Trust Agreement has been duly executed and delivered by the Property Trustee, and constitutes the legal, valid and binding obligation of the Property Trustee, enforceable against the Property Trustee in accordance with its terms, except as enforceability thereof may be limited by the Permitted Exceptions. The Guarantee Agreement has been duly executed and delivered by the Guarantee Trustee, and constitutes the legal, valid and binding obligation of the Guarantee Trustee, enforceable against the Guarantee Trustee in accordance with its terms, except as enforceability thereof may be limited by the Permitted Exceptions. (iii) The execution, delivery and performance of the Indenture by the Indenture Trustee, does not conflict with or constitute a breach of the articles of organization or bylaws of the Indenture Trustee. The execution, delivery and performance of the Trust Agreement by the Property Trustee does not conflict with or constitute a breach of the articles of organization or bylaws of the Property Trustee. The 20 execution, delivery and performance of the Guarantee Agreement by the Guarantee Trustee does not conflict with or constitute a breach of the articles of organization or bylaws of the Guarantee Trustee. (iv) No consent, approval or authorization of, or registration with or notice to, any Massachusetts or federal banking authority is required for the execution, delivery or performance by the Indenture Trustee of the Indenture. No consent, approval or authorization of, or registration with or notice to, any Massachusetts or federal banking authority is required for the execution, delivery or performance by the Property Trustee of the Trust Agreement. No consent, approval or authorization of, or registration with or notice to, any Massachusetts or federal banking authority is required for the execution, delivery or performance by the Guarantee Trustee of the Guarantee Agreement. (g) At the Closing Time, (i) the Registration Statement, and the Prospectus, as they may then be amended or supplemented, shall contain all statements that are required to be stated therein under the 1933 Act and the 1933 Act Regulations and in all material respects shall conform to the requirements of the 1933 Act and the 1933 Act Regulations; the Company shall have complied in all material respects with Rule 430A (if it shall have elected to rely thereon) and neither the Registration Statement nor the Prospectus, as they may then be amended or supplemented, shall contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) there shall not have been, since the respective dates as of which information is given in the Registration Statement, any material adverse change in the business, prospects, properties, assets, results of operations or condition (financial or otherwise) of the Company or the Trust, whether or not arising in the ordinary course of business, (iii) no action, suit or proceeding at law or in equity shall be pending or, to the best of Offeror's knowledge, threatened against the Company or the Trust that would be required to be set forth in the Prospectus other than as set forth therein and no proceedings shall be pending or, to the best knowledge of the Offerors, threatened against the Company or the Trust before or by any federal, state or other commission, board or administrative agency wherein an unfavorable decision, ruling or finding could materially adversely affect the business, prospects, assets, results of operations or condition (financial or otherwise) of the Company or the Trust, other than as set forth in the Prospectus, (iv) the Company and the Trust shall have complied with all agreements and satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Time, and (v) the representations and warranties of the Offerors set forth in Section 1 shall be accurate as though expressly made at and as of the Closing Time. At the Closing Time, you shall have received a certificate executed by the President and Chief Financial Officer of the Company dated as of the Closing Time, to such effect and with respect to the following additional matters: (A) the Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Prospectus has been issued, and no 21 proceedings for that purpose have been instituted or are pending or, to the best of their knowledge, threatened under the 1933 Act; and (B) they have reviewed the Registration Statement and the Prospectus and, when the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement, and the Prospectus and any amendments or supplements thereto contained all statements and information required to be included therein or necessary to make the statements therein not misleading and neither the Registration Statement, nor the Prospectus nor any amendment or supplement thereto included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus that has not been so set forth. (h) You shall have received from Ernst & Young LLP letters dated, respectively, the date hereof (but delivered prior to the execution of this Agreement) and the Closing Time and the Date of Delivery, in form heretofore agreed, with such variation, as may be reasonably acceptable to you. (i) At the Closing Time, counsel for the Underwriters shall have been furnished with all such documents, certificates and opinions as they may request for the purpose of enabling them to pass upon the issuance and sale of the Preferred Securities as contemplated in this Agreement and the matters referred to in Section 5(c) and in order to evidence the accuracy and completeness of any of the representations, warranties or statements of the Company and the Trust, the performance of any of the covenants of the Company and the Trust, or the fulfillment of any of the conditions herein contained; and all proceedings taken by the Company and the Trust at or prior to the Closing Time in connection with the authorization, issuance and sale of the Preferred Securities as contemplated in this Agreement shall be reasonably satisfactory in form and substance to you and to counsel for the Underwriters. The Company and the Trust will furnish you with such number of conformed copies of such opinions, certificates, letters and documents as you shall reasonably request. (j) The NASD, upon review of the terms of the public offering of the Preferred Securities, shall not have objected to such offering, such terms or the Underwriters' participation in the same. (k) Subsequent to the date hereof, there shall not have occurred any of the following: (i) if there has occurred or accelerated any outbreak of hostilities or other national or international calamity or crisis or change in economic or political conditions the effect of which on the financial markets of the United States is such as to make it, in your judgment, impracticable to market the Preferred Securities or enforce contracts for the sale of the Preferred Securities, or (ii) if trading in any securities of the Company has been suspended by the Commission or by the Nasdaq Stock Market, or if trading generally on the New York Stock Exchange or in the over-the-counter market has been suspended, or limitations on prices 22 for trading (other than limitations on hours or numbers of days of trading) have been fixed, or maximum ranges for prices for securities have been required, by the NASD or by order of the Commission or any other governmental authority, or (iii) if there has been any downgrading in the rating of the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the 1933 Act), or (iv) if a banking moratorium has been declared by federal or New York, Kentucky or Tennessee authorities, or (v) any federal or state statute, regulation, rule or order of any court or other governmental authority has been enacted, published, decreed or otherwise promulgated which in your reasonable opinion materially adversely affects or will materially adversely affect the business or operations of the Company or the Trust, or (vi) any action has been taken by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States. If any of the conditions specified in this Section 5 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this Agreement may be terminated by you on notice to the Company and the Trust at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party, except as provided in Section 4. Notwithstanding any such termination, the provisions of Section 6 shall remain in effect. The several obligations of the Underwriters to purchase Option Preferred Securities hereunder are subject to the satisfaction on and as of any Date of Delivery for Option Preferred Securities of the conditions set forth in this Section 5, except that, if any Date of Delivery for Option Preferred Securities is other than the Closing Time, the certificates, opinions and letters referred to in paragraphs (b), (c), (d), (e) and (f) shall be revised to reflect the sale of Option Preferred Securities. Section 6. Indemnification and Contribution. (a) Each of the Company and the Trust, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject under the 1933 Act, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (i) arise out of or are based upon any breach of any warranty or covenant of the Company or the Trust herein contained, (ii) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in (A) any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or (B) any application or other document, or any amendment or supplement thereto, executed by the Company or the Trust or based upon written information furnished by or on behalf of the Company or the Trust filed in any jurisdiction in order to qualify the Preferred Securities under the securities or blue sky laws thereof or filed with the Commission or any securities association or securities exchange (each an "Application"), or (iii) arise out of or are based upon the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any Application a material fact 23 required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company and the Trust shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company or the Trust by any Underwriter expressly for use therein. In addition to its other obligations under this Section 6(a), the Company and the Trust agrees that, as an interim measure during the pendency of any such claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in this Section 6(a), it will reimburse the Underwriters on a quarterly basis for all reasonable legal and other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company's and the Trust's obligation to reimburse the Underwriters for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. Any such interim reimbursement payments that are not made to an Underwriter within 30 days of a request for reimbursement shall bear interest at the prime rate (or reference rate or other commercial lending rate for borrowers of the highest credit standing) published from time to time by The Wall Street Journal (the "Prime Rate") from the date of such request. This indemnity agreement shall be in addition to any liabilities that the Company and the Trust may otherwise have. Each of the Company and the Trust will not, without the prior written consent of each Underwriter, settle or compromise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not such Underwriter is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of such Underwriter from all liability arising out of such action or claim (or related cause of action or portion thereof). The indemnity agreement in this Section 6(a) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each person, if any, who controls any Underwriter within the meaning of the 1933 Act to the same extent as such agreement applies to the Underwriters. (b) Each Underwriter, severally but not jointly, will indemnify and hold harmless the Company and the Trust against any losses, claims, damages or liabilities to which the Company and the Trust may become subject, under the 1933 Act, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any breach of any warranty or covenant by such Underwriter herein contained or any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement, any 462(b) Registration Statement or the Prospectus, 24 or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company or the Trust by such Underwriter expressly for use therein; and will reimburse the Company or the Trust for any legal or other expenses reasonably incurred by the Company or the Trust in connection with investigating or defending any such loss, claim, damage, liability or action. In addition to its other obligations under this Section 6(b), the Underwriters agree that, as an interim measure during the pendency of any such claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in this Section 6(b), they will reimburse the Company and the Trust on a quarterly basis for all reasonable legal and other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of their obligation to reimburse the Company and the Trust for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. Any such interim reimbursement payments that are not made to the Company or the Trust, as the case may be, within 30 days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. This indemnity agreement shall be in addition to any liabilities that the Underwriters may otherwise have. No Underwriter will, without the prior written consent of the Company and the Trust, settle or compromise or consent to the entry of judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not the Company or the Trust is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of the Company and the Trust from all liability arising out of such action or claim (or related cause of action or portion thereof). The indemnity agreement in this Section 6(b) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each officer and director of the Company and the Trust and each person, if any, who controls the Company and the Trust within the meaning of the 1933 Act to the same extent as such agreement applies to the Company and the Trust. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; no indemnification provided for in subsection (a) or (b) shall be available to any party who shall fail to give notice as provided in this subsection (c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice, but the omission so to notify the indemnifying party will not relieve the 25 indemnifying party from any liability that it may have to any indemnified party otherwise than under Section 6. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, except that if the indemnified party has been advised by counsel in writing that there are one or more defenses available to the indemnified party which are different from or additional to those available to the indemnifying party, then the indemnified party shall have the right to employ separate counsel and in that event the reasonable fees and expenses of such separate counsel for the indemnified party shall be paid by the indemnifying party; provided, however, that if the indemnifying party is the Company or the Trust, the Company or the Trust shall only be obligated to pay the reasonable fees and expenses of a single law firm (and any reasonably necessary local counsel) employed by all of the indemnified parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) It is agreed that any controversy arising out of the operation of the interim reimbursement arrangements set forth in Section 6(a) and (b) hereof, including the amounts of any requested reimbursement payments, the method of determining such amounts and the basis on which such amounts shall be apportioned among the indemnifying parties, shall be settled by arbitration conducted pursuant to the Code of Arbitration Procedure of the National Association of Securities Dealers, Inc. Any such arbitration must be commenced by service of a written demand for arbitration or a written notice of intention to arbitrate, therein electing the arbitration tribunal. In the event the party demanding arbitration does not make such designation of an arbitration tribunal in such demand or notice, then the party responding to said demand or notice is authorized to do so. Any such arbitration will be limited to the operation of the interim reimbursement provisions contained in Sections 6(a) and (b) hereof and will not resolve the ultimate propriety or enforceability of the obligation to indemnify for expenses that is created by the provisions of Sections 6(a) and (b). (e) In order to provide for just and equitable contribution in circumstances under which the indemnity provided for in this Section 6 is for any reason judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the right of appeal) to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Trust, on the one hand and the Underwriters on the other shall contribute to the aggregate losses, liabilities, 26 claims, damages and expenses of the nature contemplated by such indemnity incurred by the Company and the Trust, and one or more of the Underwriters, as incurred, in such proportions that (a) the Underwriters are responsible pro rata for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus bears to the public offering price (before deducting expenses) appearing thereon, and (b) the Company and the Trust are responsible for the balance, provided, however, that no person guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation; provided, further, that if the allocation provided above is not permitted by applicable law, the Company and the Trust, on the one hand, and the Underwriters on the other shall contribute to the aggregate losses in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Trust, on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company or the Trust, on the one hand or by the Underwriters on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Trust and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 6(e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 6(e). The amount paid or payable by a party as a result of the losses, claims, damages or liabilities referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending such action or claim. Notwithstanding the provisions of this Section 6(e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Preferred Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Underwriters' obligations in this Section 6(e) to contribute are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section 6(e), each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company or each trustee of the Trust who signed the Registration Statement, and each person, if any, who controls the Company or the Trust, within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company and the Trust. Section 7. Representations, Warranties and Agreements to Survive Delivery. The representations, warranties, indemnities, agreements and other statements of the Offerors or its officers set forth in or made pursuant to this Agreement will remain operative and in full force and 27 effect regardless of any investigation made by or on behalf of the Offerors, or any Underwriter or controlling person, and with respect to an Underwriter or the Offerors will survive delivery of and payment for the Preferred Securities or termination of this Agreement. Section 8. Effective Date of Agreement and Termination. (a) This Agreement shall become effective immediately as to Sections 4 and 6 and, as to all other provisions, at 10:00 a.m. E.D.T. on the first full business day following the date of execution of this Agreement; but this Agreement shall nevertheless become effective at such earlier time as you may determine on and by notice to the Company or by release of any of the Preferred Securities for sale to the public. For the purposes of this Section 8, the Preferred Securities shall be deemed to have been so released upon the release of publication of any newspaper advertisement relating to the Preferred Securities or upon the release by you of telegrams (i) advising the Underwriters that the Preferred Securities are released for public offering, or (ii) offering the Preferred Securities for sale to securities dealers, whichever may occur first. By giving notice before the time this Agreement becomes effective, you, or the Company, may prevent this Agreement from becoming effective, without liability of any party to any other party, except that the Company shall remain obligated to pay costs and expenses to the extent provided in Section 4 hereof. (b) You may terminate this Agreement, by notice to the Company and the Trust, at any time at or prior to the Closing Time (i) in accordance with the last paragraph of Section 5 of this Agreement, or (ii) if there has been since the respective dates as of which information is given in the Registration Statement, any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, prospects, management, properties, assets, results of operations or condition (financial or otherwise) of the Company, whether or not arising in the ordinary course of business, or (iii) if there has occurred or accelerated any outbreak of hostilities or other national or international calamity or crisis or change in economic or political conditions the effect of which on the financial markets of the United States is such as to make it, in your judgment, impracticable to market the Shares or enforce contracts for the sale of the Preferred Securities, or (iv) if trading in any securities of the Company has been suspended by the Commission or by the Nasdaq Stock Market or if trading generally on the New York Stock Exchange or in the over-the-counter market has been suspended, or limitations on prices for trading (other than limitations on hours or numbers of days of trading) have been fixed, or maximum ranges for prices for securities have been required, by the NASD or by order of the Commission or any other governmental authority, or (v) if there has been any downgrading in the rating of the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the 1933 Act), or (vi) if a banking moratorium has been declared by federal or New York, Kentucky or Tennessee authorities, or (vii) any federal or state statute, regulation, rule or order of any court or other governmental authority has been enacted, published, decreed or otherwise promulgated which in your reasonable opinion materially adversely affects or will materially adversely affect the business 28 or operations of the Company, or (viii) any action has been taken by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States. (c) If this Agreement is terminated pursuant to this Section 8, such termination shall be without liability of any party to any other party, except to the extent provided in Section 4. Notwithstanding any such termination, the provisions of Section 6 shall remain in effect. Section 9. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time to purchase the Preferred Securities that it or they are obligated to purchase pursuant to this Agreement (the "Defaulted Securities"), you shall have the right, within 36 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms set forth in this Agreement; if, however, you have not completed such arrangements within such 36-hour period, then: (a) If the aggregate number of Firm Preferred Securities which are Defaulted Securities does not exceed 10% of the aggregate number of Firm Preferred Securities to be purchased pursuant to this Agreement, the non- defaulting Underwriters shall be obligated to purchase the full amount thereof in the proportions that their respective underwriting obligation proportions bear to the underwriting obligations of all non-defaulting Underwriters, and (b) If the aggregate number of Firm Preferred Securities which are Defaulted Securities exceeds 10% of the aggregate number of Firm Preferred Securities to be purchased pursuant to this Agreement, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section 9 shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default that does not result in a termination of this Agreement, either you or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements, and the Company agrees promptly to file any amendments to the Registration Statement or supplements to the Prospectus that may thereby be made necessary. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section 9. Section 10. Default by the Company. If the Company or the Trust shall fail at the Closing Time to sell and deliver the aggregate number of Firm Preferred Securities that it is obligated to sell, then this Agreement shall terminate without any liability on the part of any non-defaulting party, 29 except to the extent provided in Section 4 and except that the provisions of Section 6 shall remain in effect. No action taken pursuant to this Section shall relieve the Company or the Trust from liability, if any, in respect to such default. Section 11. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered, mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed c/o Morgan Keegan & Company, Inc., 50 Front Street, Memphis, Tennessee 38103, Attention: Randy Coley (with a copy sent in the same manner to King & Spalding, 120 West 45th Street, New York, New York 10036, Attention: Stephen M. Wiseman); and notices to the Company shall be directed to it at 208 North Mayo Trail, Pikeville, Kentucky 41501 Attention: Richard M. Levy, Chief Financial Officer (with a copy sent in the same manner to Greenebaum Doll & McDonald PLLC, 1400 Vine Center Tower, Lexington, Kentucky 40593 Attention: Nicholas R. Glancy). Section 12. Parties. This Agreement is made solely for the benefit of and is binding upon the Underwriters, the Company and the Trust to the extent provided in Section 6, any person controlling the Company, the Trust or any of the Underwriters, the officers, directors and trustees of the Company, and their respective executors, administrators, successors and assigns and subject to the provisions of Section 6, no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser, as such purchaser, from any of the several Underwriters of the Preferred Securities. All of the obligations of the Underwriters hereunder are several and not joint. SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TENNESSEE. SPECIFIED TIME OF THE DAY REFERS TO UNITED STATES EASTERN TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. Section 14. Counterparts. This Agreement may be executed in one or more counterparts and when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. 30 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, and upon the acceptance hereof by the Underwriters, this instrument will become a binding agreement among the Company and the several Underwriters in accordance with its terms. Very truly yours, COMMUNITY TRUST BANCORP, INC. By:________________________________ Name: Title: CTBI PREFERRED CAPITAL TRUST By: COMMUNITY TRUST BANCORP, INC., on behalf of CTBI Preferred Capital Trust By:___________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first written above: MORGAN KEEGAN & COMPANY, INC. By:_______________________________ Name: Title: J.J.B. HILLIARD, W.L. LYONS, INC. By:_______________________________ Name: Title: 31 SCHEDULE A
Number of Firm Preferred Securities to be Purchased -------------------- Underwriter - ----------- Morgan Keegan & Company, Inc. J.J.B. Hilliard, W.L. Lyons, Inc. TOTAL
Schedule B Community Trust Bank, N.A. Community Trust Bank, FSB Trust Company of Kentucky Commercial Bank, West Liberty, Kentucky EX-4.1 3 CERTIFICATE OF TRUST OF CTBI Exhibit 4.1 CERTIFICATE OF TRUST OF CTBI PREFERRED CAPITAL TRUST This Certificate of Trust of the CTBI PREFERRED STOCK TRUST (the "Trust"), dated March 18, 1997, is being duly executed and filed by WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C.(S) 3801 et seq.) 1. NAME. The name of the business trust formed hereby is CTBI Preferred Capital Trust. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001, Attn: Corporate Trust Administration. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing with the Secretary of State. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, has executed this Certificate of Trust as of the date first above written. WILMINGTON TRUST COMPANY as Trustee By \s\ W. Chris Sponenberg ---------------------------------- Name: W. Chris Sponenberg Title: Senior Financial Services Officer EX-4.2 4 TRUST AGREEMENT OF CTBI Exhibit 4.2 TRUST AGREEMENT, dated as of March 18, 1997, by and between Community Trust Bancorp, Inc., a Kentucky corporation, as "Depositor", and Wilmington Trust Company, a Delaware banking corporation, as "Trustee". The Depositor and the Trustee hereby agree as follows: Section 1. The Trust. The trust created hereby shall be known as CTBI Preferred Capital Trust (the "Trust"), in which name the Trustee, or the Depositor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. Section 2. The Trust Estate. The Depositor hereby assigns, transfers, conveys and sets over to the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such amount in trust from the Depositor, which amount shall constitute the initial trust estate. The Trustee hereby declares that it will hold the trust estate in trust for the Depositor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 39 of Title 12 of the Delaware Code, 12 Del C (S) 3801 et seq (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustee is hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in accordance with the provisions of the Business Trust Act. Section 3. Amended and Restated Trust Agreement. The Depositor, the Trustee and certain other parties will enter into an amended and restated Trust Agreement, satisfactory to each such party and substantially in the form to be included as an exhibit to the 1933 Act Registration Statement (as defined below), to provide for the contemplated operation of the Trust created hereby and the issuance of the Capital Securities (as defined below) and common securities of the Trust to be referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement, the Trustee shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery of licenses, consents or approvals required by applicable law or otherwise. Section 4. Certain Authorizations. The Depositor and the Trustee hereby authorize and direct the Depositor, as the sponsor of the Trust, (i) to file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust (a) the Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post- effective amendments to such 1933 Act Registration Statement (including the prospectus and the exhibits contained therein), relating to the registration under the Securities Act of 1933, as amended, of the preferred securities of the Trust (the "Capital Securities") and certain other securities of the Depositor and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement")(including all pre-effective and post-effective amendments thereto) relating to the registration of the Capital Securities of the Trust under Section 12 of the Securities Exchange Act of 1934, as amended; (ii) to file with the National Association of Securities Dealers ("NASD") and execute on behalf of the Trust a listing application or applications and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Capital Securities to be listed on the NASD's Nasdaq National Market ("NASDAQ"); (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as the Depositor on behalf of the Trust, may deem necessary or desirable to register the Capital Securities under the securities or "Blue Sky" laws; and (iv) to execute on behalf of the Trust such Underwriting Agreements with one or more underwriters relating to the offering of the Capital Securities as the Depositor, on behalf of the Trust, may deem necessary or desirable. In the event that any filing referred to in clauses (i), (ii) or (iii) above is required by the rules and regulations of the Commission, the NASD or state securities or "Blue Sky" laws, to be executed on behalf of the Trust by the Trustee, the Depositor and any Trustee appointed pursuant to Section 6 hereof are hereby authorized to join in any such filing and to execute on behalf of the Trust any and all of the foregoing. Section 5. Counterparts. This Trust Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Section 6. Trustees. The number of Trustees initially shall be one (1) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor, which may increase or decrease the number of Trustees; provided, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any Trustee at any time. The Trustee may resign upon thirty days' prior notice to the Depositor. Section 7. Governing Law. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflicts of law principals). IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed as of the day and year first above written. COMMUNITY TRUST BANCORP, INC. as Depositor By: /s/ Richard M. Levy ---------------------------- Name: Richard M. Levy Title: Executive Vice President WILMINGTON TRUST COMPANY, as Trustee By: /s/ W. Chris Sponenberg ----------------------------- Name: W. Chris Sponenberg Title: Senior Financial Services Officer EX-4.3 5 AMENDMENT AND RESTATED TRUST AGREEMENT Exhibit 4.3 State Street Bank and Trust Company, not in its individual capacity but solely as Trustee By __________________________________ Name: _______________________________ Title: ______________________________ Richard M. Levy not in his individual capacity but solely as Trustee Jean R. Hale not in her individual capacity but solely as Trustee CTBI PREFERRED CAPITAL TRUST AMENDED AND RESTATED TRUST AGREEMENT among COMMUNITY TRUST BANCORP, INC., as Depositor STATE STREET BANK AND TRUST COMPANY, as Property Trustee WILMINGTON TRUST COMPANY, as Delaware Trustee, and THE ADMINISTRATIVE TRUSTEES NAMED HEREIN Dated as of _________ ___, 1997 TABLE OF CONTENTS
Section Page 1. Defined terms...................................................................... 2 1.1 Definitions................................................................... 2 2. Establishment Of The Trust......................................................... 11 2.1 Name.......................................................................... 11 2.2 Office of the Delaware Trust; Principal Place of Business..................... 11 2.3 Initial Contribution of Trust Property; Organizational Expenses............... 11 2.4 Issuance of the Preferred Securities.......................................... 11 2.5 Issuance of the Common Securities; Subscription and Purchase of Debentures.... 12 2.6 Declaration of Trust.......................................................... 12 2.7 Authorization to Enter into Certain Transactions.............................. 12 2.8 Assets of Trust............................................................... 16 2.9 Title to Trust Property....................................................... 16 3. Payment Account.................................................................... 16 3.1 Payment Account............................................................... 16 4. Distributions, Redemption.......................................................... 16 4.1 Distributions................................................................. 16 4.2 Redemption.................................................................... 17 4.3 Subordination of Common Securities............................................ 19 4.4 Payment Procedures............................................................ 20 4.5 Tax Returns and Reports....................................................... 20 4.6 Payment of Taxes, Duties, Etc. Of The Trust................................... 20 4.7 Payments Under Indenture...................................................... 20 5. Trust Securities Certificates...................................................... 20 5.1 Initial Ownership............................................................. 21 5.2 The Trust Securities Certificates............................................. 21 5.3 Execution And Delivery Of Trust Securities Certificates....................... 21 5.4 Registration Of Transfer And Exchange Of Preferred Securities Certificates.... 21 5.5 Mutilated, Destroyed, Lost Or Stolen Trust Securities Certificates............ 22 5.6 Persons Deemed Securityholders................................................ 23 5.7 Access To List Of Securityholders' Name And Addresses......................... 23 5.8 Maintenance Of Office Or Agency............................................... 23 5.9 Appointment Of Paying Agent................................................... 23
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Section Page 5.10 Ownership Of Common Securities By Depositor..................................... 24 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate.................................................................. 24 5.12 Notices To Clearing Agency...................................................... 25 5.13 Definitive Preferred Securities Certificates.................................... 25 5.14 Rights Of Securityholders....................................................... 26 6. Acts Of Securityholders; Meetings; Voting............................................. 27 6.1 Limitations on Voting Rights..................................................... 27 6.2 Notice of Meetings............................................................... 28 6.3 Meetings of Preferred Securityholders............................................ 28 6.4 Voting Rights.................................................................... 28 6.5 Proxies, Etc..................................................................... 28 6.6 Securityholder Action by Written Consent......................................... 29 6.7 Record Date for Voting and Other Purposes........................................ 29 6.8 Acts of Securityholders.......................................................... 29 6.9 Inspection of Records............................................................ 30 7. Representations And Warranties........................................................ 30 7.1 Representations and Warranties of the Bank....................................... 30 7.2 Representations and Warranties of the Delaware Bank.............................. 31 7.3 Representations and Warranties of Depositor...................................... 32 8. The Trustees.......................................................................... 33 8.1 Certain Duties and Responsibilities............................................... 33 8.2 Certain Notices................................................................... 34 8.3 Certain Rights of Property Trustee................................................ 35 8.4 Not Responsible for Recitals or Issuance of Securities............................ 37 8.5 May Hold Securities............................................................... 37 8.6 Compensation; Indemnity; Fees..................................................... 37 8.7 Corporate Property Trustee Required; Eligibility of Trustees...................... 37 8.8 Conflicting Interests............................................................. 38 8.9 Co-Trustees and Separate Trustee.................................................. 38 8.10 Resignation and Removal; Appointment of Successor................................ 40 8.11 Acceptance of Appointment by Successor........................................... 41 8.12 Merger, Conversion, Consolidation or Succession to Business...................... 42 8.13 Preferential Collection of Claims Against Depositor or Trust..................... 42 8.14 Reports by Property Trustee...................................................... 42 8.15 Reports to the Property Trustee.................................................. 43 8.16 Evidence of Compliance with Conditions Precedent................................. 43
-ii- TABLE OF CONTENTS
Section Page 8.17 Number of Trustees.................................................. 43 8.18 Delegation of Power................................................. 43 8.19 Voting.............................................................. 44 9. Termination, Liquidation And Merger...................................... 44 9.1 Termination upon Expiration Date..................................... 44 9.2 Early Termination.................................................... 44 9.3 Termination.......................................................... 44 9.4 Liquidation.......................................................... 44 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust.. 46 10. Miscellaneous Provisions................................................. 47 10.1 Limitation of Rights of Securityholders............................ 47 10.2 Amendment.......................................................... 47 10.3 Separability....................................................... 48 10.4 Governing Law...................................................... 48 10.5 Payments Due on Non-Business Day................................... 49 10.6 Successors......................................................... 49 10.7 Headings........................................................... 49 10.8 Reports, Notices and Demands....................................... 49 10.9 Agreement not to Petition.......................................... 50 10.10 Trust Indenture Act; Conflict with Trust Indenture Act............ 50 10.11 Acceptance of Terms of Trust Agreement, Guarantee and Indenture... 50
-iii- EXHIBITS
Description Exhibit Certificate of Trust........................................................ A Certificate Depository Agreement............................................ B Certificate Evidencing Common Securities.................................... C Form of Agreement as to Expenses and Liabilities............................ D Certificate Evidencing Preferred Securities................................. E
AMENDED AND RESTATED TRUST AGREEMENT CROSS-REFERENCE TABLE
Section of Section of Trust Indenture Act Indenture of 1939, As Amended 310(a)(1)................................................................. 8.7 310(a)(2)................................................................. 8.7 310(a)(3)................................................................. 8.7 310(a)(4)............................................................. 2.7(a)(1) 310(b).................................................................... 8.8 311(a).................................................................... 8.13 311(b).................................................................... 8.13 312(a).................................................................... 5.7 312(b).................................................................... 5.7 312(c).................................................................... 5.7 313(a)................................................................. 8.14(a) 313(a)(4).............................................................. 8.14(b) 313(b)................................................................. 8.14(b) 313(c)................................................................. 8.14(b) 313(d)................................................................. 8.14(c) 314(a).................................................................... 8.15 314(b).......................................................... Not Applicable 314(c)(1)................................................................. 8.16 314(c)(2)................................................................. 8.16 314(c)(3)....................................................... Not Applicable 314(d).......................................................... Not Applicable 314(e)................................................................ 1.1, 8.16 315(a).......................................................... 8.1(a), 8.3(a) 315(b).................................................................... 8.2 315(c)................................................................. 8.1(a) 315(d)................................................................ 8.1, 8.3 315(e).......................................................... Not Applicable 316(a).......................................................... Not Applicable 316(a)(1)(A).................................................... Not Applicable 316(a)(1)(B).................................................... Not Applicable
-iv-
316(a)(2)................................ Not Applicable 316(b)................................... Not Applicable 316(c).............................................. 6.7 317(a)(1)................................ Not Applicable 317(a)(2)................................ Not Applicable 317(b).............................................. 5.9 318(a)............................................. 10.10
-v- AMENDED AND RESTATED TRUST AGREEMENT THIS AMENDED AND RESTATED TRUST AGREEMENT is entered into and effective as of April ____, 1997, by and between (i) COMMUNITY TRUST BANCORP, INC., a Kentucky corporation (including any successors or assigns, the "Depositor"), (ii) STATE STREET BANK AND TRUST COMPANY, a Massachusetts corporation duly organized and existing under the laws of the State of Massachusetts, as property trustee (the "Property Trustee" and, in its separate corporate capacity and not in its capacity as Property Trustee, the "Bank"), (iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation, duly organized and existing under the laws of the State of Delaware, as Delaware Trustee (the "Delaware Trustee" and, in its separate corporate capacity and not in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) JEAN R. HALE, an individual, and RICHARD M. LEVY, an individual, each of whose address is c/o Community Trust Bancorp, Inc., 208 North Mayo Trail, Pikeville, Kentucky 41501 (each an "Administrative Trustee" and collectively the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. RECITALS: A. Whereas, the Depositor and the Delaware Trustee have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into of that certain Trust Agreement, dated as of March 18, 1997 (the "Original Trust Agreement"), and by the execution and filing by the Delaware Trustee with the Secretary of State of the State of Delaware of the Certificate of Trust, filed on March 18, 1997 the form of which is attached as Exhibit A; and B. Whereas, the Depositor, the Delaware Trustee, the Property Trustee and the Administrative Trustees desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Debentures and (iv) the appointment of the Property Trustee; Agreement: NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party, for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows: 1. DEFINED TERMS. 1.1 Definitions. (a) For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Section have the meanings assigned to them in this Section and include the plural as well as the singular; (2) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) unless the context otherwise requires, any reference to a "Section" refers to a Section, as the case may be, of this Trust Agreement; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Section or other subdivision. (b) "Act" has the meaning specified in Section 6.8. (c) "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the amount of additional interest accrued on interest in arrears and paid by the Depositor on a Like Amount of Debentures for such period. (d) "Additional Sums" has the meaning specified in Section 2.5(c) of the Indenture. (e) "Administrative Trustee" means each of Richard M. Levy and Jean R. Hale solely in their capacity as an Administrative Trustee of the Trust formed and continued hereunder and not in their individual capacity, or such Administrative Trustee's successor in interest in such capacity, or any successor trustee appointed as herein provided. (f) "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. (g) "Bank" has the meaning specified in the preamble to this Trust Agreement. (h) "Bankruptcy Event" means, with respect to any Person: -2- (1) the entry of a decree or order by a court having jurisdiction in the premises adjudging such Person as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of or in respect of such Person under the Federal Bankruptcy Code or any other similar applicable Federal or State law, and the continuance of any such decree or order unvacated and unstayed for a period of 90 days; or the commencement of an involuntary case under the Federal Bankruptcy Code in respect of such Person, which shall continue undismissed for a period of 90 days or entry of an order for relief in such case; or the entry of a decree or order of a court having jurisdiction in the premises for the appointment on the ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency of such Person or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; or (2) the institution by such Person of proceedings to be adjudicated a voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy proceeding against it, or the filing by such Person of a petition or answer or consent seeking liquidation or reorganization under the Federal Bankruptcy Code or other similar applicable Federal or State law, or the consent by such Person to the filing of any such petition or to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of such Person or of its property, or shall make a general assignment for the benefit of creditors. (i) "Bankruptcy Laws" has the meaning specified in Section 10.9. (j) "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Depositor to have been duly adopted by the Depositor's Board of Directors, or such committee of the Board of Directors or officers of the Depositor to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the appropriate Trustee. (k) "Book Entry Preferred Securities Certificates" means certificates representing Preferred Securities issued in global, fully registered form to the Clearing Agency as described in Section 5.11. (l) "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture Trustee is closed for business. (m) "Capital Event" means that CTBI Trust has received an opinion of independent counsel experienced in such matters that the Company cannot, or within 90 days of such opinion, will not be permitted by the applicable regulatory authorities, due to a change in law, regulation, -3- policy or guideline, to account for the Preferred Securities as Tier I Capital under the capital guidelines or policies of the Federal Reserve. (n) "Certificate Depository Agreement" Trust, means the agreement among the Depositor and The Depositary Trust Company, as the initial Clearing Agency, dated as of the Closing Date, relating to the Trust Securities Certificates, substantially in the form attached as Exhibit B, as the same may be amended and supplemented from time to time. (o) "Certificate of Trust" means the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust, as amended or restated from time to time. (p) "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository Trust Company will be the initial Clearing Agency. (q) "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. (r) "Closing Date" means the date of execution and delivery of this Trust Agreement. (s) "Code" means the Internal Revenue Code of 1986, as amended. (t) "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. (u) "Common Security" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. (v) "Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit C. (w) "Corporate Trust Office" means the principal corporate trust office of the Property Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110. (x) "Debenture Event of Default" means an "Event of Default" as defined in the Indenture. -4- (y) "Debenture Redemption Date" means, with respect to any Debentures to be redeemed under the Indenture, the date fixed for redemption under the Indenture. (z) "Debenture Tax Event" means a "Tax Event" as defined in the Indenture. (aa) "Debenture Trustee" means State Street Bank and Trust Company, a Massachusetts banking corporation organized under the laws of the State of Massachusetts and any successor thereto, as trustee under the Indenture. (bb) "Debentures" means the $_____________ aggregate principal amount of the Depositor's _______% Subordinated Debentures, issued pursuant to the Indenture. (cc) "Definitive Preferred Securities Certificates" means either or both (as the context requires) of (a) Preferred Securities Certificates issued as Book-Entry Preferred Securities Certificates as provided in Section 5.11(a) and 5.11(b) and (b) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. (dd) "Delaware Bank" has the meaning specified in the preamble to this Trust Agreement. (ee) "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Delaware Code Sections 3801 et seq, as it may be amended from time to time. (ff) "Delaware Trustee" means the commercial bank or trust company identified as the "Delaware Trustee" in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust performed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. (gg) "Depositor" has the meaning specified in the preamble to this Trust Agreement. (hh) "Distribution Date" has the meaning specified in Section 4.1(a). (ii) "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.1. (jj) "Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the occurrence of a Debenture Event of Default; or -5- (2) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (3) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (4) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in the performance of which or the breach of which is dealt with in clause (b) or (c), above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the defaulting Trustee or Trustees by the Holders of at least 25% in aggregate liquidation preference of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) the occurrence of a Bankruptcy Event with respect to the Property Trustee and the failure by the Depositor to appoint a successor Property Trustee within 60 days thereof. (kk) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (ll) "Expense Agreement" means the Agreement as to Expenses and Liabilities between the Depositor and the Trust, substantially in the form attached as Exhibit D, as amended from time to time. (mm) "Expiration Date" has the meaning specified in Section 9.1. (nn) "Extended Interest Payment Period" has the meaning specified in Section 4.1 of the Indenture. (oo) "Guarantee" means the Guarantee Agreement executed and delivered by the Depositor and State Street Bank and Trust Company as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the holders of the Preferred Securities, as amended from time to time. (pp) "Indenture" means the Indenture, dated as of ___________ ____, 1997, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time. (qq) "Investment Company Event" means the receipt by the Trust of an Opinion of Counsel, rendered by a law firm experienced in such matters, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be considered an "investment company" that is required -6- to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Preferred Securities under this Trust Agreement. (rr) "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trusty, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. (ss) "Like Amount" means (a) with respect to a redemption of Trust Securities, Trust Securities having a Liquidation Amount equal to the principal amount of Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities and (b) with respect to a distribution of Debentures to Holders of Trust Securities in connection with a termination or liquidation of the Trust, Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Debentures are distributed. (tt) "Liquidation Amount" means the stated amount of $25 per Trust Security. (uu) "Liquidation Date" means the date on which Debentures are to be distributed to Holders of Trust Securities in connection with a termination and liquidation of the Trust pursuant to Section 904(a). (vv) "Liquidation Distribution" has the meaning specified in Section 9.4(d). (ww) "1940 Act" means the Investment Company Act of 1940, as amended. (xx) "Officers' Certificate" means a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 816 shall be the principal executive, financial or accounting officer of the Depositor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided in this Trust Agreement shall include: (1) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (2) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (3) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and -7- (4) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. (yy) "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but not an employee of any thereof, and who shall be reasonably acceptable to the Property Trustee. (zz) "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. (aaa) "Outstanding", when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore executed and delivered under this Trust Agreement, except: (1) Preferred securities theretofore canceled by the Property Trustee or delivered to the Property Trustee for cancellation; (2) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that, if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and (3) Preferred Securities which have been paid or in exchange for or in lieu of which other Preferred Securities have been executed and delivered pursuant to Sections 5.4, 5.5, 5.11 and 5.13; provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or wavier, only Preferred Securities that such Trustee knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right so to the Depositor or any Affiliate of the Depositor. (bbb) "Owner" means each Person who is the beneficial owner of a Book Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an -8- account with such Clearing Agency (directly or indirectly, in accordance with the rules of such clearing Agency). (ccc) "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.9 and shall initially be the Bank. (ddd) "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee with the Bank in its trust department for the benefit of the Securityholders in which all amounts paid in respect of the Debentures will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Sections 4.1 and 4.2. (eee) "Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. (fff) "Preferred Security" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. (ggg) "Preferred Securities Certificate", means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit E. (hhh) "Property Trustee" means the commercial bank or trust company identified as the "Property Trustee", in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust heretofore formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as herein provided. (iii) "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Debenture Redemption Date and the stated maturity of the Debentures shall be a Redemption Date for a Like Amount of Trust Securities. (jjj) "Redemption Price" means with respect to any Trust Security, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, paid by the Depositor upon the concurrent redemption of a Like Amount of Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among the Trust Securities. (kkk) "Relevant Trustee" shall have the meaning specified in Section 8.10. -9- (lll) "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 5.4. (mmm) "Securityholder" or "Holder" means a Person in whose name a Trust Security or Securities is registered in the Securities Register; any such Person is a beneficial owner within the meaning of the Delaware Business Trust Act. (nnn) "Tax Event" means the receipt by the Trust of an Opinion of Counsel, rendered by a law firm experienced in such matters, to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Preferred Securities under this Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest payable by the Depositor on the Debentures is not, or within 90 days after the date of such Opinion of Counsel, will not be, deductible by the Depositor, in whole or in part, for United States federal income tax purposes or (iii) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. (ooo) "Trust" means the Delaware business trust created and continued hereby and identified on the cover page to this Trust Agreement. (ppp) "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Trust Agreement and any such modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Trust Agreement and any such modification, amendment or supplement, respectively. (qqq) "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. (rrr) "Trust Property" means (a) the Debentures, (b) the rights of the Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to, the Payment Account and (d) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the trusts of this Trust Agreement. -10- (sss) "Trust Security" means any one of the Common Securities or the Preferred Securities. (ttt) "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. (uuu) "Trustee" means, collectively, the Property Trustee, the Delaware Trustee and the Administrative Trustees. (vvv) "Underwriting Agreement" means the Underwriting Agreement, dated as of _________ ____, 1997, among the Trust, the Depositor and the Underwriter named therein. 2. Establishment Of The Trust. 2.1 Name. The trust created and continued hereby shall be known as "CTBI Preferred Capital Trust," as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may engage in the transactions contemplated hereby, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. 2.2 Office of the Delaware Trust; Principal Place of Business. The address of the Delaware Trustee in the State of Delaware is c/o Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is c/o Community Trust Bancorp, Inc., 208 North Mayo Trail, Pikeville, Kentucky 41501. 2.3 Initial Contribution of Trust Property; Organizational Expenses. The trustees acknowledge receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. 2.4 Issuance of the Preferred Securities. On _________ ____, 1997, the Depositor, on behalf of the Trust and pursuant to the Original Trust Agreement, executed and delivered the Underwriting Agreement. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2 and deliver in accordance with the Underwriting Agreement Preferred Securities Certificates, registered in the name of the nominee of the initial Clearing Agency, in an aggregate amount of ___________. Preferred Securities having an aggregate Liquidation Amount of $_________, against receipt of the aggregate purchase price of such Preferred Securities of -11- $_____________, which amount such Administrative Trustee shall promptly deliver to the Property Trustee. 2.5 Issuance of the Common Securities; Subscription and Purchase of Debentures. (a) Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute and deliver Common Securities certificates, registered in the name of the Depositor, in an aggregate amount of ________ Common Securities having an aggregate liquidation amount of $____________, against receipt of the aggregate purchase price of such Common Securities of $___________, which amount such Administrative Trustee shall promptly deliver to the Property Trustee. (b) Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor, Debentures, registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to $_____________, and, in satisfaction of the purchase price for such Debentures, an Administrative Trustee, on behalf of the Trust, shall transfer $___________ to the Depositor. 2.6 Declaration of Trust. The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities and use the proceeds from such sale to acquire the Debentures, and (b) to engage in those activities necessary, convenient or incidental thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept such appointment. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. 2.7 Authorization to Enter into Certain Transactions. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section and Section 8, and in accordance with the following provisions (i) and (ii), the Administrative Trustees shall have the authority to enter into all transactions and agreements determined by the Administrative Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Administrative Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: -12- (1) As among the Trustees, each Administrative Trustee, acting singly or jointly, shall have the power and authority to act on behalf of the Trust with respect to the following matters: (A) the issuance and sale of the Trust Securities; (B) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and the Certificate Depository Agreement and such other agreements or documents as may be necessary or desirable in connection with the purposes and function of the Trust; (C) assisting in the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act; (D) assisting in the listing of the Preferred Securities upon the NASDAQ National Market or such securities exchange or exchanges as shall be determined by the Depositor and the registration of the Preferred Securities under the Securities Exchange Act of 1934, as amended, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (E) the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement; (F) the appointment of a Paying Agent, authenticating agent and Securities Registrar in accordance with this Trust Agreement; (G) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; (H) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; and (I) the taking of any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). -13- (2) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters: (A) the establishment of the Payment Account; (B) the receipt of the Debentures; (C) the collection of interest, principal and any other payments made in respect of the Debentures in the Payment Account; (D) the distribution of amounts owed to the Securityholders in respect of the Trust Securities in accordance with the terms of this Trust Agreement; (E) the exercise of all of the rights, powers and privileges of a holder of the Debentures; (F) the sending of notices of default and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement; (G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust; (I) after an Event of Default the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder); (J) registering transfers of the Trust Securities in accordance with this Trust Agreement; and (K) except as otherwise provided in this Section 2.7(a)(2), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.7(a)(1). (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust -14- Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money or issue any other debt or (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects): (1) the preparation and filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on the appropriate form in relation to the Preferred Securities and the Debentures, including any amendments thereto; (2) the determination of the states in which to take appropriate action to qualify or, register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states; (3) the preparation for filing by the Trust and execution on behalf of the Trust of an application to the NASDAQ National Market or a national stock exchange or other organizations for listing upon notice of issuance of any Preferred Securities and to file or cause an Administrative Trustee to file thereafter with such exchange or organization such notifications and documents as may be necessary from time to time; (4) the preparation for filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) or 12(g) of the Exchange Act, including any amendments thereto; (5) the negotiation of the terms of, and the execution an delivery of, the Underwriting Agreement providing for the sale of the Preferred Securities; and (6) the taking of any other actions necessary or desirable to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the -15- Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act, will be classified as a "grantor trust" and not as an association taxable as a corporation for United States federal income tax purposes and so that the Debentures will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, subject to Section 10.2, the Depositor and the Administrative Trustees are authorized to take any action, not in consistent with applicable law or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in their discretion to be necessary or desirable for such purposes. 2.8 Assets of Trust. The assets of the Trust shall consist of the Trust Property. 2.9 Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders in accordance with this Trust Agreement. 3. Payment Account. 3.1 Payment Account. (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments or proceeds with respect to, the Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof. 4. Distributions, Redemption. 4.1 Distributions. (a) Distributions on the Trust Securities shall be cumulative, and will accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from _________, 1997, and, except during any Extended Interest Payment Period with respect to the Debentures, shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 1997 (each date on which distributions are payable in accordance with the foregoing a "Distribution Date"). -16- If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day (and without any additional Distributions, interest or other payment in respect of any such delay), in each case with the same force and effect as if made on the date such payment was originally payable. (b) The Trust Securities represent undivided beneficial interests in the Trust Property, and the Distributions on the Trust Securities shall be payable at a rate of _____% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full period shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of Distributions for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30 day months. During any Extended Interest Payment Period with respect to the Debentures, Distributions on the Preferred Securities will be deferred for a period equal to the Extended Interest Payment Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (c) Distributions on the Trust Securities shall be made by the Property Trustee solely from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and immediately available in the Payment Account for the payment of such Distributions. (d) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to such Distribution Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be the 15th day of the month in which the relevant Distribution Date occurs. 4.2 Redemption. (a) On each Debenture Redemption Date and on the stated maturity of the Debentures, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. (b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Securities Register. The Property Trustee shall have no responsibility for the accuracy of any CUSIP number contained in such notice. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; -17- (3) the CUSIP number; (4) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the aggregate Liquidation Amount of the particular Trust Securities to be redeemed; and (5) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accumulate on and after said date. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has immediately available funds then on hand and available in the Payment Account for the payment of such Redemption Price. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption Date, subject to Section 4.2(c), the Property Trustee will, so long as the Preferred Securities are in book-entry-only form, deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price and will give such Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the holders thereof. If the Preferred Securities are no longer in book-entry-only form, the Property Trustee, subject to Section 4.2(c), will deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price and any Distribution payable on or prior to the Redemption Date, but without interest, and such Securities will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accumulate, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. -18- (e) Payment of the Redemption Price on the Trust Securities shall be made to the record holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to the relevant Redemption Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be a date at least fifteen days prior to the relevant Redemption Date. (f) Subject to Section 4.3(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Preferred Securities. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the outstanding Preferred Securities not previously called for redemption, by such method (including, without limitation, by lot) as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $25 or an integral multiple of $25 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed. 4.3 Subordination of Common Securities. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made, subject to Section 4.2(f), pro rata among the Common Securities and the Preferred Securities based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date any Event of Default resulting from a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all Distribution periods terminated on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Preferred Securities then due and payable. -19- (b) In the case of the occurrence of any Event of Default resulting from a Debenture Event of Default, the Holder of Common Securities will be deemed to have waived any right to act with respect to any such Event of Default under this Trust Agreement until the effect of all such Events of Default with Respect to the Preferred Securities shall have been cured, waived or otherwise eliminated. Until any such Event of Default under this Trust Agreement with respect to the Preferred Securities shall have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. 4.4 Payment Procedures. Payments of Distributions (including Additional Amounts, if applicable) in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency in immediately available funds, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable distribution dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Common Securityholder. 4.5 Tax Returns and Reports. The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared and filed) the appropriate Internal Revenue Service Form required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the appropriate Internal Revenue Service Form required to be furnished to such Securityholder or the information required to be provided on such form. The Administrative Trustees shall provide the Depositor with a copy of all such returns and reports promptly after such filing or furnishing. The Property Trustee shall comply with the United States federal withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. 4.6 Payment of Taxes, Duties, Etc. Of The Trust. Upon receipt under the Debentures of Additional Sums, the Property Trustee, at the direction of an Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or governmental charges of whatsoever nature (other than withholding taxes) imposed on the Trust by the United States or any other taxing authority. 4.7 Payments Under Indenture. Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder has directly received under the Indenture pursuant to Section 5.14(b) or 5.14(c) hereof. 5. Trust Securities Certificates. -20- 5.1 Initial Ownership. Upon the creation of the Trust and the contribution by the Depositor pursuant to Section 2.3 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust. 5.2 The Trust Securities Certificates. The Preferred Securities Certificates shall be issued in minimum denominations of $25 Liquidation Amount and integral multiples of $25 in excess thereof, and the Common Securities Certificates shall be issued in denominations of $25 Liquidation Amount and integral multiples thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of the Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Sections 5.4, 5.11 and 5.13. 5.3 Execution And Delivery Of Trust Securities Certificates. On the Closing Date and on the date on which the Underwriter exercises the Option, as applicable (the "Option Closing Date"), the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5, to be executed on behalf of the Trust by at least one of the Administrative Trustees and delivered to or upon the written order of the Depositor, signed by its President, any Vice President, the Treasurer or any Assistant Treasurer without further corporate action by the Depositor, in authorized denominations. 5.4 Registration Of Transfer And Exchange Of Preferred Securities Certificates. (a) The Depositor shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.8, a register or registers for the purpose of registering Trust Securities Certificates and transfers and exchanges of Preferred Securities Certificates (herein referred to as the "Securities Register") in which the registrar designated by the Depositor (the "Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates (subject to Section in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Property Trustee shall be the initial Securities Registrar. (b) Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.8, the Administrative Trustees or any one of them shall execute and deliver, in the name of the designated transferee or transferees, one or -21- more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount dated the date of execution by such Administrative Trustee or Trustees. The Securities Registrar shall not be required to register the transfer of any Preferred Securities that have been called for redemption. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.8. (c) Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Property Trustee and the Securities Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Property Trustee in accordance with its customary practice. The Trust shall not be required to (i) issue, register the transfer of, or exchange any Preferred Securities during a period beginning at the opening of business 15 calendar days before the date of mailing of a notice of redemption of any Preferred Securities called for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Preferred Securities being redeemed in part. (d) No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. 5.5 Mutilated, Destroyed, Lost Or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust shall execute and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. -22- 5.6 Persons Deemed Securityholders. The Trustees, the Paying Agent and the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and neither the Trustees nor the Securities Registrar shall be bound by any notice to the contrary. 5.7 Access To List Of Securityholders' Name And Addresses. At any time when the Property Trustee is not also acting as the Securities Registrar, the Administrative Trustees or the Depositor shall furnish or cause to be furnished to the Property Trustee (a) semi-annually on or before January 15 and July 15 in each year, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent record date and (b) promptly after receipt by any Administrative Trustee or the Depositor of a request therefor from the Property Trustee in order to enable the Property Trustee to discharge its obligations under this Trust Agreement, in each case to the extent such information is in the possession or control of the Administrative Trustees or the Depositor and is not identical to a previously supplied list or has not otherwise been received by the Property Trustee in its capacity as Securities Registrar. The rights of Securityholders to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities, and the corresponding rights of the Trustee shall be as provided in the Trust Indenture Act. Each Holder, by receiving and holding a Trust Securities Certificate, and each owner shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. 5.8 Maintenance Of Office Or Agency. The Administrative Trustees shall maintain in Boston, Massachusetts, an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate the principal corporate trust office of the Property Trustee, at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department as the principal corporate trust office for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor and to the Securityholders of any change in the location of the Securities Registrar or any such office or agency. 5.9 Appointment Of Paying Agent. The Paying Agent shall make Distributions to Securityholders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent shall initially be the Property Trustee, and any co-paying agent chosen by the Property Trustee, and acceptable to the Administrative Trustees, and the Depositor. Any Person acting as Paying -23- Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees, the Property Trustee and the Depositor. In the event that the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.1, and 8.6 shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder. Any reference to this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. 5.10 Ownership Of Common Securities By Depositor. On the Closing Date, the Depositor shall acquire and retain beneficial and record ownership of the Common Securities. To the fullest extent permitted by law, any attempted transfer of the Common Securities (other than a transfer in connection with a merger or consolidation of the Depositor into another corporation pursuant to Section 12.1 of the Indenture) shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE". 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate. (a) The Preferred Securities Certificates, upon original issuance, will be issued in the form of a typewritten Preferred Securities Certificate or Certificates representing Book-Entry Preferred Securities Certificates, to be delivered to or held on behalf of the Depositary Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such Book-Entry Preferred Securities Certificate or Certificates shall initially be registered on the Securities Register in the name of Cede & Co. the nominee of the initial Clearing Agency, and no beneficial owner will receive a Definitive Preferred Securities Certificate representing such beneficial owner's interest in such Preferred Securities, except as provided in Section 5.13 unless and until Definitive Preferred Securities Certificates have been issued to beneficial owners pursuant to Section 5.13: (1) the provisions of this Section 5.11(a) shall be in full force and effect; (2) the Securities Registrar, the Paying Agent and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement relating to the Book -24- Entry Preferred Securities Certificates (including the payment of the Liquidation Amount of and Distributions on the Book-Entry Preferred Securities) as the sole Holder of Book-Entry Preferred Securities and shall have no obligations to the Owners thereof; (3) to the extent that the provisions of this Section 5.11 conflict with any other provisions of this Trust Agreement, the provisions of the Section 5.11 shall control; and (4) the rights of the Owners of the Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Certificate Depository Agreement, unless and until Definitive Preferred Securities Certificates are issued pursuant to Section 5.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments on the Preferred Securities to such Clearing Agency Participants. Any Clearing Agency designated pursuant hereto will not be deemed an agent of the Trustees for any purpose. (b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate. 5.12 Notices To Clearing Agency. To the extent that a notice or other communication to the Owners is required under this Trust Agreement, unless and until Definitive Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners. 5.13 Definitive Preferred Securities Certificates. If (a) the Depositor advises the Trustees in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor, or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the Depositary is required to be so registered to act as such depositary, (b) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, or (c) after the occurrence of a Debenture Event of Default, Owners of Preferred Securities Certificates representing beneficial interests aggregating at least a majority of the Liquidation Amount advise the Property Trustee in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Owners of Preferred Securities Certificates, then the Property Trustee shall notify the Clearing Agency, and the Clearing Agency shall notify all Owners of Preferred Securities Certificates, of the occurrence of any such event and of the availability of the Definitive Preferred Securities Certificates to owners of such class or classes, as applicable, requesting the same. Upon surrender to the Property Trustee of the typewritten Preferred Securities Certificate or Certificates representing the Book-Entry Preferred Securities Certificates by the Clearing Agency, accompanied by -25- registration instructions, the Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Securityholders. The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by the execution thereof by the Administrative Trustees or any one of them. 5.14 Rights Of Securityholders. (a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.9, and the Securityholders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or similar rights. When issued and delivered to the Holders of the Preferred Securities against payment of the purchase price therefor, the Preferred Securities will be fully paid and nonassessable interests in the Trust. The Holders of the Preferred Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. (b) For so long as any Preferred Securities remain Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Debentures fail to declare the principal of all of the Debentures to be immediately due and payable, the Holders of at least 25% in Liquidation Amount of the Preferred Securities then Outstanding shall have such right by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on all of the Debentures shall become immediately due and payable, provided that the payment of principal and interest on such Debentures shall remain subordinated to the extent provided in the Indenture. (c) For so long as any Preferred Securities remain outstanding, if, upon a Debenture Event of Default, arising from the failure to pay interest or principal on the Debentures, the Holders of any Preferred Securities then Outstanding shall, to the fullest extent permitted by law, have the right to directly institute proceedings for enforcement of payment to such Holders of principal of or interest on the Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of such Holders. 6. Acts Of Securityholders; Meetings; Voting. -26- 6.1 Limitations on Voting Rights. (a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.2 and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Debentures are held by the Property Trustee, the Property Trustee shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Debentures, (ii) waive any past default which is waivable under Section 6 of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a majority in Liquidation Amount of all Outstanding Preferred Securities; provided, however, that where a consent under the Indenture would require the consent of each Holder of Outstanding Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each holder of Preferred Securities. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Outstanding Preferred Securities, except by a subsequent vote of the Holders of the outstanding Preferred Securities. The Property Trustee shall notify each Holder of the Outstanding Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will continue to be classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes on account of such action. (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a majority in Liquidation Amount of the Outstanding Preferred Securities. No amendment to this Trust Agreement may be made if, as a result of such amendment, the Trust would cease to be classified as a grantor trust or would be classified as an association taxable as a corporation for United States federal income tax purposes. -27- 6.2 Notice of Meetings. Notice of all meetings of the Preferred Securityholders, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each Preferred Securityholder of record, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. 6.3 Meetings of Preferred Securityholders. (a) No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Preferred Securityholders of 25% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Preferred Securityholders to vote on any matters as to which the Preferred Securityholders are entitled to vote. (b) Preferred Securityholders of record of 50% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders. (c) If a quorum is present at a meeting, an affirmative vote by the Preferred Securityholders of record present, in person or by proxy, holding more than a majority of the Preferred Securities (based upon their aggregate Liquidation Amount) held by the Preferred Securityholders of record present, either in person or by proxy, at such meeting shall constitute the action of the Securityholders, unless this Trust Agreement requires a greater number of affirmative votes. 6.4 Voting Rights. Securityholders shall be entitled to one vote for each $25 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. 6.5 Proxies, Etc. At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy, shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. When Trust Securities are held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and, the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. -28- 6.6 Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding more than a majority of all Outstanding Trust Securities (based upon their aggregate Liquidation Amount) entitled to vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing (based upon their aggregate Liquidation Amount). 6.7 Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of a Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. 6.8 Acts of Securityholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders or Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders or owners in person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders or Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.1) conclusive in favor of the Trustees, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient. (c) The ownership of Preferred Securityholders shall be proved by the Securities Register. -29- (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. (e) Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such liquidation amount. (f) Securityholder may institute a legal proceeding directly against the Depositor under the Guarantee to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trust (as defined in the Guarantee), the Trust or any Person. 6.9 Inspection of Records. Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. 7. Representations And Warranties. 7.1 Representations and Warranties of the Bank. The Bank, as of the date hereof, and each Successor Property Trustee at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee hereunder (the term "Bank" being used to refer to such Successor Property Trustee in its separate corporate capacity) hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Bank is a Massachusetts banking corporation duly organized, validly existing and in good standing under the laws of the State of Massachusetts; (b) the Bank has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized executed and delivered by the Bank and constitutes the valid and legally binding agreement of the Bank enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors, rights and to general equity principles; -30- (d) the execution, delivery and performance by the Bank of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Bank and does not require any approval of stockholders of the Bank and such execution, delivery and performance will not (i) violate the Bank's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Bank is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Massachusetts, as the case may be, governing the banking or trust powers of the Bank or any order, judgment or decree applicable to the Bank; (e) neither the authorization, execution or delivery by the Bank of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing federal law governing the banking or trust powers of the Bank under the laws of the United States or the State of Massachusetts, and (f) there are no proceedings pending or, to the best of the Bank's knowledge, threatened against or affecting the Bank in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Bank to enter into or perform its obligations as one of the Trustees under this Trust Agreement. 7.2 Representations and Warranties of the Delaware Bank. The Delaware Bank, as of the date hereof, and each Successor Delaware Trustee at the time of the Successor Delaware Trustee's acceptance of appointment as Delaware Trustee hereunder (the term "Delaware Bank" being used to refer to such Successor Delaware Trustee in its separate corporate capacity), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Delaware Bank is a Delaware banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) the Delaware Bank has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Delaware Trustee and constitutes the valid and legally binding agreement of the Delaware Bank enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent -31- transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors, rights and to general equity principles; (d) the execution, delivery and performance by the Delaware Bank of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Delaware Bank and does not require any approval of stockholders of the Delaware Bank and such execution, delivery and performance will not (i) violate the Delaware Bank's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Delaware Bank is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking or trust powers of the Delaware Bank or any order, judgment or decree applicable to the Delaware Bank; (e) neither the authorization, execution or delivery by the Delaware Bank of this Trust Agreement nor the consummation of any of the transactions by the Delaware Bank contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing federal law governing the banking or trust powers of the Delaware Bank under the laws of the United States or the State of Delaware; and (f) there are no proceedings pending or, to the best of the Delaware Bank's knowledge, threatened against or affecting the Delaware Bank in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Delaware Trustee to enter into or perform its obligations as one of the Trustees under this Trust Agreement. 7.3 Representations and Warranties of Depositor. The Depositor hereby represents and warrants for the benefit of the Securityholders that: (a) the Trust Securities Certificates issued on the Closing Date or the Option Closing Date, if applicable, on behalf of the Trust have been duly authorized and will have been, duly and validly executed, issued and delivered by the Administrative Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders will be, as of such date, entitled to the benefits of this Trust Agreement; and (b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Bank, the Property Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement. -32- 8. The Trustees. 8.1 Certain Duties and Responsibilities. (a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. No Administrative Trustee nor the Delaware Trustee shall be liable for its acts or omissions hereunder except as a result of its own gross negligence or willful misconduct. The Property Trustee's liability shall be determined under the Trust Indenture Act. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. To the extent that, at law or in equity, the Delaware Trustee or an Administrative Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, the Delaware Trustee or such Administrative Trustee shall not be liable to the Trust or to any Securityholder for such Trustee's good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Delaware Trustee or the Administrative Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of the Delaware Trustee or Administrative Trustees. (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.1(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. (c) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; -33- (2) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; (3) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Payment Account shall be to deal with such Property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act; (4) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Depositor and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section and except to the extent otherwise required by law; and (5) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the negligence, default or misconduct of the Administrative Trustees or the Depositor. 8.2 Certain Notices. (a) Within five Business Days after the occurrence of any Event of Default actually known to the Property Trustee, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.8 notice of such Event of Default to the Securityholders, the Administrative Trustees and the Depositor, unless such Event of Default shall have been cured or waived. For purposes of this Section the term "Event of Default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. (b) The Administrative Trustees shall transmit, to the Securityholders in the manner and to the extent provided in Section 10.8 notice of the Depositor's election to begin or further extend an Extended Interest Payment Period on the Debentures (unless such election shall have been revoked) within the time specified for transmitting such notice to the holders of the Debentures pursuant to the Indenture as originally executed. 8.3 Certain Rights of Property Trustee. Subject to the provisions of Section 8.1: (a) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation -34- of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Preferred Securityholders are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it has delivered such notice, or such reasonable shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (c) any direction or act of the Depositor or the Administrative Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate; (d) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (e) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof; (f) the Property Trustee may consult with counsel of its choice (which counsel may be counsel to the Depositor or any of its Affiliates) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice, such counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees; the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; -35- (g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (h) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Securityholders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit; (i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder; (j) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Trust Securities which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions; and (k) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. 8.4 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Debentures. -36- 8.5 May Hold Securities. Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Sections 8.8 and 8.13 and except as provided in the definition of the term "Outstanding" in Section 1, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. 8.6 Compensation; Indemnity; Fees. The Depositor agrees: (a) to pay to the Trustees from time to time reasonable compensation for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to such Trustee's negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Delaware Trustee, any such expense, disbursement or advance as may be attributable to his or her gross negligence, bad faith or willful misconduct); and (c) to indemnify each of the Trustees or any predecessor Trustee for, and to hold the Trustees harmless against, any loss, damage, claims, liability, penalty or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Trust Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except as any such indemnification is attributable to such Trustee's negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Delaware Trustee, any such expense, disbursement or advance as may be attributable to his or her gross negligence, bad faith or willful misconduct). (d) No Trustee may claim any lien or charge on any Trust Property as a result of any amount due pursuant to this Section 8.6. 8.7 Corporate Property Trustee Required; Eligibility of Trustees. (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect -37- to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Section. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity. 8.8 Conflicting Interests. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. 8.9 Co-Trustees and Separate Trustee. (a) Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor shall have power to appoint, and upon the written request of the Property Trustee, the Depositor shall for such purpose join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co- trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to the extent required by law to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-trustee or separate trustee pointed pursuant to this Section shall either be (i) a natural person who is at least 21 years of age and a resident of the United States or (ii) a legal entity with its principal place of business in the United States that shall act through one or more persons authorized to bind such entity. (b) Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor. -38- (c) Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (1) The Trust Securities shall be executed and delivered and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees specified hereunder, shall be exercised, solely by such Trustees and not by such co-trustees or separate trustee. (2) The rights, powers, duties and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co- trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee. (3) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case a Debenture Event of Default has occurred and is continuing, the Property Trustee shall have the power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.9. (4) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee or any other trustee hereunder. (5) The Property Trustee shall not be liable by reason of any act of a co-trustee or separate trustee. (6) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. 8.10 Resignation and Removal; Appointment of Successor. (a) No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Section shall become effective until the -39- acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.11. (a) Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time with respect to the Trust Securities by giving written notice thereof to the Securityholders. If the instrument of acceptance by the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the Relevant Trustee may petition, at the expense of the Depositor, any court of competent jurisdiction for the appointment of a successor Relevant Trustee with respect to the Trust Securities. (c) Unless a Debenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Common Securityholder. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed at such time by Act of the Holders of at least 25% in Liquidation Amount of the Preferred Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Common Securityholder at any time. (d) If any Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of any Trustee for any cause, at a time when no Debenture Event of Default shall have occurred and be continuing, the Common Securityholder, by Act of the Common Securityholder delivered to the retiring Trustee, shall promptly appoint a successor Trustee or Trustees with respect to the Trust Securities and the Trust, and the successor Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture Event of Default shall have occurred and is continuing, the Preferred Securityholders, by Act of the Securityholders of a majority in Liquidation Amount of the Preferred Securities then Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees with respect to the Trust Securities and the Trust, and such successor Trustee shall comply with the applicable requirements of Section 8.11. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when a Debenture Event of Default shall have occurred and be continuing, the Common Securityholder, by Act of the Common Securityholder delivered to an Administrative Trustee, shall promptly appoint a successor Administrative Trustee or Administrative Trustees with respect to the Trust Securities and the Trust, and such successor Administrative Trustee or Administrative Trustees shall comply with the applicable requirements of Section 8.11. If no successor Relevant Trustee with respect to the Trust Securities shall have been so appointed by the Common Securityholder or the Preferred Securityholders and accepted appointment in the manner required by Section 8.11, any Securityholder who has been a Securityholder of Trust Securities on behalf of himself and all others similarly situated may petition a court of competent jurisdiction for the appointment Trustee with respect to the Trust Securities. -40- (e) The Property Trustee shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Securityholders in the manner provided in Section 10.8 and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust office if it is the Property Trustee. (f) Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by: (1) the unanimous act of remaining Administrative Trustees if there are at least two of them; or (2) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees set forth in Section 8.7). 8.11 Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Relevant Trustee with respect to the Trust Securities and the Trust, the retiring Relevant Trustee and each successor Relevant Trustee with respect to the Trust Securities shall execute and deliver an instrument wherein each successor Relevant Trustee shall accept such appointment and which shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust and upon the execution and delivery of such instrument the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust; but, on request of the Trust or any successor Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust. (b) Upon request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the immediately preceding paragraph, as the case may be. (c) No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Section. 8.12 Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee, the Delaware Trustee or any Administrative Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, -41- conversion or consolidation to which such Relevant Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Section, without the execution or filing of any paper or any further act on the part of any of the parties hereto. 8.13 Preferential Collection of Claims Against Depositor or Trust. If and when the Property Trustee or the Delaware Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Debentures or the Trust Securities), the Property Trustee or the Delaware Trustee, as the case may be, shall be subject to and shall take all actions necessary in order to comply with the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). 8.14 Reports by Property Trustee. (a) Not later than July 15 of each year commencing with July 15, 1997, the Property Trustee shall transmit to all Securityholders in accordance with Section , and to the Depositor, a brief report dated as of such May 15 with respect to: (1) its eligibility under Section 8.7 or, in lieu thereof, if to be the best of its knowledge it has continued to be eligible under said Section, a written statement to such effect; and (2) any change in the property and funds in its possession as Property Trustee since the date of its last report and any action taken by the Property Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Trust Securities. (b) In addition the Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with the NASDAQ National Market or other organization upon which the Trust Securities are listed, with the Commission and with the Depositor. 8.15 Reports to the Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. -42- 8.16 Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers' Certificate. 8.17 Number of Trustees. (a) The number of Trustees shall be four, provided that the Holder of all of the Common Securities by written instrument may increase or decrease the number of Administrative Trustees. The Property Trustee and the Delaware Trustee may be the same Person. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement. 8.18 Delegation of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.7(a); and (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. 8.19 Voting. Except as otherwise provided in this Trust Agreement, the consent or approval of the Administrative Trustees shall require consent or approval by not less than a majority of the Administrative Trustees unless there are only two, in which case both must consent. -43- 9. Termination, Liquidation And Merger. 9.1 Termination upon Expiration Date. Unless earlier dissolved, the Trust shall automatically dissolve on March 31, 2036 (the "Expiration Date") subject to distribution of the Trust Property in accordance with Section 9.4. 9.2 Early Termination. The first to occur of any of the following events is an "Early Termination Event": (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor; (b) delivery of written direction to the Property Trustee by the Depositor at any time (which direction is optional and wholly within the discretion of the Depositor) to dissolve the Trust and distribute the Debentures to Securityholders in exchange for the Preferred Securities in accordance with Section 9.4; (c) the redemption of all of the Preferred Securities in connection with the redemption of all of the Debentures; and (d) an order for dissolution of the Trust shall have been entered by a court of competent jurisdiction. 9.3 Termination. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.4, or upon the redemption of all of the Trust Securities pursuant to Section 4.2, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders, and (d) the filing of a certificate of cancellation by the Administrative Trustee under the Business Trust Act. 9.4 Liquidation. (a) If an Early Termination Event specified in clause (a), (b), or (d) of Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously as the Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to each Securityholder a Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by first-class mail, postage pre-paid, mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such holder's address appearing in the Securities Register. All notices of liquidation shall: -44- (1) state the Liquidation Date; (2) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Debentures; and (3) provide such information with respect to the mechanics by which Holders may exchange Trust Securities certificates for Debentures, or if Section 9.4(d) applies receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the liquidation of the Trust and distribution of the Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Debentures in exchange for the Outstanding Trust Securities Certificates. (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be outstanding, (ii) certificates (or, at the election of the Depositor a Global Debenture, subject to the provisions of the Indenture) representing a Like Amount of Debentures will be issued to holders of Trust Securities Certificates upon surrender of such certificates to the Administrative Trustees or their agent for exchange, (iii) the Depositor shall use its reasonable efforts to have the Debentures listed on The Nasdaq Stock Market's National Market or on such other securities exchange or other organization as the Preferred Securities are then listed or traded, (iv) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Debentures, accruing interest at the rate provided for in the Debentures from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to holders of Trust Securities Certificates with respect to such Debentures) and (v) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Debentures upon surrender of Trust Securities Certificates. (d) In the event that, notwithstanding the other provisions of this Section 9.4, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined by the Property Trustee not to be practical, the Trust Property shall be liquidated, and the Trust shall be dissolved, wound-up or terminated, by the Property Trustee in such manner as the Property Trustee determines. In such event, on the date of the dissolution, winding-up or other termination of the Trust, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus -45- accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, winding-up or termination, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, winding-up or termination pro rata (determined as aforesaid) with Holders of Preferred securities, except that, if a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust. The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except pursuant to this Section 9.5. At the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the holders of the Preferred Securities, the Property Trustee or the Delaware Trustee, the Trust may merge with or into, consolidate, amalgamate, be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) the Depositor expressly appoints a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee as the holder of the Debentures, (iii) the Successor Securities are listed or traded, or any Successor Securities will be listed or traded upon notification of issuance, on the NASDAQ National Market or any national securities exchange or other organization on which the Preferred Securities are then listed, if any, (iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect (v) such successor entity has a purpose identical to that of the Trust, (vi) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act and (vii) the Depositor owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets -46- substantially as entirety to any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. 10. Miscellaneous Provisions. 10.1 Limitation of Rights of Securityholders. The death or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person or any Securityholder for such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding-up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. 10.2 Amendment. (a) This Trust Agreement may be amended from time to time by the Trustees and the Depositor, without the consent of any Securityholders, (i) as provided in Section 8.11 with respect to acceptance of appointment by a successor Trustee, (ii) to cure any ambiguity, correct or supplement any provision herein or therein which may be inconsistent with any other provision herein or therein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, that shall not be inconsistent with the other provisions of this Trust Agreement, or (iii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust will not be required to register as an "investment company" under the 1940 Act; provided, however, that in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder; and any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders. (b) Except as provided in Section 6.1(c) or Section 10.2(c) hereof, any provision of this Trust Agreement may be amended by the Trustees and the Depositor (i) with the consent of Trust Securityholders representing not less than a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status as an "investment company" under the 1940 Act. (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the -47- amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date; notwithstanding any other provision herein, without the unanimous consent of the Securityholders (such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this paragraph (c) of this Section 10.2 may not be amended. (d) Notwithstanding any other provisions of this Trust Agreement, no Administrative Trustee shall enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the 1940 Act or to fail or cease to be classified as a grantor trust for United States federal income tax purposes. (e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. (g) Neither the Property Trustee nor the Delaware Trustee shall be required to enter into any amendment to this Trust Agreement which affects its own rights, duties or immunities under this Trust Agreement. The Property Trustee shall be entitled to receive an Opinion of Counsel and an Officers' Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement. 10.3 Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired thereby. 10.4 Governing Law. This Trust Agreement and the Rights and Obligations of Each of the Securityholders, the Trust and the Trustees with Respect to this Trust Agreement and the Trust Securities Shall Be Construed in Accordance with and Governed by the Laws of the State of Delaware (Without Regard to Conflict of Laws Principles). 10.5 Payments Due on Non-Business Day. If the date fixed for any payment on any Trust Security shall be a day that is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day which is a Business Day, with the same force and effect as though made on the date fixed for such payment, and no distribution shall accumulate thereon for the period after such date. 10.6 Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee(s), including any successor -48- by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Section 12 of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder. 10.7 Headings. The Section headings are for convenience only and shall not affect the Construction of this Trust Agreement. 10.8 Reports, Notices and Demands. (a) Any report, notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Preferred Securityholder, to such Preferred Securityholder as such Securityholder's name and address may appear on the Securities Register; and (b) in the case of the Common Securityholder or the Depositor, to Community Trust Bancorp, Inc., 208 North Mayo Trail, Pikeville, Kentucky 40502, Attention: Treasurer, facsimile no. (606) 437-3366. Any notice to Preferred Securityholders shall also be given to such owners as have, within two years preceding the giving of such notice, filed their names and addresses with the Property Trustee for that purpose. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. (b) Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon CTBI Trust, the Delaware Trustee the Property Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee to State Street Bank and Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department; (b) with respect to the Delaware Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Trustee Administration; and (c) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked "Attention: Administrative Trustees of CTBI Preferred Capital Trust." Such notice, demand or other communication to or upon the Trust or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust or the Property Trustee. 10.9 Agreement not to Petition. Each of the Trustees and the Depositor agree for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Section 9, they shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy -49- Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.9, the Property Trustee agrees, for the benefit of Securityholders, that at the expense of the Depositor (which expense shall be paid prior to the filing), it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom. The provisions of this Section 10.9 shall survive the termination of this Trust Agreement. 10.10 Trust Indenture Act; Conflict with Trust Indenture Act. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control. If any provision of this Trust Agreement modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Trust Agreement as so modified or to be excluded, as the case may be. (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. 10.11 Acceptance of Terms of Trust Agreement, Guarantee and Indenture. The Receipt and Acceptance of a Trust Security or Any Interest Therein by or on Behalf of a Securityholder or Any Beneficial Owner, Without Any Signature or Further Manifestation of Assent, Shall Constitute the Unconditional Acceptance by the Securityholder and All Others Having a Beneficial Interest in Such Trust Security of All of the Terms and Provisions of this Trust Agreement and Agreement to the Subordination Provisions and Other Terms of the Guarantee and the Indenture, and Shall Constitute the Agreement of the Trust, Such Securityholder and Such Others That the Terms and Provisions of this Trust Agreement Shall Be Binding, Operative and Effective as Between the Trust and Such Securityholder and Such Others. Community Trust Bancorp, Inc. as Depositor By: __________________________________ -50- Name: Richard M. Levy Title: Executive Vice President and Chief Financial Officer State Street Bank and Trust Company as Property Trustee By: __________________________________ Name: ___________________________ Title: __________________________ Wilmington Trust Company as Delaware Trustee By: __________________________________ Name: ___________________________ Title: __________________________ --------------------------------------- Jean R. Hale as Administrative Trustee --------------------------------------- Richard M. Levy as Administrative Trustee Exhibit "A" Certificate of Trust of CTBI Preferred Capital Trust This Certificate of Trust of the CTBI PREFERRED STOCK TRUST (the "Trust"), dated March 18, 1997, is being duly executed and filed by WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C.(S) 3801 et seq.) 1. NAME. The name of the business trust formed hereby is CTBI Preferred Capital Trust. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890- 0001, Attn: Corporate Trust Administration. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing with the Secretary of State. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, has executed this Certificate of Trust as of the date first above written. WILMINGTON TRUST COMPANY as Trustee By \s\ W. Chris Sponenberg ---------------------------------- Name: W. Chris Sponenberg______ Title: Senior Financial Services Officer -52- Exhibit "B" Certificate Depository Agreement __________ ___, 1997 The Depository Trust Company 55 Water Street, 49th Floor New York, New York 10041-0099 Attention: __________________________ General Counsel's Office Re: CTBI Preferred Capital Trust Cumulative Trust Preferred Securities Ladies and Gentlemen: The purpose of this letter is to set forth certain matters relating to the issuance and deposit with The Depository Trust Company ("DEPOSITORY TRUST COMPANY") of CTBI Preferred Capital Trust Cumulative Trust Preferred Securities (the "Preferred Securities"), of CTBI Preferred Capital Trust, a Delaware business trust (the "Issuer"), created pursuant to a Trust Agreement between Community Trust Bancorp, Inc. a Kentucky corporation ("CTBI"), State Street Bank and Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware and the Administrative Trustees named therein. The payment of distributions on the Preferred Securities and payments due upon liquidation of Issuer or redemption of the Preferred Securities, to the extent the Issuer has funds available for the payment thereof, are guaranteed by CTBI to the extent set forth in a Guarantee Agreement, dated ___________ ___, 1997, by CTBI with respect to the Preferred Securities. CTBI and the Issuer propose to sell the Preferred Securities to Morgan Keegan & Company, Inc. and J.J.B. Hilliard, W. L. Lyons, Inc. (the"Underwriters") pursuant to an Underwriting Agreement, dated _________, ___, 1997, by and among the Underwriters, the Issuer and CTBI, and the Underwriters wish to take delivery of the Preferred Securities through DEPOSITORY TRUST COMPANY. State Street Bank and Trust Company is acting as transfer agent and registrar with respect to the Preferred Securities (the "Transfer Agent and Registrar"). To induce DEPOSITORY TRUST COMPANY to accept the Preferred Securities as eligible for deposit at DEPOSITORY TRUST COMPANY, and to act in accordance with DEPOSITORY TRUST COMPANY's rules with respect to the Preferred Securities, the Issuer, the Transfer Agent and Registrar and DEPOSITORY TRUST COMPANY agree among each other as follows: 1. Prior to the closing of the sale of the Preferred Securities to the Underwriter, which is expected to occur on or about April 9, 1997, there shall be deposited with DEPOSITORY TRUST COMPANY one or more global certificates (individually and collectively, the "Global -53- Certificate") registered in the name of DEPOSITORY TRUST COMPANY's Preferred Securities nominee, Cede & Co., representing an aggregate of 1,200.000 Preferred Securities (Liquidation Amount $25 per Preferred Security) and bearing the following legend: Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DEPOSITORY TRUST COMPANY"), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DEPOSITORY TRUST COMPANY (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 2. The Amended and Restated Trust Agreement of the Issuer provides for the voting by holders of the Preferred Securities under certain limited circumstances. The Issuer shall establish a record date for such purposes and shall, to the extent possible, give DEPOSITORY TRUST COMPANY notice of such record date not less than 15 calendar days in advance of such record date. 3. In the event of a stock split, conversion, recapitalization, reorganization or any other similar transaction resulting in the cancellation of all or any part of the Preferred Securities outstanding, the Issuer or the Transfer Agent and Registrar shall send DEPOSITORY TRUST COMPANY a notice of such event at least 5 business days prior to the effective date of such event. 4. In the event of distribution on, or an offering or issuance of rights with respect to, the Preferred Securities outstanding, the Issuer or the Transfer Agent and Registrar shall send DEPOSITORY TRUST COMPANY a notice specifying: (a) the amount of and conditions, if any, applicable to the payment of any such distribution or any such offering or issuance of rights; (b) any applicable expiration or deadline date, or any date by which any action on the part of the holders of Preferred Securities is required; and (c) the date any required notice is to be mailed by or on behalf of the Issuer to holders of Preferred Securities or published by or on behalf of the Issuer (whether by mail or publication, the "Publication Date"). Such notice shall be sent to DEPOSITORY TRUST COMPANY by a secure means (e.g., legible telecopy, registered or certified mail, overnight delivery) in a timely manner designed to assure that such notice is in DEPOSITORY TRUST COMPANY's possession no later than the close of business on the business day before the Publication Date. The Issuer or the Transfer Agent and Registrar will forward such notice either in a separate secure transmission for each CUSIP number or in a secure transmission of multiple CUSIP numbers (if applicable) that includes a manifest or list of each CUSIP number submitted in that transmission. (The party sending such notice shall have a method to verify subsequently the use of such means and the timeliness of such notice.) The Publication Date shall be not less than 30 calendar days nor more than 60 calendar days prior to the payment of any such distribution or any such offering or issuance of rights with respect to the -54- Preferred Securities. After establishing the amount of payment to be made on the Preferred Securities, the Issuer or the Transfer Agent and Registrar will notify DEPOSITORY TRUST COMPANY's Dividend Department of such payment 5 business days prior to payment date. Notices to DEPOSITORY TRUST COMPANY's Dividend Department by telecopy shall be sent to (212) 709-1723. Such notices by mail or by any other means shall be sent to: Manager, Announcements Dividend Department The Depository Trust Company 7 Hanover Square, 23rd Floor New York, New York 10004-2695 The Issuer or the Transfer Agent and Registrar shall confirm DEPOSITORY TRUST COMPANY's receipt of such telecopy by telephoning the Dividend Department at (212) 709-1270. 5. In the event of a redemption by the Issuer of the Preferred Securities, notice specifying the terms of the redemption and the Publication Date of such notice shall be sent by the Issuer or the Transfer Agent and Registrar to DEPOSITORY TRUST COMPANY not less than 30 calendar days prior to such event by a secure means in the manner set forth in paragraph 4. Such redemption notice shall be sent to DEPOSITORY TRUST COMPANY's Call Notification Department at (516) 227-4164 or (516) 227-4190, and receipt of such notice shall be confirmed by telephoning (516) 227-4070. Notice by mail or by any other means shall be sent to: Call Notification Department The Depository Trust Company 711 Stewart Avenue Garden City, New York 11530-4719 6. In the event of any invitation to tender the Preferred Securities, notice specifying the terms of the tender and the Publication Date of such notice shall be sent by the Issuer or the Transfer Agent and Registrar to DEPOSITORY TRUST COMPANY by a secure means and in a timely manner as described in paragraph 4. Notices to DEPOSITORY TRUST COMPANY pursuant to this paragraph and notices of other corporate actions (including mandatory tenders, exchanges and capital changes), shall be sent, unless notification to another department is expressly provided for herein, by telecopy to DEPOSITORY TRUST COMPANY's Reorganization Department at (212) 709-1093 or (212) 709-1094 and receipt of such notice shall be confirmed by telephoning (212) 709-6884 or by mail or any other means to: Manager, Reorganization Department Reorganization Window The Depository Trust Company 7 Hanover Square, 23rd Floor New York, New York 10004-2695 -55- 7. All notices and payment advices sent to DEPOSITORY TRUST COMPANY shall contain the CUSIP number or numbers of the Preferred Securities and the accompanying designation of the Preferred Securities, which, as of the date of this letter, is "CTBI Preferred Capital Trust Cumulative Trust Preferred Securities." 8. Distribution payments or other cash payments with respect to the Preferred Securities evidenced by the Global Certificate shall be received by Cede & Co., as nominee of DEPOSITORY TRUST COMPANY, or its registered assigns in next day funds on each payment date (or in accordance with existing arrangements between the Issuer or the Transfer Agent and Registrar and DEPOSITORY TRUST COMPANY). Such payments shall be made payable to the order of Cede & Co., and shall be addressed as follows: NDFS Redemption Department The Depository Trust Company 7 Hanover Square, 23rd Floor New York, New York 10004-2695 9. DEPOSITORY TRUST COMPANY may by prior written notice direct the Issuer and the Transfer Agent and Registrar to use any other telecopy number or address of DEPOSITORY TRUST COMPANY as the number or address to which notices or payments may be sent. 10. In the event of a conversion, redemption, or any other similar transaction (e.g., tender made and accepted in response to the Issuer's or the Transfer Agent and Registrar's invitation) necessitating a reduction in the aggregate number of Preferred Securities outstanding evidenced by the Global Certificate, DEPOSITORY TRUST COMPANY, in its discretion: (a) may request the Issuer or the Transfer Agent and Registrar to issue and countersign a new Global Certificate; or (b) may make an appropriate notation on the Global Certificate indicating the date and amount of such reduction. 11. DEPOSITORY TRUST COMPANY may discontinue its services as a securities depository with respect to the Preferred Securities at any time by giving at least 90 days' prior written notice to the Issuer and the Transfer Agent and Registrar (at which time DEPOSITORY TRUST COMPANY will confirm with the Issuer or the Transfer Agent and Registrar the aggregate number of Preferred Securities deposited with it) and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Issuer may determine to make alternative arrangements for book-entry settlement for the Preferred Securities, make available one or more separate global certificates evidencing Preferred Securities to any Participant having Preferred Securities credited to its DEPOSITORY TRUST COMPANY account, or issue definitive Preferred Securities to the beneficial holders thereof, and in any such case, DEPOSITORY TRUST COMPANY agrees to cooperate fully with the Issuer and the Transfer Agent and Registrar and to return the Global Certificate, duly endorsed for transfer as directed by the Issuer or the Transfer Agent and Registrar, together with any other documents of transfer reasonably requested by the Issuer or the Transfer Agent and Registrar. -56- 12. In the event that the Issuer determines that beneficial owners of Preferred Securities shall be able to obtain definitive Preferred Securities, the Issuer or the Transfer Agent and Registrar shall notify DEPOSITORY TRUST COMPANY of the availability of certificates. In such event, the Issuer or the Transfer Agent and Registrar shall issue, transfer and exchange certificates in appropriate amounts, as required by DEPOSITORY TRUST COMPANY and others, and DEPOSITORY TRUST COMPANY agrees to cooperate fully with the Issuer and the Transfer Agent and Registrar and to return the Global Certificate, duly endorsed for transfer as directed by the Issuer or the Transfer Agent and Registrar, together with any other documents of transfer reasonably requested by the Issuer or the Transfer Agent and Registrar. 13. This letter may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Nothing herein shall be deemed to require the Transfer Agent and Registrar to advance funds on behalf of CTBI Preferred Capital Trust. Very truly yours, CTBI Preferred Capital Trust (As Issuer) By: ____________________________ Name: Richard M. Levy Title: Executive Vice President -57- State Street Bank and Trust Company As Property Trustee and as Transfer Agent and Registrar By: ____________________________ Name: __________________________ Title: _________________________ RECEIVED AND ACCEPTED: THE DEPOSITORY TRUST COMPANY By: ____________________________ Name: __________________________ Title: _________________________ -58- Exhibit "C" Certificate Evidencing Common Securities Certificate Number _______ Number of Common Securities Certificate Evidencing Common Securities of CTBI Preferred Capital Trust % Common Securities (liquidation amount $25 per Common Security) CTBI Preferred Capital Trust, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that COMMUNITY TRUST BANCORP, INC. (the "Holder") is the registered owner of Thirty-Six Thousand (36,000) common securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the __________% Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below), the Common Securities are not transferable and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of __________ _____, 1997, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of the Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. In Witness Whereof, one of the Administrative Trustees of the Trust has executed this certificate this ____ day of ________, 1997. CTBI Preferred Capital Trust By:___________________________ Name: _____________________ Title: Administrative Trustee -59- Exhibit "D" Agreement as to Expenses and Liabilities AGREEMENT dated as of ____________ ____, 1997, between COMMUNITY TRUST BANCORP, INC., a Kentucky corporation ("CTBI"), and CTBI Preferred Capital Trust, a Delaware business trust (the "Trust"). WHEREAS, the Trust intends to issue its common securities (the "Common Securities") to, and receive Debentures from, CTBI and to issue and sell ____% Cumulative Trust Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of _____________ ____, 1997, as the same may be amended from time to time (the "Trust Agreement"); WHEREAS, CTBI will directly or indirectly own all of the Common Securities of the Trust and will issue the Debentures; NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase CTBI hereby agrees shall benefit CTBI and which purchase CTBI acknowledges will be made in reliance upon the execution and delivery of this Agreement, CTBI, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: 1. Section I. 1.1 Guarantee by CTBI. Subject to the terms and conditions hereof, CTBI, including in its capacity as holder of the Common Securities, hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any costs, expenses or liabilities of the Trust other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. 1.2 Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise) and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any obligation, under the Guarantee Agreement, dated -60- the date hereof by CTBI and State Street Bank and Trust Company as guarantee trustee or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. 1.3 Waiver of Notice. CTBI hereby waives notice of acceptance of this Agreement and of any obligation to which it applies or may apply, and CTBI hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 1.4 No Impairment. The obligations, covenants, agreements and duties of CTBI under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the obligations or for the performance of any other obligation under, arising gout of, or in connection with, the obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. (d) There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, CTBI with respect to the happening of any of the foregoing. 1.5 Enforcement. A Beneficiary may enforce this Agreement directly against CTBI, and CTBI waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against CTBI. 2. Section II. 2.1 Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of CTBI and shall inure to the benefit of the Beneficiaries. 2.2 Amendment. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. 2.3 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same by facsimile transmission (confirmed -61- by mail), telex, or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer back, if sent by telex): CTBI Preferred Capital Trust c/o Community Trust Bancorp, Inc. 208 Mayo Trail P.O. Box 2947 Pikeville, Kentucky 41502 Facsimile No.: (606) 437-3366 Attention: Chief Financial Officer Community Trust Bancorp, Inc. 208 North Mayo Trail Pikeville, Kentucky 41502 Facsimile No.: (606) 437-3366 Attention: Chief Financial Officer 2.4 Governing Law. Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Kentucky (without regard to conflict of laws principles). THIS AGREEMENT is executed as of the day and year first above written. Community Trust Bancorp, Inc. By:_________________________________ Name: Richard M. Levy Title: Executive Vice President and Chief Financial Officer CTBI Preferred Capital Trust By:_________________________________ Name: Jean R. Hale Title: Administrative Trustee -62- Exhibit "E" Certificate Evidencing Preferred Securities This Preferred Security is a Global Certificate within the meaning of the Trust Agreement hereinafter referred to and is registered in the name of The Depository Trust Company, a New York Corporation ("DEPOSITORY TRUST COMPANY") or a nominee of the DEPOSITORY TRUST COMPANY. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the DEPOSITORY TRUST COMPANY or its nominee only in the limited circumstances described in the Trust Agreement (as defined below) and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the DEPOSITORY TRUST COMPANY to a nominee of the DEPOSITORY TRUST COMPANY or by a nominee of the DEPOSITORY TRUST COMPANY to the DEPOSITORY TRUST COMPANY or another nominee of the DEPOSITORY TRUST COMPANY) may be registered except in limited circumstances. Unless this Preferred Security is presented by an authorized representative of the DEPOSITORY TRUST COMPANY to CTBI Preferred Capital Trust or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co., or such other name as is requested by an authorized representative of DEPOSITORY TRUST COMPANY (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. Certificate Number Number of Preferred Securities P - CUSIP NO. __________________________ -63- Certificate Evidencing Cumulative Trust Preferred Securities of CTBI Preferred Capital Trust % Cumulative Trust Preferred Securities (liquidation amount $25 per Preferred Security) CTBI Preferred Capital Trust, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that CEDE & CO. (the "Holder") is the registered owner of One Million, Two Hundred Thousand (1,200.000) preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the _________% Cumulative Trust Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of ________ ______, 1997, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Preferred Securities Guarantee Agreement entered into by Community Trust Bancorp, Inc. a Kentucky corporation, and as guarantee trustee, dated as of _________ _____, 1997 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. In Witness Whereof, one of the Administrative Trustees of the Trust has executed this certificate this ____ day of ________, 1997. CTBI Preferred Capital Trust By:_________________________ Name: Richard M. Levy Title: Administrative Trustee -64- EX-4.4 6 INDENTURE Exhibit 4.4 ----------------------------------------------------------------------- COMMUNITY TRUST BANCORP, INC. AND STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE INDENTURE % SUBORDINATED DEBENTURES ----------------------------------------------------------------------- , 1997 TABLE OF CONTENTS Section Page 1. Definitions............................................................. 2 1.1 Definitions of Terms................................................ 2 2. Issue, Description, Terms, Conditions, Registration And Exchange Of The Debentures....................................................... 9 2.1 Designation and Principal Amount.................................... 9 2.2 Maturity............................................................ 9 2.3 Form and Payment.................................................... 10 2.4 Interest............................................................ 11 2.5 Execution and Authentications....................................... 11 2.6 Registration of Transfer and Exchange............................... 12 2.7 Temporary Securities................................................ 13 2.8 Mutilated, Destroyed, Lost or Stolen Securities..................... 14 2.9 Cancellation........................................................ 14 2.10 Benefit of Indenture............................................... 15 2.11 Authenticating Agent............................................... 15 3. Redemption Of Debentures................................................ 16 3.1 Redemption.......................................................... 16 3.2 Special Event Redemption............................................ 16 3.3 Optional Redemption by Company...................................... 16 3.4 Notice of Redemption................................................ 17 3.5 Payment Upon Redemption............................................. 18 3.6 No Sinking Fund..................................................... 18 4. Extension of Interest Payment Period.................................... 18 4.1 Extension of Interest Payment Period................................ 19 4.2 Notice of Extension................................................. 19 4.3 Limitation of Transactions.......................................... 20 5. Particular Covenants Of The Company..................................... 20 5.1 Payment of Principal and Interest................................... 20 5.2 Maintenance of Agency............................................... 20 5.3 Paying Agents....................................................... 20 5.4 Appointment to Fill Vacancy in Office of Trustee.................... 22 5.5 Compliance with Consolidation Provisions............................ 22 5.6 Limitation on Dividends; Transactions with Affiliates............... 22 5.7 Covenants as to CTBI Trust.......................................... 22 -i- TABLE OF CONTENTS Section Page 6. Securityholders' Lists And Reports By The Company And The Trustee....... 23 6.1 Company to Furnish Trustee Names and Addresses of Securityholders... 23 6.2 Preservation of Information Communications with Securityholders..... 23 6.3 Reports by the Company.............................................. 23 6.4 Reports by the Trustee.............................................. 24 7. Remedies Of The Trustee And Securityholders On Event Of Default......... 24 7.1 Events of Default................................................... 24 7.2 Collection of Indebtedness and Suits for Enforcement by Trustee..... 26 7.3 Application of Moneys Collected..................................... 28 7.4 Limitation on Suits................................................. 28 7.5 Rights and Remedies Cumulative; Delay or Omission Not Waiver........ 29 7.6 Control by Securityholders.......................................... 29 7.7 Undertaking to Pay Costs............................................ 30 8. Form of Debenture and Original Issue.................................... 30 8.1 Form of Debenture................................................... 30 8.2 Original Issue of Debentures........................................ 30 9. Concerning The Trustee.................................................. 31 9.1 Certain Duties and Responsibilities of Trustee...................... 31 9.2 Notice of Defaults.................................................. 32 9.3 Certain Rights of Trustee........................................... 32 9.4 Trustee Not Responsible for Recitals or Issuance of Securities...... 33 9.5 May Hold Securities................................................. 34 9.6 Monies Held in Trust................................................ 34 9.7 Compensation and Reimbursement...................................... 34 9.8 Reliance on Officers' Certification................................. 34 9.9 Disqualification: Conflicting Interests............................. 35 9.10 Corporate Trustee Required; Eligibility............................ 35 9.11 Resignation and Removal; Appointment of Successor.................. 35 9.12 Acceptance of Appointment by Successor............................. 36 9.13 Merger, Conversion, Consolidation or Succession to Business........ 37 9.14 Preferential Collection of Claims Against the Company.............. 37 10. Concerning The Securityholders......................................... 38 10.1 Evidence of Action by Securityholders.............................. 38 10.2 Proof of Execution by Securityholders.............................. 38 10.3 Who May Be Deemed Owners........................................... 38 10.4 Certain Securities Owned by Company Disregarded.................... 39 -ii- TABLE OF CONTENTS Section Page 10.5 Actions Binding on Future Securityholders........................... 39 11. Supplemental Indentures................................................. 40 11.1 Supplemental Indentures Without the Consent of Security holders..... 40 11.2 Supplement Indentures with Consent of Securityholders............... 41 11.3 Effect of Supplemental Indentures................................... 41 11.4 Securities Affected by Supplemental Indentures...................... 42 11.5 Execution of Supplemental Indentures................................ 42 12. Successor Corporation................................................... 42 12.1 Company May Consolidate, Etc........................................ 42 12.2 Successor Corporation Substituted................................... 43 12.3 Evidence of Consolidation, Etc. to Trustee.......................... 43 13. Satisfaction And Discharge.............................................. 43 13.1 Satisfaction and Discharge of Indenture............................. 43 13.2 Discharge of Obligations............................................ 44 13.3 Deposited Moneys to be Held in Trust................................ 44 13.4 Payment of Monies Held by Paying Agents............................. 44 13.5 Repayment to Company................................................ 45 14. Immunity of Incorporators, Stockholders, Officers And Directors......... 45 14.1 No Recourse......................................................... 45 15. Miscellaneous Provisions................................................ 45 15.1 Effect on Successors and Assigns.................................... 45 15.2 Actions by Successors............................................... 46 15.3 Surrender of Company Powers......................................... 46 15.4 Notices............................................................. 46 15.5 Governing Law....................................................... 46 15.6 Treatment of Debentures as Debt..................................... 46 15.7 Compliance Certificates and Opinions................................ 46 15.8 Payments on Business Days........................................... 47 15.9 Conflict With Trust Indenture Act................................... 47 15.10 Counterparts....................................................... 47 15.11 Severability....................................................... 47 15.12 Assignment......................................................... 47 15.13 Acknowledgment of Rights........................................... 47 16. Subordination Of Securities............................................. 48 -iii- TABLE OF CONTENTS Section Page 16.1 Agreement to Subordinate.............................................. 48 16.2 Default on Senior Debt, Subordinated Debt or Additional Senior Obligations.................................................. 48 16.3 Liquidation; Dissolution; Bankruptcy.................................. 49 16.4 Subrogation........................................................... 50 16.5 Trustee to Effectuate Subordination................................... 51 16.6 Notice by the Company................................................. 51 16.7 Rights of the Trustee; Holders of Senior Indebtedness................. 52 16.8 Subordination May Not be Impaired..................................... 52 -iv- EXHIBITS Description Exhibit Form of Face of Debenture.................................................... A Certificate of Authentication................................................ B Subordinated Debenture....................................................... C TRUST INDENTURE ACT CROSS-REFERENCE TABLE Section of Trust Indenture Acts of 1939, Amended Section of Indenture 310(a)......................................................... 9.1 310(b)......................................................... 9.9, 9.10 310(c)......................................................... Not Applicable 311(a)......................................................... 9.14 311(b)......................................................... 9.14 311(c)......................................................... Not Applicable 312(a)......................................................... 6.1, 6.2(a) 312(b)......................................................... 6.2(c) 312(c)......................................................... 6.2(c) 313(a)......................................................... 6.4(a) 313(b)......................................................... 6.4(b) 313(c)......................................................... 6.4(a), 6.4(b) 313(d)......................................................... 6.4(c) 314(a)......................................................... 6.3 314(b)......................................................... Not Applicable 314(c)......................................................... 15.7 314(d)......................................................... Not Applicable 314(e)......................................................... 15.7(b) 314(f)......................................................... Not Applicable 315(a)......................................................... 7.6, 9.1(b), 9.3 315(b)......................................................... 9.2 315(c)......................................................... 9.1 315(d)......................................................... 9.1(b) 315(e)......................................................... 7.7 316(a)......................................................... 7.6, 9.1(b), 9.3 316(b)......................................................... 7.4 316(c)......................................................... 10.1 317(a)......................................................... 7.2 317(b)......................................................... 5.3 318(a)......................................................... 15.9 -v- INDENTURE This Indenture is entered into and effective as of , 1997, by and between Community Trust Bancorp, Inc. ("Company"), a Kentucky corporation, and State Street Bank and Trust Company ("Trustee"), Boston, Massachusetts. Recitals: A. WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of a new series of its securities to be known as its ____% Subordinated Debentures due 2027 (hereinafter referred to as the "Debentures"), the form and substance of such Debentures and the terms, provisions and conditions thereof to be set forth as provided in this Indenture; B. WHEREAS, CTBI Preferred Capital Trust, a Delaware statutory business trust ("CTBI Trust") has offered to the public $_______________ aggregate liquidation amount of its ____% Cumulative Trust Preferred Securities (the "Preferred Securities"), representing undivided beneficial interests in the assets of CTBI Trust and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by CTBI Trust to the Company of $__________ aggregate liquidation amount of its ____% Trust Common Securities, in $___________ aggregate principal amount of the Debentures; and C. WHEREAS, the Company has requested that the Trustee execute and deliver this Indenture and all requirements necessary to make this Indenture a valid instrument in accordance with its terms, and to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed, and the execution and delivery of this Indenture has been duly authorized in all respects; D. WHEREAS, to provide the terms and conditions upon which the Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; and E. WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. Agreement: Now, Therefore, in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of the Securities: 1. Definitions. 1.1 Definitions of Terms. The terms defined in this Section 1.1 (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section and shall include the plurals as well as the singular. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended or that are by reference in such Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this instrument. (a) "Accelerated Maturity Date" means if the Company elects to accelerate the Maturity Date in accordance with Section 2.2(c), the date selected by the Company which is prior to the Scheduled Maturity Date, but is after March 31, 2007. (b) "Additional Sums" shall have the meaning set forth in Section 2.5. (c) "Additional Senior Obligations" means all indebtedness of the Company whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Additional Senior Obligations do not include claims in respect of Senior Debt or Subordinated Debt or obligations which, by their terms, are expressly stated to be not superior in right of payment to the Debentures or to rank pari passu in right of payment with the Debentures. For purposes of this definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978, as amended. (d) "Affiliate" means, with respect to a specified Person, (1) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person, (2) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person, (3) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person, (4) a partnership in which the specified Person is a general partner, (5) any officer or director of the specified Person, and (6) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner. (e) "Authenticating Agent" means an authenticating agent with respect to all or any of the series of Securities appointed with respect to the Securities by the Trustee pursuant to Section 2.12. -2- (f) "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. (g) "Board of Directors" means the Board of Directors of the Company or any duly authorized committee of such Board. (h) "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. (i) "Business Day" means, with respect to any series of Securities, any day other than a day on which Federal or State banking institutions in the Boston, MA are authorized or obligated by law, executive order or regulation to close or a day on which the Trustee's Corporate Trust Office is closed for business. (j) "Capital Event" means that CTBI Trust has received an opinion of independent counsel experienced in such matters (which may be counsel to the Company) that the Company cannot or, within 90 days of such opinion, will not be permitted by the applicable regulatory authorities, due to a change in law, regulation, policy or guideline or interpretation or application of law or regulation, policy or guideline, to account for the Preferred Securities as Tier I Capital under the capital guidelines or policies of the Federal Reserve. (k) "CTBI Trust" means CTBI Preferred Capital Trust, a Delaware business trust created for the sole purpose of issuing preferred securities in connection with the issuance of Securities under this Indenture and holding the Subordinated Debentures. (l) "Certificate" means a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company. The Certificate need not comply with the provisions of Section 15.7. (m) "Common Securities" means undivided beneficial interests in the assets of CTBI Trust which rank pari passu with Preferred Securities issued by CTBI Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. (n) "Common Securities Guarantee" means any guarantee that the Company may enter into with the Trustee or other Persons that operate directly or indirectly for the benefit of holders of Common Securities of CTBI Trust. (o) "Company" means Community Trust Bancorp, Inc., a corporation duly organized and existing under the laws of the Commonwealth of Kentucky, and, subject to the provisions of Section 12, shall also include its successors and assigns. -3- (p) "Compounded Interest" shall have the meaning set forth in Section 4.1. (q) "Corporate Trust Office" means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at Two International Place, 4th Floor, Boston, Massachusetts, 02110, Attention: Corporate Trust Department. (r) "Custodian" means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law. (s) "Debentures" means the Subordinated Debentures authenticated and delivered under this Indenture. (t) "Debt" means with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; and (vi) every obligation of the type referred to in clauses (i) through (v) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligator or otherwise. (u) "Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. (v) "Deferred Interest" shall have the meaning set forth in Section 4.1. (w) "Depositary" means, with respect to Securities of any series, for which the Company shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to this Indenture. (x) "Dissolution Event" means that as a result of the occurrence and continuation of a Special Event, CTBI Trust is to be dissolved in accordance with CTBI Trust Agreement and the Debentures held by the Property Trustee are to be distributed to the holders of CTBI Trust Securities issued by CTBI Trust pro rata in accordance with the Trust Agreement. -4- (y) "Event of Default" means, with respect to the Debentures, any event specified in Section 7.1, continued for the period of time, if any, therein designated. (z) "Extended Interest Payment Period" shall have the meaning set forth in Section 4.1. (aa) "Extended Maturity Date" means if the Company elects to extend the Maturity Date in accordance with Section 2.2(b), the date selected by the Company which is after the Scheduled Maturity Date but before March 31, 2036. (bb) "Federal Reserve" means the Board of Governors of the Federal Reserve System. (cc) "Global Security" means, with respect to any series of Securities, a Security executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with the Indenture, which shall be registered in the name of the Depositary or its nominee. (dd) "Governmental Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt. (ee) "Herein," "hereof," and "hereunder," and other words of similar import, refer to this Indenture as a whole and not to any particular Section or other subdivision. (ff) "Holder" means a Person in whose name a security is registered in the Securities Register. (gg) "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof. -5- (hh) "Interest Payment Date," when used with respect to any installment of interest on the Debentures, means the date specified in the Debenture as the fixed date on which an installment of interest with respect to the Debentures is due and payable. (ii) "Investment Company Event" means the receipt by CTBI Trust of an Opinion of Counsel, rendered by a law firm experienced in such matters, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), CTBI Trust is or will be considered an "investment company" that is required to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Preferred Securities under the Trust Agreement. (jj) "Maturity Date" means the date on which the Debentures mature and on which the principal shall be due and payable together with all accrued and unpaid interest thereon including Compounded Interest and Additional Interest, if any. (kk) "Non Book-Entry Preferred Securities" shall have the meaning set forth in Section 2.4. (ll) "Officers' Certificate" means a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance with the terms hereof. Each such certificate shall include the statements provided for in Section 15.7, if and to the extent required by the provisions thereof. (mm) "Opinion of Counsel" means an opinion in writing of legal counsel, who may not be an employee of the Company but may be counsel to the Company, that is delivered to the Trustee in accordance with the terms hereof. Each such opinion shall include the statements provided for in Section 15.7, if and to the extent required by the provisions thereof. (nn) "Outstanding," when used with reference to the Debentures, means, subject to the provisions of Section 10.4, as of any particular time, all Debentures theretofore authenticated and delivered by the Trustee under this Indenture, except (1) Debentures theretofore cancelled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation or that have previously been cancelled; (2) Debentures or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that if such Debentures or portions of such Debentures are to be redeemed prior to the maturity date thereof, notice of such redemption shall have been given as provided in Section 3, or provision satisfactory to the Trustee shall have been made for giving such notice; and (3) Debentures in lieu of or in substitution for which other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.9. -6- (oo) "Person" means any individual, corporation, partnership, joint- venture, joint-stock company, unincorporated organization or government or any agency or political subdivision thereof. (pp) "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt and as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.9 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. (qq) "Preferred Securities" means undivided beneficial interests in the assets of CTBI Trust which rank pari passu with Common Securities issued by CTBI Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. (rr) "Preferred Securities Guarantee" means any guarantee that the Company may enter into with State Street Bank and Trust Company or other Persons that operate directly or indirectly for the benefit of holders of Preferred Securities of CTBI Trust. (ss) "Property Trustee" has the meaning set forth in CTBI Trust Agreement of CTBI Trust. (tt) "Responsible Officer" when used with respect to the Trustee means the Chairman of the Board of Directors, the President, any Vice President, the Secretary, the Treasurer, any trust officer, any corporate trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. (uu) "Scheduled Maturity Date" means March 31, 2027. (vv) "Securities" means any Debentures. (ww) "Securityholder," "holder of securities," "registered holder," or other similar term, means the Person or Persons in whose name or names a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms of this Indenture. (xx) "Senior Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of this Indenture or thereafter -7- incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Debentures or to other Debt which is pari passu with, or subordinated to, the Debentures; provided, however, that Senior Debt shall not be deemed to include (i) any Debt of the Company which when incurred and without respect to any election under Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, without recourse to the Company, (ii) any Debt of the Company to any of its subsidiaries, (iii) Debt to any employee of the Company, (iv) debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Debentures as a result of the subordination provisions of this Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject; (v) Debt which constitutes Subordinated Debt, and (vi) any other debt securities issued pursuant to this Indenture. (yy) "Special Event" means a Tax Event, an Investment Company Event or a Capital Event. (zz) "Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of this Indenture or thereafter incurred, which is by its terms expressly provided to be junior and subordinate to other Debt of the Company (other than the Debentures). (aaa) "Subsidiary" means, with respect to any Person, (i) any corporation at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. (bbb) "Tax Event" means the receipt by CTBI Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Debentures under this Indenture, there is more than an insubstantial risk that (1) CTBI Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to interest received or accrued on the Debentures, (2) interest payable by the Company on the Debentures is not, or within 90 days after the date of such Opinion of Counsel, will not be, deductible by the Company, -8- in whole or in part, for United States federal income tax purposes, or (3) CTBI Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. (ccc) "Trust Agreement" means the Amended and Restated Trust Agreement, dated __________ __, 1997, of CTBI Trust. (ddd) "Trustee" means State Street Bank and Trust Company and, subject to the provisions of Section 9, shall also include its successors and assigns, and, if at any time there is more than one Person acting in such capacity hereunder, "Trustee" shall mean each such Person. The term "Trustee" as used with respect to a particular series of the Securities shall mean the trustee with respect to that series. (eee) "Trust Indenture Act," means CTBI Trust Indenture Act of 1939, subject to the provisions of Sections 11.1, 11.2, and 12.1, as in effect at the date of execution of this instrument. (fff) "Trust Securities" means Common Securities and Preferred Securities of CTBI Trust. (ggg) "Voting Stock," as applied to stock of any Person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency. 2. ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND EXCHANGE OF THE DEBENTURES. 2.1 Designation and Principal Amount. There is hereby authorized a series of Securities designated the "____% Subordinated Debentures due 2027", limited in aggregate principal amount to $__________ which amount shall be as set forth in any written order of the Company for the authentication and delivery of Debentures pursuant to Section 8.2 of this Indenture. 2.2 Maturity. (a) The Maturity Date will be either: (1) the Scheduled Maturity Date; or (2) if the Company elects to extend the Maturity Date beyond the Scheduled Maturity Date in accordance with Section 2.2(b), the Extended Maturity Date; or -9- (3) if the Company elects to accelerate the Maturity Date to be prior a date to the Scheduled Maturity Date in accordance with Section 2.2(c), the Accelerated Maturity Date. (b) The Company may at any time before the day which is 90 days before the Scheduled Maturity Date, elect to extend the Maturity Date only once to the Extended Maturity Date provided that the Company has received the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve and further provided that the following conditions in this Section 2.2(b) are satisfied both at the date the Company gives notice in accordance with Section 2.2(d) of its election to extend the Maturity Date and at the Scheduled Maturity Date: (1) the Company is not in bankruptcy, otherwise insolvent or in liquidation; (2) the Company is not in default in the payment of any interest or principal on the Debentures; and (3) CTBI Trust is not in arrears on payments of Distributions on the Preferred Securities issued by it and no deferred Distributions are accumulated. (c) The Company may at any time before the day which is 90 days before the Scheduled Maturity Date and after March 31, 2027, elect to shorten the Maturity Date only once to the Accelerated Maturity Date provided that the Company has received the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. (d) If the Company elects to extend the Maturity Date in accordance with Section 2.2(b), the Company shall give notice to registered holders of the Debentures, the Property Trustee and CTBI Trust of the extension of the Maturity Date and the Extended Maturity Date at least 90 days and no more than 180 days before the Scheduled Maturity Date. (e) If the Company elects to accelerate the Maturity Date in accordance with Section 2.2(c), the Company shall give notice to registered holders of the Debentures, the Property Trustee and CTBI Trust of the acceleration of the Maturity Date and the Accelerated Maturity Date at least 90 days and no more than 180 days before the Accelerated Maturity Date. 2.3 Form and Payment. The Debentures shall be issued in fully registered certificated form without interest coupons. Principal and interest on the Debentures issued in certificated form shall be payable, the transfer of such Debentures shall be registrable and such Debentures shall be exchangeable for Debentures bearing identical terms and provisions at the office or agency of the Trustee; provided, however, that payment of interest may be made at the option of the Company by check mailed to the holder at such address as shall appear in the Debenture Register or by wire transfer to an account maintained by the holder as specified in the Debenture Register, provided that the holder provides proper transfer instructions by the regular record date. Notwithstanding -10- the foregoing, so long as the holder of any Debentures is the Property Trustee, the payment of the principal of and interest (including Compounded Interest and Additional Interest, if any) on such Debentures held by the Property Trustee shall be made at such place and to such account as may be designated by the Property Trustee. 2.4 Global Debenture (a) In connection with a Dissolution Event, (1) the Debentures in certificated form may be presented to the Trustee by the Property Trustee in exchange for a Global Debenture to be registered in the name of the Depositary, or its nominee, and delivered by the Trustee to the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Administrative Trustees. The Company upon any such presentation shall execute a Global Debenture in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with this Indenture. Payments on the Debentures issued as a Global Debenture will be made to the Depositary; and (2) if any Preferred Securities are held in non book-entry certificated form, the Debentures in certified form may be presented to the Trustee by the Property Trustee and any Preferred Security Certificate which represents Preferred Securities other than Preferred Securities held by the Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent beneficial interests in Debentures presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred Securities until such Preferred Security Certificates are presented to the Security Registrar for transfer or reissuance at which time such Preferred Security Certificates will be canceled and a Debenture, registered in the name of the holder of the Preferred Security Certificate or the transferee of the holder of such Preferred Security Certificate, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Security Certificate canceled, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with this Indenture. On issue of such Debentures, Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. (b) A Global Debenture may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary. (c) If at any time (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary or if at any time the Depositary for the Debentures shall no longer be registered or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, and a successor Depositary for the Debentures is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, or (ii) there shall have occurred and be continuing an Event of Default with respect to a Global Debenture, then the Company will execute, and the Trustee, upon written notice from the Company, will authenticate and deliver the Debentures in definitive registered form without coupons, and in an aggregate principal amount equal to the principal amount of the Global Debenture in exchange for such Global Debenture. In addition, the Company may at any time in its sole discretion determine that the Debentures shall no longer be represented by a Global Debenture. In such event the Company will execute, and the Trustee, upon receipt of an Officer's Certificate evidencing such determination by the Company, will authenticate and deliver the Debentures in definitive registered form without coupons, and in an aggregate principal amount equal to the principal amount of the Global Debenture in exchange for such Global Debenture. Upon the exchange of the Global Debenture for such Debentures in definitive registered form without coupons, in authorized denominations, the Global Debenture shall be canceled by the Trustee. Such Debentures in definitive registered form issued in exchange for the Global Debenture shall be registered in such names as the Depositary, pursuant to written instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to the Persons in whose names such Securities are so registered. 2.5 Interest. (a) Each Debenture shall bear interest at the rate of 9.25% per annum (the "Coupon Rate") from the original date of issuance until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Coupon Rate, compounded quarterly, payable (subject to the provisions of Article IV) quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each, an "Interest Payment Date," commencing on March 31, 1997), to the Person in whose name such Debenture or any Predecessor Debentures is registered, at the close of business on the regular record date for such interest installment, which shall be the fifteenth day of the last month of the calendar quarter. (b) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed, will be computed on the basis of the actual number of days elapsed in such a 30-day period. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date such payment was originally payable. (c) If, at any time while the Property Trustee is the Holder of any Debentures, CTBI Trust or the Property Trustee is required to pay any taxes, duties, assessments or other governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company will pay as additional interest ("Additional Sums") on the Debentures held by the Property Trustee, such additional amounts as shall be required so that the net amounts received and retained by CTBI Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts CTBI Trust and the Property Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. 2.6 Execution and Authentications. (a) The Debentures shall be signed on behalf of the Company by its President or one of its Vice Presidents, under its corporate seal attested by its Secretary or one of its Assistant Secretaries. Signatures may be in the form of a manual or facsimile signature. The Company may use the facsimile signature of any Person who shall have been a President or Vice President -11- thereof, or of any Person who shall have been a Secretary or Assistant Secretary thereof, notwithstanding the fact that at the time the Securities shall be authenticated and delivered or disposed of such Person shall have ceased to be the President or a Vice President, or the Secretary or an Assistant Secretary, of the Company. The seal of the Company may be in the form of a facsimile of such seal and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. The Securities may contain such notations, legends or endorsements required by law, stock exchange rule or usage. Each Security shall be dated the date of its authentication by the Trustee. (b) A Security shall not be valid until authenticated manually by an authorized signatory of the Trustee, or by an Authenticating Agent. Such signature shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. (c) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a written order of the Company for the authentication and delivery of such Securities, signed by its President or any Vice President and its Treasurer or any Assistant Treasurer, and the Trustee in accordance with such written order shall authenticate and deliver such Securities. (d) In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 9.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established in conformity with the provisions of this Indenture. (e) The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee. 2.7 Registration of Transfer and Exchange. (a) Securities may be exchanged upon presentation thereof at the office of the Security Registrar and, in the event the Subordinated Debentures are distributed to the Preferred Security Holders, or office or agency of the Company designated for such purpose in the Borough of Manhattan, the City and State of New York, or at the office of the Security Registrar, for other Securities and for a like aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, all as provided in this Section. In respect of any Securities so surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in exchange therefor the Security or Securities that the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding. -12- (b) The Company shall keep, or cause to be kept, at its office or agency designated for such purpose, or at the office of the Security Registrar, or such other location designated by the Company a register or registers (herein referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities and the transfers of Securities as in this Section provided and which at all reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of registering Securities and transfer of Securities as herein provided shall initially be the Trustee and thereafter as may be appointed by the Company as authorized by Board Resolution (the "Security Registrar"). (c) Upon surrender for transfer of any Security at the office or agency of the Company designated for such purpose, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in the name of the transferee or transferees a new Security or Securities for a like aggregate principal amount. (d) All Securities presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Security Registrar, duly executed by the registered holder or by such holder's duly authorized attorney in writing. (e) No service charge shall be made for any exchange or registration of transfer of Securities, or issue of new Securities in case of partial redemption of any series, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than exchanges pursuant to Section 2.8, the second paragraph of Section 3.5 and Section 11.4 not involving any transfer. (f) The Company shall not be required (i) to issue, exchange or register the transfer of any Securities during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of less than all the Outstanding Securities and ending at the close of business on the day of such mailing, nor (ii) to register the transfer of or exchange any Securities or portions thereof called for redemption. The provisions of this Section 2.7 are, with respect to any Global Security, subject to Section 2.4 hereof. 2.8 Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and the Trustee shall authenticate and deliver, temporary Securities (printed, lithographed, or typewritten). Such temporary Securities shall be substantially in the form of the definitive Securities in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unnecessary delay the Company will execute and will furnish definitive Securities and thereupon any or all temporary Securities may be surrendered in -13- exchange therefor (without charge to the holders), at the office of the Security Registrar and the Trustee shall authenticate and such office or agency shall deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities, unless the Company advises the Trustee to the effect that definitive Securities need not be executed and furnished until further notice from the Company. Until so exchanged, the temporary Securities shall be entitled to the same benefits under this Indenture as definitive Securities authenticated and delivered hereunder. 2.9 Mutilated, Destroyed, Lost or Stolen Securities. (a) In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon the Company's request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substituted Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant's Security and of the ownership thereof. The Trust may authenticate any such substituted Security and deliver the same upon the written request or authorization of its President or any Vice President and its Treasurer or any assistant Treasurer of the Company. Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trust) connected therewith. In case any Security that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as they may require to save them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof. (b) Every replacement Security issued pursuant to the provisions of this Section shall constitute an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. -14- 2.10 Cancellation. All Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On request of the Company at the time of such surrender, the Trustee shall deliver to the Company cancelled Securities held by the Trustee. In the absence of such request the Trustee may dispose of cancelled Securities in accordance with its standard procedures and deliver a certificate of disposition to the Company. If the Company shall otherwise acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. 2.11 Benefit of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the holders of the Securities (and, with respect to the provisions of Section 16, the holders of Senior Indebtedness) any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Securities (and, with respect to the provisions of Section 16, the holders of Senior Indebtedness). 2.12 Authenticating Agent. (a) So long as any of the Securities remain outstanding there may be an Authenticating Agent for the Securities which the Trustee shall have the right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate the Securities issued upon exchange, transfer or partial redemption thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Securities by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and that is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or State authorities. If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately. (b) Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, -15- upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto. 3. Redemption Of Debentures. 3.1 Redemption. Subject to the Company having received prior approval of the Federal Reserve, if then required under the applicable capital guidelines or policies of the Federal Reserve, the Company may redeem the Debentures issued hereunder on and after the dates and in accordance with the terms established pursuant to this Section 3. 3.2 Special Event Redemption. Subject to the Company having received the prior approval of the Federal Reserve, if then required under the applicable capital guidelines or policies of the Federal Reserve, if a Special Event has occurred and is continuing, then, notwithstanding Section 3.3(a) but subject to Section 3.3(b), the Company shall have the right upon not less than 30 days nor more than 60 days notice to the Holders of the Debentures to redeem the Debentures, in whole but not in part, for cash within 90 days following the occurrence of such Special Event (the"90-Day Period") at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest thereon to the date of such redemption (the "Redemption Price"), provided that if at the time there is available to the Company the opportunity to eliminate, within the 90-Day Period, the Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on the Company, CTBI Trust or the Holders of CTBI Trust Securities issued by CTBI Trust, the Company shall pursue such Ministerial Action in lieu of redemption, and, provided, further, that the Company shall have no right to redeem the Debentures while CTBI Trust is pursuing any Ministerial Action pursuant to its obligations under the Trust Agreement. The Redemption Price shall be paid prior to 12:00 noon, New York time, on the date of such redemption or such earlier time as the Company determines, provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date such Redemption Price is to be paid. 3.3 Optional Redemption by Company. (a) Subject to the provisions of Section 3.3(b), except as otherwise may be specified in this Indenture, the Company shall have the right to redeem the Debentures, in whole or in part, from time to time, on or after March 31, 2027, at a redemption price equal to the Redemption Price. Any redemption pursuant to this paragraph will be made upon not less than 30 days nor more than 60 days notice to the Holder of the Debentures, at the Redemption Price. If the Debentures are only partially redeemed pursuant to this Section 3.3, the Debentures will be redeemed pro rata or by lot or by any other manner the Trustee shall deem appropriate in its discretion; provided, that if at the time of redemption the Debentures are registered as a Global Debenture, the Depositary shall determine, in accordance with its procedures, the principal amount of such Debentures held by each Holder of Debentures to be redeemed. The Redemption -16- Price shall be paid prior to 12:00 noon, New York time, on the date of such redemption or at such earlier time as the Company determines provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date such Redemption Price is to be paid. (b) If a partial redemption of the Debentures would result in the delisting of the Preferred Securities issued by CTBI Trust from The Nasdaq Stock Market's National Market or any national securities exchange or other organization on which the Preferred Securities are then listed, the Company shall not be permitted to effect such partial redemption and may only redeem the Debentures in whole. 3.4 Notice of Redemption. (a) In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Debentures in accordance with the right reserved so to do, the Company shall, or shall cause the Trustee to upon receipt of 45 days prior written notice from the Company (which notice shall, in the event of a Partial Redemption, include a representation to the effect that such Partial Redemption will not result in the delisting of the Preferred Securities as described in Section 3.3(b) above), give notice of such redemption to holders of the Debentures to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 60 days before the date fixed for redemption to such holders at their last addresses as they shall appear upon the Security Register unless a shorter period is specified in the Debentures to be redeemed. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice. In any case, failure duly to give such notice to the holder of any Security designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Debentures. In the case of any redemption of Debentures prior to the expiration of any restriction on such redemption provided in the terms of such Debentures or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with any such restriction. (b) Each such notice of redemption shall specify the date fixed for redemption and the redemption price at which Debentures of that series are to be redeemed, and shall state that payment of the redemption price of such Debentures to be redeemed will be made at the office or agency of the Company or at the office of the Securities Registrar upon presentation and surrender of such Debentures, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue. If less than all the Debentures of a series are to be redeemed, the notice to the holders of Debentures of that series to be redeemed in whole or in part shall specify the particular Debentures to be so redeemed. In case any Security is to be redeemed in part only, the notice that relates to such Security shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Security, a new Security or Debentures of such series in principal amount equal to the unredeemed portion thereof. -17- (c) If less than all the Debentures are to be redeemed, the Company shall give the Trustee at least 45 days' notice in advance of the date fixed for redemption as to the aggregate principal amount of the Debentures to be redeemed, and thereupon the Trustee shall select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and that may provide for the selection of a portion or portions (equal to twenty-five U.S. dollars ($25) or any integral multiple thereof) of the principal amount of such Debentures of a denomination larger than $25, the Debentures to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Debentures to be redeemed, in whole or in part. (d) The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its President or any Vice President, instruct the Trustee or any paying agent to call all or any part of the Debentures of a particular series for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or its own name as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Security Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section. 3.5 Payment Upon Redemption. (a) If the giving of notice of redemption shall have been completed as above provided, the Debentures or portions of Debentures to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable Redemption Price and interest on such Debentures or portions of Debentures shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such Redemption Price with respect to any such Security or portion thereof. On presentation and surrender of such Debentures on or after the date fixed for redemption at the place of payment specified in the notice, said Debentures shall be paid and redeemed at the applicable Redemption Price, together with interest accrued thereon to the date fixed for redemption (but if the date fixed for redemption is an interest payment date, the interest installment payable on such date shall be payable to the registered holder at the close of business on the applicable record date pursuant to Section 3.3). (b) Upon presentation of any Debenture that is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Security is presented shall deliver to the holder thereof, at the expense of the Company, a new Security or Debentures of authorized denomination in principal amount equal to the unredeemed portion of the Security so presented. 3.6 No Sinking Fund. The Debentures are not entitled to the benefit of any sinking fund. -18- 4. Extension of Interest Payment Period. 4.1 Extension of Interest Payment Period. So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of the Debentures, to defer payments of interest by extending the interest payment period of such Debentures for a period not exceeding 20 consecutive quarters (each such period an "Extended Interest Payment Period"), during which Extended Interest Payment Period no interest shall be due and payable; provided that no Extended Interest Payment Period may extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 4.1, will bear interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extended Interest Payment Period ("Compounded Interest"). At the end of the Extended Interest Payment Period, the Company shall calculate (and deliver such calculation to the Trustee) and pay all interest accrued and unpaid on the Debentures, including any Additional Interest and Compounded Interest (together, "Deferred Interest") that shall be payable to the Holders of the Debentures in whose names the Debentures are registered in the Security Register on the first record date after the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date of the Debentures. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may prepay at any time all or any portion of the interest accrued during an Extended Interest Payment Period. 4.2 Notice of Extension. (a) If the Property Trustee is the only registered Holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give written notice to the Administrative Trustees, the Property Trustee and the Trustee of its selection of such Extended Interest Payment Period two Business Days before the earlier of (i) the next succeeding date on which Distributions on CTBI Trust Securities issued by CTBI Trust are payable, or (ii) the date CTBI Trust is required to give notice of the record date, or the date such Distributions are payable, to the NASDAQ National Market or other applicable self-regulatory organization or to holders of the Preferred Securities issued by CTBI Trust, but in any event at least one Business Day before such record date. (b) If the Property Trustee is not the only Holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give the Holders of the Debentures and the Trustee written notice of its selection of such Extended Interest Payment Period at least two Business Days before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Company is required to give notice of the record or payment date of such -19- interest payment to the NASDAQ National Market or other applicable self- regulatory organization or to Holders of the Debentures. (c) The quarter in which any notice is given pursuant to paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 20 quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.1. 4.3 Limitation of Transactions. If (i) the Company shall exercise its right to defer payment of interest as provided in Section 4.1, or (ii) there shall have occurred any Event of Default, as defined in the Indenture, then (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock or (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to the Debentures; (other than (i) purchases or acquisitions of shares of its common stock in connection with the satisfaction by the Company of its obligations under any employee benefit plans or the satisfaction by the Company of its obligations pursuant to any contract or security requiring the Company to purchase shares of its common stock, (ii) the purchase of fractional interests in shares of its capital stock pursuant to the conversion or exchange provisions of such capital stock or security being converted or exchanged, (iii) payments under the Preferred Securities Guarantee, (iv) dividends or distributions in common stock of the Company, or (v) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase or any such rights pursuant thereto). 5. Particular Covenants Of The Company. 5.1 Payment of Principal and Interest. The Company will duly and punctually pay or cause to be paid the principal of and interest on the Debentures at the time and place and in the manner provided herein and established with respect to such Debentures. 5.2 Maintenance of Agency. So long as any of the Securities remain Outstanding, the Company agrees to maintain an office or agency in the City of Pikeville, Kentucky, or at the office of the Property Trustee, where (i) Securities may be presented for payment, (ii) Securities may be presented as hereinabove authorized for registration of transfer and exchange, and (iii) notices and demands to or upon the Company in respect of the Securities and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its President or a Vice President and delivered to the Trustee, designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. -20- 5.3 Paying Agents. (a) The Company appoints the Trustee as the Paying Agent. If the Company shall appoint one or more paying agents for all of the Securities, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section: (1) that it will hold all sums held by it as such agent for the payment of the principal of (and premium, if any) or interest on the Securities (whether such sums have been paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of the Persons entitled thereto; (2) that it will give the Trustee notice of any failure by the Company (or by any other obligor of such Securities) to make any payment of the principal of (and premium, if any) or interest on the Securities when the same shall be due and payable; (3) that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(ii) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and (4) that it will perform all other duties of paying agent as set forth in this Indenture. (b) If the Company shall act as its own paying agent with respect to the Securities, it will on or before each due date of the principal of (and premium, if any) or interest on Securities, set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal (and premium, if any) or interest so becoming due on Securities of that series until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor on such Securities) to take such action. Whenever the Company shall have one or more paying agents for any of the Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on any Securities, deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of this action or failure so to act. (c) Notwithstanding anything in this Section to the contrary, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 13.5, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such -21- paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. 5.4 Appointment to Fill Vacancy in Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 9.10, a Trustee, so that there shall at all times be a Trustee hereunder. 5.5 Compliance with Consolidation Provisions . The Company will not, while any of the Securities remain outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other company unless the provisions of Section 12 hereof are complied with. 5.6 Limitation on Dividends; Transactions with Affiliates. If Securities are issued to CTBI Trust or a trustee of CTBI Trust in connection with the issuance of Trust Securities by CTBI Trust and (i) there shall have occurred any event that would constitute an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Preferred Securities Guarantee relating to CTBI Trust or (iii) the Company shall have given notice of its election to defer payments of interest on such Securities by extending the interest payment period as provided in the Indenture and such period, or any extension thereof, shall be continuing, then (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, and (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior in interest to the Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Subordinated Debentures (other than (a) dividends or distributions in common stock, (b) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Preferred Securities Guarantee, and (d) purchases of common stock related to rights under any of the Company's benefit plans for its directors, officers or employees). 5.7 Covenants as to CTBI Trust. (a) For so long as such Trust Securities of CTBI Trust remain outstanding, the Company will (i) maintain 100% direct or indirect ownership of the Common Securities of CTBI Trust; provided, however, that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of the Common Securities, (ii) not voluntarily terminate, wind up or liquidate CTBI Trust, except upon prior approval of the Federal Reserve if then so required under applicable capital guidelines or policies of the Federal Reserve, (iii) use its reasonable efforts, consistent with the terms of CTBI Trust Agreement, to cause CTBI Trust (a) to remain a business trust, except in connection with a distribution of Securities, the redemption of all of CTBI Trust Securities of CTBI Trust or certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement of CTBI Trust, and (b) to otherwise continue not to be treated as an association taxable as a corporation or partnership for United States federal income tax purposes, and (iv) to use its reasonable efforts, consistent with the terms of the Trust Agreement, to cause each holder of Trust Securities to be treated as owning an individual beneficial interest in the Securities. (b) If the Debentures are to be issued as a Global Debenture in connection with the distribution of the Debentures to the holders of the Preferred Securities issued by the CTBI Trust upon a Dissolution Event, the Company will use its best efforts to list such Debentures on The Nasdaq Stock Markets' National Market or on such other exchange as the Preferred Securities are then listed. -22- 6. Securityholders' Lists And Reports By The Company And The Trustee. 6.1 Company to Furnish Trustee Names and Addresses of Securityholders. The Company will furnish or cause to be furnished to the Trustee (a) on a quarterly basis on each regular record date (as defined in Section 2.5(a)) a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of each series of Securities as of such regular record date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company (in the event the Company fails to provide such list on a monthly basis, the Trustee shall be entitled to rely on the most recent list provided by the Company); and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished for any series for which the Trustee shall be the Security Registrar. 6.2 Preservation of Information Communications with Securityholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to it as provided in Section 6.1 and as to the names and addresses of holders of Securities received by the Trustee in its capacity as Security Registrar (if acting in such capacity). (b) The Trustee may destroy any list furnished to it as provided in Section 6.1 upon receipt of a new list so furnished. (c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Securityholders with respect to their rights under this Indenture or under the Securities. 6.3 Reports by the Company. (a) The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to -23- file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on The Nasdaq Stock Market National Market or a national securities exchange as may be prescribed from time to time in such rules and regulations. (b) The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or reputable over-night delivery service that provides for evidence of receipt, to the Securityholders, as their names and addresses appear upon the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 6.4 Reports by the Trustee. (a) On or before July 15 in each year in which any of the Securities are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register, a brief report dated as of the preceding May 15, if and to the extent required under Section 313(a) of CTBI Trust Indenture Act. (b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust Indenture Act. (c) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, with each stock exchange upon which any Securities are listed (if so listed) and also with the Commission. The Company agrees to notify the Trustee when any Securities become listed on any stock exchange. 7. Remedies Of The Trustee And Securityholders On Event Of Default. 7.1 Events of Default. (a) Whenever used herein with respect to the Debentures, "Event of Default" means any one or more of the following events that has occurred and is continuing: (1) the Company defaults in the payment of any installment of interest upon any of the Debentures, as and when the same shall become due and payable, and continuance of -24- such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of this Indenture shall not constitute a default in the payment of interest for this purpose; (2) the Company defaults in the payment of the principal of (or premium, if any, on) any of the Debentures as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise; provided, however, that a valid extension of the maturity of such Securities in accordance with the terms of any indenture supplemental hereto shall not constitute a default in the payment of principal or premium, if any; (3) the Company fails to observe or perform any other of its covenants or agreements with respect to the Debentures for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of at least 25% in principal amount of the Debentures at the time Outstanding; (4) the Company pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors; (5) a court of competent jurisdiction enters an order under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company for all or substantially all of its property, or (iii) orders the liquidation of the Company or the Guarantor, and the order or decree remains unstayed and in effect for 90 days; or (6) CTBI Trust shall have voluntarily or involuntarily dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of Securities to holders of Trust Securities in liquidation of their interests in CTBI Trust, (ii) the redemption of all of the outstanding Trust Securities of CTBI Trust or (iii) certain mergers, consolidations or amalgamation, each as permitted by the Trust Agreement of CTBI Trust. (b) In each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders) may declare the principal of all the Securities to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, notwithstanding anything contained in this Indenture or in the Securities. -25- (c) At any time after the principal of the Securities shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities then Outstanding hereunder, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of that series and the principal of (and premium, if any, on) any and all Debentures that shall have become due otherwise then by acceleration (with interest upon such principal and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Debentures to the date of such payment or deposit) and the amount payable to the Trustee under Section 9.6, and (ii) any and all Events of Default under the Indenture, other than the nonpayment of principal on Debentures that shall not have become due by their terms, shall have been remedied or waived as provided in Section 7.6. (d) No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon. (e) In case the Trustee shall have proceeded to enforce any right with respect to the Debentures under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken. 7.2 Collection of Indebtedness and Suits for Enforcement by Trustee. (a) The Company covenants that (1) in case it shall default in the payment of any installment of interest on any of the Securities, and such default shall have continued for a period of 90 Business Days, or (2) in case it shall default in the payment of the principal of (or premium, if any, on) any of the Securities when the same shall have become due and payable, whether upon maturity of the Securities or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee the Guarantor (as defined in the Preferred Securities Guarantee) will pay to the Trustee, for the benefit of the holders of the Securities, the whole amount that then shall have been become due and payable on all such Securities for principal (and premium, if any) or interest, or both, as the case may be, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law and, if the Securities are held by CTBI Trust or a trustee of such trust, without duplication of any other amounts paid by CTBI Trust or trustee in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 9.6. -26- (b) If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or other obligor upon the Securities, wherever situated. (c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affecting the Company or the creditors or property of either, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of the Securities allowed for the entire amount due and payable by the Company under the Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 9.6; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of the Securities to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 9.6. (d) All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Securities, may be enforced by the Trustee without the possession of any of such Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 9.6, be for the ratable benefit of the holders of the Securities. (e) In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. (f) Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of that series or the rights of any -27- holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. 7.3 Application of Moneys Collected. Any moneys collected by the Trustee pursuant to this Section with respect to the Securities shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Securities, and notation thereon the payment, if only partially paid, and upon surrender thereof if fully paid: (a) FIRST: To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 9.6; (b) SECOND: To the payment of all Senior Indebtedness of the Company if and to the extent required by Section 16; and (c) THIRD: To the payment of the amounts then due and unpaid upon Securities for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively. 7.4 Limitation on Suits. (a) No holder of any Security shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to the Securities specifying such Event of Default, as hereinbefore provided; (ii) the holders of not less than 25% in aggregate principal amount of the Securities then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (iii) such holder or holders shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of Indemnity, shall have failed to institute any such action, suit or proceeding; and (v) during such 60 day period, the holders of a majority in principal amount of the Securities of that series do not give the Trustee a direction inconsistent with the request. (b) Notwithstanding anything contained herein to the contrary, any other provisions of this Indenture, the right of any holder of any Security to receive payment of the principal of (and premium, if any) and interest on such Security, as therein provided, on or after the respective due dates expressed in such Security (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or -28- redemption date, shall not be impaired or affected without the consent of such holder and by accepting a Security hereunder it is expressly understood, intended and covenanted by the taker and holder of every Security with every other such taker and holder and the Trustee, that no one or more holders of Securities shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 7.5 Rights and Remedies Cumulative; Delay or Omission Not Waiver. (a) Except as otherwise provided in Section 2.9, all powers and remedies given by this Section to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Securities. (b) No delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or on acquiescence therein; and, subject to the provisions of Section 7.4, every power and remedy given by this Section or by law to the Trustee or the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. 7.6 Control by Securityholders. The holders of a majority in aggregate principal amount of the Securities at the time Outstanding, determined in accordance with Section 10.4, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture or be unduly prejudicial to the rights of holders of Securities of any other series at the time Outstanding determined in accordance with Section 10.4 hereof. Subject to the provisions of Section 9.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Securities at the time Outstanding affected thereby, determined in accordance with Section 10.4, may on behalf of the holders of all of the Securities waive any past default in the performance of any of the covenants contained herein and its consequences, except (i) a default in the payment of the principal of, or premium, if any, or interest on, any of the Securities as and when the same shall become due by the terms of such securities otherwise than by acceleration (unless such default has been cured and a sum sufficient -29- to pay all matured installments of interest and principal and any premium has been deposited with the Trustee (in accordance with Section 7.1(c)), (ii) a default in the covenants contained in Section 5.6, or (iii) in respect of a covenant or provision hereof which under Section 11 cannot be modified or amended without the consent of the Holder of each Outstanding Security affected; provided, however, that if the Debentures are held by CTBI Trust or a trustee of such trust, such waiver or modification to such waiver shall not be effective until the holders of a majority in liquidation preference of Trust Securities of CTBI Trust shall have consented to such waiver or modification to such waiver; provided further, that if the consent of the Holder of each Outstanding Security is required, such waiver shall not be effective until each holder of CTBI Trust Securities of CTBI Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 7.6 Undertaking to Pay Costs. All parties to this Indenture, and each holder of any Securities by such holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Debentures, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debentures, on or after the respective due dates expressed in such Debenture or established pursuant to this Indenture. 8. Form of Debenture and Original Issue. 8.1 Form of Debenture. The Debenture and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the forms contained as Exhibit A to this Indenture, attached hereto and incorporated herein by reference. 8.2 Original Issue of Debentures. Debentures in the aggregate principal amount of $___________ may, upon execution of this Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures to or upon the written order of the Company, signed by its Chairman, its Vice Chairman, its President, or any Vice President and its Treasurer or an Assistant Treasurer, without any further action by the Company. 9. Concerning The Trustee. -30- 9.1 Certain Duties and Responsibilities of Trustee. (a) The Trustee prior to the occurrence of an Event of Default with respect to the Securities and after the curing of all Events of Default with respect to the Debentures that may have occurred, shall undertake to perform with respect to the Securities of such series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default with respect to the Debentures has occurred (that has not been cured or waived), the Trustee shall exercise with respect to Debentures such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) prior to the occurrence of an Event of Default with respect to the Debentures and after the curing or waiving of all such Events of Default with respect to the Debentures that may have occurred: (A) the duties and obligations of the Trustee shall with respect to the Debentures be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to the Debentures except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (B) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to the Debentures conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee, was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Debentures at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or -31- exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Debentures; and (4) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it. 9.2 Notice of Defaults. Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities, the Trustee shall transmit by mail to all holders of Securities, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal or (or premium, if any) or interest (including any Additional Interest) on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of the directors and/or responsible officers of the Trustee determines in good faith that the withholding of such notice is in the interests of the holders of such Securities; and provided, further, that in the case of any default of the character specified in Section 7.1(a)(3), no such notice to holder of Securities shall be given until at least 30 days after the occurrence thereof. For the purposes of this Section, the terms "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to the Securities. 9.3 Certain Rights of Trustee. Except as otherwise provided in Section 9.1: (a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by the President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer thereof (unless other evidence in respect thereof is specifically prescribed herein); (c) The Trustee shall not be deemed to have knowledge of a default or an Event of Default, other than an Event of Default specified in Section 7.1(a) (1) or (2), unless and until it receives written notification of such Event of Default from the Company or by holders of at least 25% of the aggregate principal amount of the Securities at the time Outstanding; -32- (d) The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon; (e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Securities (that has not been cured or waived) to exercise with respect to the Securities such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; (f) The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security, or other papers or documents unless requested in writing so to do by the holders of not less than a majority in principal amount of the Outstanding Securities affected thereby (determined as provided in Section 10.4); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and (h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 9.4 Trustee Not Responsible for Recitals or Issuance or Securities. (a) The recitals contained herein and in the Securities shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. -33- (c) The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds of such Securities, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any moneys received by any paying agent other than the Trustee. 9.5 May Hold Securities. The Trustee or any paying agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent or Security Registrar. 9.6 Monies Held in Trust. Subject to the provisions of Section 13.5, all monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any monies received by it hereunder except such as it may agree with the Company to pay thereon. 9.7 Compensation and Reimbursement. (a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Company and the Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim of liability in the premises. (b) The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities. 9.8 Reliance on Officers' Certification. Except as otherwise provided in Section 9.1 whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be -34- herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof. 9.9 Disqualification: Conflicting Interests. If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 9.10 Corporate Trustee Required; Eligibility. There shall at all times be a Trustee with respect to the Debentures issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time CTBI Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.11. 9.11 Resignation and Removal; Appointment of Successor. (a) The Trustee or any successor hereafter appointed, may at any time resign with respect to the Securities by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to Securities by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to Securities, or any Securityholder who has been a bona fide holder of a Security or Securities for at least six months may, subject to the provisions of Section 9.9, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may -35- thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any one of the following shall occur: (1) the Trustee shall fail to comply with the provisions of Section 9.9 after written request therefor by the Company or the Guarantor or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months; or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 9.10 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee with respect to all Securities and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 9.9, unless the Trustee's duty to resign is stayed as provided herein, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months may, on behalf of that holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The holders of a majority in aggregate principal amount of the Securities at the time Outstanding may at any time remove the Trustee by so notifying the Trustee and the Company and may appoint a successor Trustee with the consent of the Company. (d) Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Securities pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 9.12. (e) Any successor trustee appointed pursuant to this section may be appointed with respect to the Securities, and at any time there shall be only one Trustee with respect to the Securities. 9.12 Acceptance of Appointment by Successor. -36- (a) In case of the appointment hereunder of a successor trustee with respect to the Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) of this Section, as the case may be. (c) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Section. (d) Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company and the Guarantor. 9.13 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 9.9 and eligible under the provisions of Section 9.10, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. 9.14 Preferential Collection of Claims Against the Company. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein. -37- 10. Concerning The Securityholders. 10.1 Evidence of Action by Securityholders. (a) Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Securities may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such majority or specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Securities in Person or by agent or proxy appointed in writing. (b) If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Securities shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. 10.2 Proof of Execution by Securityholders. Subject to the provisions of Section 10.1, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Securities shall be sufficient if made in the following manner: (a) The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee. (b) The ownership of Securities shall be proved by the Security Register of such Securities or by a certificate of the Security Registrar thereof. (c) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. 10.3 Who May Be Deemed Owners. Prior to the due presentment for registration of transfer of any Security, the Company, the Trustee, any paying agent and any Security Registrar may -38- deem and treat the Person in whose name such Security shall be registered upon the books of the Company as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal of, premium, if any, and (subject to Section 2.3) interest on such Security and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. 10.4 Certain Securities Owned by Company Disregarded. In determining whether the holders of the requisite aggregate principal amount of Securities have concurred in any direction, consent of waiver under this Indenture, the Securities that are owned by the Company or any other obligor on the Securities or by any Person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Securities shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities that the Trustee actually knows are so owned shall be so disregarded. The Securities so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. 10.5 Actions Binding on Future Securityholders. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 10.1, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any holder of a Security that is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 10.2, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Securities. -39- 11. Supplemental Indentures. 11.1 Supplemental Indentures Without the Consent of Security holders. (a) In addition to any supplemental indenture otherwise authorized by this Indenture, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of CTBI Trust Indenture Act as then in effect), without the consent of the Securityholders, for one or more of the following purposes: (1) to cure any ambiguity, defect, or inconsistency herein, in the Securities; (2) to comply with Section 10; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; (4) to add to the covenants of the Company for the benefit of the holders of all of the Securities or to surrender any right or power herein conferred upon the Company; (5) to add to, delete from, or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of Securities, as herein set forth; (6) to make any change that does not adversely affect the rights of any Securityholder in any material respect; (7) to provide for the issuance of and establish the form and terms and conditions of the Securities, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture of Securities, or to add to the rights of the holders of Securities; or (8) qualify or maintain the qualification of the Indenture under CTBI Trust Indenture Act. (b) The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. -40- (c) Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 11.2. 11.2 Supplement Indentures with Consent of Securityholders. (a) With the consent (evidenced as provided in Section 10.1 of the holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding, the Company, when authorized by Board Resolutions, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 11.1 the rights of the holders of the Securities under this Indenture; provided, however, that no such supplemental Indenture shall without the consent of the holders of each Debenture then Outstanding and affected thereby, (i) extend the fixed maturity of any Securities, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the holder of each Security so affected or (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture provided, further, that so long as any of the Securities issued by CTBI Trust remain outstanding, no such supplemental indenture shall adversely affect the holders of the Preferred Securities in any material respect without the consent of the holders of a majority of the aggregate liquidation preference of the Preferred Securities, provided further, that if the Debentures are held by CTBI Trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in liquidation preference of Trust Securities of CTBI Trust shall have consented to such supplemental indenture; provided further, that if the consent of the holder of each Outstanding Debt Security is required, such supplemental indenture shall not be effective until each holder of the Trust Securities of CTBI Trust shall have consented to such supplemental indenture. (b) It shall not be necessary for the consent of the Securityholders affected thereby under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. 11.3 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Section or of Section 10.1, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. -41- 11.4 Securities Affected by Supplemental Indentures. Securities affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Section or of Section 11.1, may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which the Securities may be listed as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of that series so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities then Outstanding. 11.5 Execution of Supplemental Indentures. (a) Upon the request of the Company, accompanied by their Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. The Trustee, subject to the provisions of Section 9.1 may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Section is authorized or permitted by, and conforms to, the terms of this Section and that it is proper for the Trustee under the provisions of this Section to join in the execution thereof. (b) Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Security Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. 12. Successor Corporation. 12.1 Company May Consolidate, Etc. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other corporation or corporations (whether or not affiliated with the Company, as the case may be), or successive consolidations or mergers in which the Company, as the case may be, or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property of the Company, as the case may be, or its successor or successors as an entirety, or substantially as an entirety, to any other corporation (whether or not affiliated with the Company, as the case may be, or its successor or successors) authorized to acquire and operate the same; provided, however, the Company hereby covenants and agree that, (i) upon any such consolidation, merger, sale, conveyance, transfer or other disposition, the due and punctual -42- payment, in the case of the Company, of the principal of (premium, if any) and interest on all of the Debentures, according to their terms and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Company as the case may be, shall be expressly assumed, by supplemental indentures (which shall conform to the provisions of the Trust Indenture Act, as then in effect) satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company, as the case may be, shall have been merged, or by the entity which shall have acquired such property; (ii) in case the Company consolidates with or merges into another Person or conveys or transfers its properties and assets substantially then as an entirety to any Person, the successor Person is organized under the laws of the United States of any state or the District of Columbia, and (iii) immediately after giving effect thereto, an Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing. 12.2 Successor Corporation Substituted. (a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of, in the case of the Company, the due and punctual payment of the principal of, premium, if any, and interest on all of the Debentures Outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, as the case may be such successor corporation shall succeed and be substituted for the Company with the same effect as if it had been named as the Company herein, and thereupon the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities. (b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate. (c) Nothing contained in this Indenture or in any of the Securities shall prevent the Company from merging into itself or acquiring by purchase or otherwise all or any part of the property of any other Person (whether or not affiliated with the Company). 12.3 Evidence of Consolidation, Etc. to Trustee. The Trustee, subject to the provisions of Section 9.1 may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Section. 13. Satisfaction And Discharge. 13.1 Satisfaction and Discharge of Indenture. If at any time: (a) the Company shall have delivered to the Trustee for cancellation all Securities theretofore authenticated (other than any -43- Securities that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.9) and Securities for whose payment money or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company (and thereupon repaid to the Company or discharged from such trust, as provided in Section 13.5; or all such Securities not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as trust funds the entire amount in moneys or Governmental Obligations sufficient or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity or upon redemption all Securities not theretofore delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder with respect to the Company; then this Indenture shall thereupon cease to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3 and 9.10, that shall survive until the date of maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. 13.2 Discharge of Obligations. If at any time all such Securities not heretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 13.1 shall have been paid by the Company by depositing irrevocably with the Trustee as trust funds moneys or an amount of Governmental Obligations sufficient in the opinion of a nationally recognized certified public accounting firm to pay at maturity or upon redemption all such Securities not theretofore delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then after the date such moneys or Governmental Obligations, as the case may be, are deposited with the Trustee the obligations of the Company under this Indenture shall cease to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.3, 9.6, 9.10 and 13.5 hereof that shall survive until such Securities shall mature and be paid. Thereafter, Sections 9.6 and 13.5 shall survive. 13.3 Deposited Moneys to be Held in Trust. All monies or Governmental Obligations deposited with the Trustee pursuant to Sections 13.1 or 13.2 shall be held in trust and shall be available for payment as due, either directly or through any paying agent (including the Company acting as its own paying agent), to the holders of the Securities for the payment or redemption of which such moneys or Governmental Obligations have been deposited with the Trustee. 13.4 Payment of Monies Held by Paying Agents. In connection with the satisfaction and discharge of this Indenture all moneys or Governmental Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee -44- and thereupon such paying agent shall be released from all further liability with respect to such moneys or Governmental Obligations. 13.5 Repayment to Company. Any monies or Governmental Obligations deposited with any paying agent or the Trustee, or then held by the Company in trust for payment of principal of or premium or interest on the Securities that are not applied but remain unclaimed by the holders of such Securities for at least two years after the date upon which the principal of (and premium, if any) or interest on such Securities shall have respectively become due and payable, shall be repaid to the Company, upon written request by the Company, on March 31 of each year or (if then held by the Company) shall be discharged from such trust; and thereupon the paying agent and the Trustee shall be released from all further liability with respect to such moneys or Governmental Obligations, and the holder of any of the Securities entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company or the Guarantor for the payment thereof. 14. Immunity Of Incorporators, Stockholders, Officers And Directors. 14.1 No Recourse. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or the Guarantor or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the Indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Securities. 15. Miscellaneous Provisions. 15.1 Effect on Successors and Assigns. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind their respective successors and assigns, whether so expressed or not. -45- 15.2 Actions by Successors. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. 15.3 Surrender of Company Powers. The Company by instrument in writing executed by authority of 2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company, and thereupon such power so surrendered shall terminate both as to the Company, as the case may be, and as to any successor corporation. 15.4 Notices. Except as otherwise expressly provided herein any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed (until another address is filed in writing by the Company with the Trustee), as follows: c/o Community Trust Bancorp, Inc., 208 North Mayo Trail, Pikeville, Kentucky 415101, Attention Chief Financial Officer. Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if received in writing at the Corporate Trust Office of the Trustee. 15.5 Governing Law. This Indenture and each Security shall be deemed to be a contract made under the internal laws of the Commonwealth of Kentucky and for all purposes shall be construed in accordance with the laws of said State. 15.6 Treatment of Debentures as Debt. It is intended that the Debentures will be treated as indebtedness and not as equity for federal income tax purposes. The provisions of this Indenture shall be interpreted to further this intention. 15.7 Compliance Certificates and Opinions. (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. (b) Each certificate and opinion of the Company provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include (1) a statement that the Person making such certificate or opinion has read such -46- covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. 15.8 Payments on Business Days. In any case where the date of maturity of interest or principal of any Security or the date of redemption of any Security shall not be a Business Day, then payment of interest or principal (and premium, if any) may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date. 15.9 Conflict With Trust Indenture Act. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of Trust Indenture Act, such imposed duties shall control. 15.10 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. 15.11 Severability. In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Securities, but this Indenture and such Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. 15.12 Assignment. The Company will have the right at all times to assign any of its respective rights or obligations under this Indenture to a direct or indirect wholly-owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, the Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties thereto. 15.13 Acknowledgment of Rights. The Company acknowledges that, with respect to any Debentures held by CTBI Trust or a trustee of such trust, if the Property Trustee fails to enforce its rights under this Indenture as the holder of the series of Debentures held as the assets of CTBI Trust any holder of Preferred Securities may institute legal proceedings directly against the Company to enforce such Property Trustee's rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Securities on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption -47- date), the Company acknowledges that a holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on the Securities having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such holder on or after the respective due date specified in the Applicable Series of Securities. 16. Subordination Of Securities. 16.1 Agreement to Subordinate. (a) The Company covenants and agrees, and each Holder of Debentures issued hereunder by such Holder's acceptance thereof likewise covenants and agrees, that all Debentures shall be issued subject to the provisions of this Section 16; and each Holder of a Debt Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. (b) The payment by the Company of the principal of, premium, if any, and interest on all Debentures issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment of the prior payment in full of all Senior Debt, Subordinated Debt and Additional Senior Obligations, whether outstanding at the date of this Indenture or thereafter incurred. (c) No provision of this Section 16 shall prevent the occurrence of any default or Event of Default hereunder. 16.2 Default on Senior Debt, Subordinated Debt or Additional Senior Obligations. (a) In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior Debt, Subordinated Debt or Additional Senior Obligations of the Company, as the case may be, or in the event that the maturity of any Senior Debt, Subordinated Debt or Additional Senior Obligations of the Company (collectively, "Senior Indebtedness"), as the case may be, has been accelerated because of a default, then, in either case, no payment shall be made by the Company with respect to the principal (including redemption and sinking fund payments) of, or premium, if any, or interest on the Debentures. (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 16.2, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee in writing -48- within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. 16.3 Liquidation; Dissolution; Bankruptcy. (a) Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company on account of the principal (and premium, if any) or interest on the Debentures; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the holders of the Debentures or the Trustee would be entitled to receive from the Company, except for the provisions of this Section 16, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the holders of the Debentures or by the Trustee under the Indenture if received by them or it, directly to the holders of Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of Debentures or to the Trustee. (b) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness of the Company is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness of the Company, as the case may be, remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness. (c) For purposes of this Section 16, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjust- -49- ment, the payment of which is subordinated at least to the extent provided in this Section 16 with respect to the Debentures to the payment of all Senior Indebtedness of the Company, as the case may be, that may at the time be outstanding, provided that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Section 10 of the Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 16.3 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Section 10 of the Indenture. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 9.6 of the Indenture. 16.4 Subrogation. (a) Subject to the payment in full of all Senior Indebtedness of the Company, the rights of the Holders of the Debentures shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest on the Debentures shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders of the Debentures or the Trustee would be entitled except for the provisions of this Section 16, and no payment over pursuant to the provisions of this Section 16 to or for the benefit of the holders of such Senior Indebtedness by Holders of the Debentures or the Trustee, shall, as between the Company, its creditors other than Holders of Senior Indebtedness of the Company, and the holders of the Debentures, be deemed to be a payment by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Section 16 are and are intended solely for the purposes of defining the relative rights of the Holders of the Debentures, on the one hand, and the holders of such Senior Indebtedness on the other hand. (b) Nothing contained in this Section 16 or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness of the Company, and the Holders of the Debentures, the obligations of the Company, which is absolute and unconditional, to pay to the Holders of the Debentures the principal of (and premium, if any) and interest on the Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Debentures and creditors of the Company, as the case may be, other than the holders of Senior Indebtedness of the Company, as the case may be, nor shall anything herein or therein prevent the Trustee or the Holder of any Debt Security from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Section 16 of the holders of such Senior Indebtedness in respect of -50- cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. (c) Upon any payment or distribution of assets of the Company referred to in this Section 16, the Trustee, subject to the provisions of Section 9.1 of the Indenture, and the Holders of the Debentures shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Debentures, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 16. 16.5 Trustee to Effectuate Subordination. Each Holder of Debentures by such Holder's acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Section 16 and appoints the Trustee such Holder's attorney-in-fact for any and all such purposes. 16.6 Notice by the Company. (c) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Section 16. Notwithstanding the provisions of this Section 16 or any other provision of this indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Section 16, unless and until a Responsible Officer of the trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 9.1 of the Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 16.6 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Debenture), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date. (b) The Trustee, subject to the provisions of Section 9.1 of the Indenture, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Company, as the case may be (or a trustee -51- on behalf of such holder), to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Section 16, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Section 16, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 16.7 Rights of the Trustee; Holders of Senior Indebtedness. (a) The Trustee in its individual capacity shall be entitled to all the rights set forth in this Section 16 in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. The Trustee's right to compensation and reimbursement of expenses as set forth in Section 9.6 shall not be subject to the subordination provisions of this Section 16. (b) With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Section 16, and not implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Section 9.1 of the Indenture, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders if Debentures, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Section 16 or otherwise. 16.8 Subordination May Not be Impaired. (a) No right of any present or future holder of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company, as the case may be, or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company, as the case may be, with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. (b) Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Debentures, without incurring responsibility to the Holders of the Debentures and without impairing or releasing the -52- subordination provided in this Section 16 or the obligations hereunder of the Holders of the Debentures to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or an instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, as the case may be, and any other Person. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. COMMUNITY TRUST BANCORP, INC. By: ------------------------------------- Richard M. Levy, Executive Vice President and Chief Financial Officer ATTEST: - ---------------------------- Jean R. Hale, Secretary STATE STREET BANK AND TRUST COMPANY as Trustee By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- STATE OF ----------------- ) ) SS: COUNTY OF ) ---------------- ) The foregoing instrument was acknowledged before me this ____ day of ________, 1997 by Richard M. Levy, as Executive Vice President and Chief Financial Officer of Community Trust Bancorp, Inc., a Kentucky corporation on behalf of the corporation. -53- My commission expires: ________________________. _______________________________ Notary Public COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) The foregoing instrument was acknowledged before me this ____ day of ________, 1997 by _______________, as _________________________ of State Street Bank and Trust Company, a Massachusetts trust company on behalf of the trust company. My commission expires: ________________________. _______________________________ Notary Public -54- EXHIBIT A (FORM OF FACE OF DEBENTURE) No. _____________________________ $ ______________________ CUSIP No. 204149-10-8 COMMUNITY TRUST BANCORP, INC. ___% SUBORDINATED DEBENTURE DUE MARCH 31, 2027 Community Trust Bancorp, Inc., a Kentucky corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, ________________, or registered assigns, the principal sum of _______________ Dollars ($_______) on March 31, 2027 (the "Stated Maturity"), and to pay interest on said principal sum from __________, 1997, to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on each of March 31, June 30, September 30, and December 31 of each year at the rate of ___% per annum until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed, will be computed on the basis of the actual number of days elapsed in a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Debenture is not a business day, then payment of interest payable on such date will be made on the next succeeding day that is a business day (and without any interest or other payment in respect of any such delay) in each case with the same force and effect as if made on the date such payment was originally payable. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Debenture (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the regular record date for such interest installment, which shall be the close of business on the business day next preceding such Interest Payment Date unless otherwise provided in the indenture. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such regular record date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered Holders of this series of Debentures not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may -55- be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debt; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered Holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Debenture is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Debenture will be made at such place and to such account as may be designated by the Property Trustee. The Stated Maturity may be shortened at any time by the Company to any date not earlier than March 31, 2027, subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. Such date may also be extended at any time at the election of the Company for one or more periods, but in no event to a date later than March 31, 2036, subject to certain limitations described in the Indenture. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in- fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated ___________, 1997 COMMUNITY TRUST BANCORP, INC. By: ------------------------- -56- Name: Richard M. Levy Title: Executive Vice President and Chief Financial Officer Attest: By: _______________________ Name: Jean R. Hale Title: Secretary -57- EXHIBIT B (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Debentures described in the within-mentioned Indenture. Dated: -------------------------- - -------------------------------- as Trustee --------------------------------- or Authentication Agent By: By ----------------------------- ------------------------------ Authorized Signatory -58- EXHIBIT C (FORM OF REVERSE OF DEBENTURE) _____% SUBORDINATED DEBENTURE (CONTINUED) This Debenture is one of the subordinated debentures of the Company (herein sometimes referred to as the "Debentures"), specified in the Indenture, all issued or to be issued under and pursuant to an Indenture dated as of _______________, 1997 (the "Indenture") duly executed and delivered between the Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Debentures. The Debentures are limited in aggregate principal amount as specified in the Indenture. Because of the occurrence and continuation of a Tax Event, Investment Company Event or Capital Event, in certain circumstances, this Debenture may become due and payable at the principal amount together with any interest accrued thereon, to the date of such redemption (the "Redemption Price"). The Redemption Price shall be paid prior to 12:00 noon, Eastern Standard Time, on the date of such redemption or at such earlier time as the Company determines. The Company shall have the right to redeem this Debenture at the option of the Company, without premium or penalty, in whole or in part at any time on or after March 31, 2007 (an "Optional Redemption"), or at any time in certain circumstances upon the occurrence of a Tax Event or Investment Company Event, at the Redemption Price. Any redemption pursuant to this paragraph will be made upon not less than 30 days nor more than 60 days notice, at the Redemption Price. If the Debentures are only partially redeemed by the Company pursuant to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee. In the event of redemption of this Debenture in part only, a new Debenture or Debentures for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. -59- The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of Debentures not less than a majority in aggregate principal amount of the Debentures at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debentures; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of the Debentures except as provided in the Indenture, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Debenture so affected, or (ii) reduce the aforesaid percentages of Debentures, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Debenture then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Debentures at the time outstanding affected thereby, on behalf of all of the Holders of the Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Debentures of such series. Any such consent or waiver by the registered Holder of this Debenture (unless removed as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Debentures and from time to time to extend the interest payment period of such Debentures for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Debentures to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period together with all such further extensions thereof shall not exceed 20 consecutive quarters. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may commence a new Extended Interest Payment Period. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the Security Register of the Company, upon surrender of this Debenture for registration of transfer at the office or agency of the Trustee in Boston, Massachusetts accompanied by a written instrument or instruments of transfer in form -60- satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any paying agent and the Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Debentures are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. This Global Debenture is exchangeable for Debentures in definitive form only under certain limited circumstances set forth in the Indenture. Debentures of this series so issued are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. -61- EX-4.7 7 PREFERRED SECURITY GUARANTEE EXHIBIT 4.7 ----------------------------------------------- PREFERRED SECURITIES GUARANTEE AGREEMENT COMMUNITY TRUST BANCORP, INC. and STATE STREET BANK AND TRUST COMPANY DATED AS OF _______________ ____, 1997 ----------------------------------------------- TABLE OF CONTENTS Section Page 1. Definitions and Interpretation ....................................... 1 1.1 Definitions and Interpretations ................................. 1 2. Trust Indenture Act .................................................. 4 2.1 Trust Indenture Act; Application ................................ 4 2.2 Lists of Holders of Securities .................................. 4 2.3 Reports by the Preferred Guarantee Trustee ...................... 5 2.4 Periodic Reports to Preferred Guarantee Trustee ................. 5 2.5 Evidence of Compliance with Conditions Precedent ................ 5 2.6 Events of Default; Waiver ....................................... 5 2.7 Event of Default; Notice ........................................ 5 2.8 Conflicting Interests ........................................... 6 3. Powers, Duties And Rights Of Preferred Guarantee Trustee ............. 6 3.1 Powers and Duties of the Preferred Guarantee Trustee ............ 6 3.2 Certain Rights of Preferred Guarantee Trustee ................... 8 3.3 Not Responsible for Recitals or Issuance of Guarantee ........... 9 4. Preferred Guarantee Trustee .......................................... 10 4.1 Preferred Guarantee Trustee; Eligibility ........................ 10 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees ........................................................ 10 5. Guarantee ............................................................ 11 5.1 Guarantee ....................................................... 11 5.2 Waiver of Notice and Demand ..................................... 11 5.3 Obligations Not Affected ........................................ 11 5.4 Rights of Holders ............................................... 12 5.5 Guarantee of Payment ............................................ 13 5.6 Subrogation ..................................................... 13 5.7 Independent Obligations ......................................... 13 6. Limitation Of Transactions; Subordination ............................ 13 6.1 Limitation of Transactions ...................................... 13 6.2 Ranking ......................................................... 13 7. Termination .......................................................... 14 7.1 Termination ..................................................... 14 8. Indemnification ...................................................... 14 -i- TABLE OF CONTENTS Section Page 8.1 Exculpation ..................................................... 14 8.2 Indemnification ................................................. 14 9. Miscellaneous ........................................................ 15 9.1 Successors and Assigns .......................................... 15 9.2 Amendments ...................................................... 15 9.3 Notices ......................................................... 15 9.4 Benefit ......................................................... 16 9.5 Governing Law ................................................... 16 -ii- TRUST INDENTURE ACT CROSS-REFERENCE TABLE Section of Trust Indenture Acts of 1939, Amended Section of Indenture 310(a) ................................................................. 4.1(a) 310(b) ............................................................ 2.8, 4.1(c) 310(c) ......................................................... Not Applicable 311(a) ................................................................. 2.2(b) 311(b) ................................................................. 2.2(b) 311(c) ......................................................... Not Applicable 312(a) ................................................................. 2.2(a) 312(b) ................................................................. 2.2(b) 313 ....................................................................... 2.3 314(a) .................................................................... 2.4 314(b) ......................................................... Not Applicable 314(c) .................................................................... 2.5 314(d) ......................................................... Not Applicable 314(e) .......................................................... 1.1, 2.5, 3.2 314(f) ............................................................... 2.1, 3.2 315(a) ................................................................. 3.1(d) 315(b) .................................................................... 2.7 315(c) .................................................................... 3.1 315(d) ................................................................. 3.1(d) 316(a) ............................................................... 1.1, 5.4 316(b) .................................................................... 5.4 316(c) .................................................................... 8.2 317(a) ......................................................... Not Applicable 317(b) ......................................................... Not Applicable 318(a) ................................................................. 2.1(b) 318(b) .................................................................... 2.1 318(c) ................................................................. 2.1(a) -iii- PREFERRED SECURITIES GUARANTEE AGREEMENT This Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee"), dated as of _______________ ____, 1997, is executed by and between Community Trust Bancorp, Inc. (the "Guarantor"), a Kentucky corporation, and State Street Bank and Trust Company, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of CTBI Preferred Capital Trust ("CTBI Trust"), a Delaware statutory business trust. RECITALS: A. Whereas, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of ________ __, 1997, among the trustees of CTBI Trust named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interest in the assets of CTBI Trust, CTBI Trust is issuing on the date hereof ________ preferred securities, having an aggregate liquidation amount of $______________, designated the _____% Cumulative Trust Preferred Securities (the "Preferred Securities"); B. Whereas, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: in consideration of the purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders. 1. Definitions And Interpretation. 1.1 Definitions and Interpretations. (a) In this Preferred Securities Guarantee, unless the context otherwise requires: (1) Capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (2) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (3) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (4) all references in this Preferred Securities Guarantee to Sections are to Sections of this Preferred Securities Guarantee, unless otherwise specified; (5) a term defined in the Trust Indenture Act has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (6) a reference to the singular includes the plural and vice versa. (b) "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. (c) "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, or (c) a day on which Property Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture Trustee is closed for business. (d) "Corporate Trust Office" means the office of the Preferred Guarantee Trustee at which the corporate trust business of the Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at Two International Place, 4th Floor, Boston, MA 02110, Attn: Corporate Trust Department. (e) "Covered Person" means any Holder or beneficial owner of Preferred Securities. (f) "Debentures" means the series of convertible junior subordinated debt securities of the Guarantor designated the __________% Cumulative Subordinated Debentures due 2027 held by the Property Trustee (as defined in the Trust Agreement) of CTBI Trust. (g) "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Preferred Securities Guarantee. (h) "Guarantee Payments" means the following payments or distributions without duplication, with respect to the Preferred Securities, to the extent not paid or made by CTBI Trust: (i) any accrued and unpaid Distributions (as defined in the Trust Agreement) that are required to be paid on such Preferred Securities to the extent CTBI Trust shall have funds available therefor, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price") to the extent CTBI Trust has funds available therefor, with respect to any Preferred Securities called for redemption by CTBI Trust, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of CTBI Trust (other than in connection with the distribution of Debentures to the Holders in exchange for Preferred Securities as provided in the Trust Agreement), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent CTBI Trust shall have funds available therefor and (b) the amount of assets -2- of CTBI Trust remaining available for distribution to Holders in liquidation of CTBI Trust (in either case, the "Liquidation Distribution"). (i) "Holder" shall mean any holder, as registered on the books and records of CTBI Trust of any Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. (j) "Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Preferred Guarantee Trustee. (k) "Indenture" means the Indenture dated as of ______________, 1997 among the Guarantor (the "Debenture Issuer") and State Street Bank and Trust Company, as trustee, and any indenture supplemental thereto pursuant to which certain subordinated debt securities of the Debenture Issuer are to be issued to the Property Trustee of CTBI Trust. (l) "Majority in liquidation amount of the Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred Securities, voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Preferred Securities. (m) "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Preferred Securities Guarantee shall include: (1) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definition relating thereto; (2) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (3) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. (n) "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, -3- unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. (o) "Preferred Guarantee Trustee" means State Street Bank and Trust Company, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. (p) "Responsible Officer" means, with respect to the Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Preferred Guarantee Trustee, including any vice-president, any assistant vice- president, any assistant secretary, the treasurer, any assistant treasurer or other officer of the Corporate Trust Officer of the Preferred Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. (q) "Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.1. (r) "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. 2. Trust Indenture Act. 2.1 Trust Indenture Act; Application. (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) If and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 2.2 Lists of Holders of Securities. (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holder of the Preferred Securities ("List of Holders) as of such date, (i) within 1 Business Day after January 1 and June 30 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Preferred Guarantee Trustee by -4- the Guarantor. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. 2.3 Reports by the Preferred Guarantee Trustee. Within 60 days after May 15 of each year, the Preferred Guarantee Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 2.4 Periodic Reports to Preferred Guarantee Trustee. The Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. 2.5 Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. 2.6 Events of Default; Waiver. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 2.7 Event of Default; Notice. (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Preferred Securities, notices of all Events of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, unless such defaults have been cured before the giving of such notice provided, that, the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Preferred Securities. (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Preferred Guarantee Trustee shall have received written notice, or of -5- which a Responsible Officer of the Preferred Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge. 2.8 Conflicting Interests. The Trust Agreement shall be deemed to be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 3. Powers, Duties And Rights Of Preferred Guarantee Trustee. 3.1 Powers and Duties of the Preferred Guarantee Trustee. (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred Securities, and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder of Preferred Securities exercising his or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders of the Preferred Securities. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: -6- (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Preferred Guarantee Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee. (2) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (3) the Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (4) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it. 3.2 Certain Rights of Preferred Guarantee Trustee. (a) Subject to the provisions of Section 3.1: (1) The Preferred Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, -7- other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (2) Any direction or act of the Guarantor contemplated by this Preferred Securities Guarantee shall be sufficiently evidenced by a Direction or an Officers' Certificate. (3) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (4) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or registration thereof). (5) The Preferred Guarantee Trustee may consult with counsel, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (6) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Preferred Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(6) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (7) The Preferred Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, requests, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. -8- (8) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (9) Any action taken by the Preferred Guarantee Trustee or its agents hereunder shall bind the Holders of the Preferred Securities, and the signature of the Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (10) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Preferred Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Preferred Guarantee Trustee shall be construed to be a duty. 3.3 Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Preferred Securities Guarantee. 4. Preferred Guarantee Trustee. 4.1 Preferred Guarantee Trustee; Eligibility. (a) There shall at all times be a Preferred Guarantee Trustee which shall: (1) not be an Affiliate of the Guarantor; and -9- (2) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(2), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees. (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Preferred Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. -10- (e) No Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Preferred Guarantee Trustee. (f) Upon termination of this Preferred Securities Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued to the date of such termination, removal or resignation. 5. Guarantee. 5.1 Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by CTBI Trust), as and when due, regardless of any defense, right of set-off or counterclaim that CTBI Trust may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing CTBI Trust to pay such amounts to the Holders. 5.2 Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against CTBI Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 5.3 Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by CTBI Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by CTBI Trust; (b) the extension of time for the payment by CTBI Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures or any extension of the maturity date of the Debentures permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders -11- pursuant to the terms of the Preferred Securities, or any action on the part of CTBI Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, CTBI Trust or any of the assets of CTBI Trust; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstances whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. 5.4 Rights of Holders. (a) The Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of this Preferred Securities Guarantee or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) Any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against CTBI Trust, the Preferred Guarantee Trustee or any other Person. 5.5 Guarantee of Payment. This Preferred Securities Guarantee creates a guarantee of payment and not of collection. 5.6 Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders of Preferred Securities against CTBI Trust in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities -12- Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 5.7 Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of CTBI Trust with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. 6. Limitation Of Transactions; Subordination. 6.1 Limitation of Transactions. So long as any Preferred Securities remain outstanding, if there shall have occurred an Event of Default or an event of default under the Trust Agreement, then (a) the Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (b) the Guarantor shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by the Guarantor which rank pari passu with or junior to the Debentures or (c) the Guarantor shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Preferred Securities Guarantee Agreement); provided, however, the Guarantor may declare and pay a stock dividend where the dividend stock is the same stock as that on which the dividend is being paid. 6.2 Ranking. This Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, (ii) pari passu with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock. 7. Termination. 7.1 Termination. This Preferred Securities Guarantee shall terminate upon (i) full payment of the Redemption Price of all Preferred Securities, (ii) upon full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of CTBI Trust or (iii) upon distribution of the Debentures to the holders of the Preferred Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Preferred Securities must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. -13- 8. Indemnification. 8.1 Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission preformed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Preferred Securities might properly be paid. 8.2 Indemnification. The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 8.2 shall survive the termination of this Preferred Securities Guarantee. 9. Miscellaneous. 9.1 Successors and Assigns. All guarantees and agreements contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. 9.2 Amendments. Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all the outstanding Preferred Securities. The provisions of Section -14- 6 of the Trust Agreement with respect to meetings of Holders of the Securities apply to the giving of such approval. 9.3 Notices. All notices provided for in this Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders of the Preferred Securities): Two International Place, 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Preferred Securities): Community Trust Bancorp, Inc. 208 North Mayo Trail Pikeville, Kentucky 41502 Attn: Chief Financial Officer (c) If given to any Holder of Preferred Securities, at the address set forth on the books and records of CTBI Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 9.4 Benefit. This Preferred Securities Guarantee is solely for the benefit of the Holders of the Preferred Securities and, subject to Section 3.1(a), is not separately transferable from the Preferred Securities. 9.5 Governing Law. THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF KENTUCKY. In Witness Whereof, the parties have entered into this Agreement as of the date first written above. -15- Community Trust Bancorp, Inc. as Guarantor By: -------------------------------- Title: -------------------------------- State Street Bank and Trust Company, as preferred guarantee Trustee By: -------------------------------- Title: -------------------------------- -16- EX-5.1 8 OPINION OF GREENEBAUM DOLL RE: VALIDITY OF SUBDEBENTURES EXHIBIT 5.1 [LETTERHEAD OF GREENEBAUM DOLL & MCDONALD PLLC] March 25, 1997 Community Trust Bancorp, Inc. 208 North Mayo Trail Pikeville, Kentucky 41501 Ladies and Gentlemen: We have acted as legal counsel to Community Trust Bancorp, Inc., a Kentucky corporation (the "Company"), and CTBI Preferred Capital Trust, a Delaware statutory business trust (the "Trust"), in connection with the preparation of a Registration Statement on Form S-3 under the Securities Act of 1933, as amended (the "Act"), filed by the Company and the Trust with the Securities and Exchange Commission (the "SEC") on March 25, 1997 (the "Registration Statement") for the purpose of registering under the Act Cumulative Trust Preferred Securities (the "Preferred Securities") issued by the Trust. Capitalized terms not defined herein shall have the meaning assigned to them in the Registration Statement. We have examined and are familiar with the (i) the certificate of trust of the Trust (the "Certificate of Trust") filed with the Secretary of State of the State of Delaware, (ii) the Amended and Restated Trust Agreement of the Trust, (iii) the form of the Preferred Securities of the Trust, (iv) the form of the Guarantee between the Company and State Street Bank and Trust Company, as trustee, (v) the form of the Subordinated Debentures to be issued by the Company, and (vi) the form of the subordinated debenture indenture (the "Indenture") between the Company and State Street Bank and Trust Company, as trustee. We have also examined originals or copies, certified, or otherwise identified to our satisfaction, of such other documents, certificates, and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. In making our examination of documents executed by parties other than the Company or the Trust, we have assumed that such parties had the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and that, except as set forth in paragraphs (1) and (2) below, such documents constitute valid and binding obligations of such parties. In addition, we have assumed that the Amended and Restated Trust Agreement of the Trust, the Preferred Securities of the Trust, the Guarantee, the Subordinated Debentures and the Indenture when executed, will be executed in substantially the form reviewed by us with only such modifications which are accepted by us. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers, trustees, and other representatives of the Company, the Trust and others. Based upon and subject to the foregoing and to other qualifications and limitations set forth herein, we are of the opinion that: 1. After the Indenture has been duly executed and delivered, the Subordinated Debentures, when duly executed, delivered, authenticated and issued in accordance with the Indenture and delivered and paid for as contemplated by the Registration Statement, will be valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors' rights generally, and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 2. The Guarantee, when duly executed and delivered by the parties thereto, will be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors' rights generally, and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). We are members of the Bar of the Commonwealth of Kentucky. To the extent that laws other than the laws of the Commonwealth of Kentucky are applicable to any of the transactions, agreements, or instruments referred to herein, we express no opinion on such laws. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and with such state securities administrators as may require such opinion of counsel for the registration of the Preferred Securities and to the reference to this firm under the heading "Validity of Preferred Securities" in the Prospectus. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or under the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Greenebaum Doll & McDonald PLLC Greenebaum Doll & McDonald PLLC 2 EX-5.2 9 OPINION OF RICHARDS LAYTON RE: VALIDITY PREFERRED SECURITIES EXHIBIT 5.2 [LETTERHEAD OF RICHARDS, LAYTON & FINGER] March 25, 1997 CTBI Preferred Capital Trust c/o Community Trust Bancorp, Inc. 208 North Mayo Trial Pikeville, Kentucky 41501 Re: CTBI Preferred Capital Trust ---------------------------- Ladies and Gentlemen: We have acted as special Delaware counsel for Community Trust Bancorp, Inc., a Kentucky corporation ("CTBI"), and CTBI Preferred Capital Trust, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated March 18, 1997 (the "Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on March 18, 1997; (b) The Trust Agreement, dated as of March 18, 1997, between CTBI and Wilmington Trust Company, a Delaware banking corporation, as Trustee of the Trust; CTBI Preferred Capital Trust March 25, 1997 Page 2 (c) The Registration Statement (the "Registration Statement") on Form S-3, including a preliminary prospectus (the "Prospectus"), relating to the Preferred Securities of the Trust, representing preferred undivided beneficial interests in the assets of such Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as filed by CTBI and the Trust with the Securities and Exchange Commission on March 25, 1997; (d) A form of Amended and Restated Trust Agreement, to be entered into among CTBI, State Street Bank and Trust Company, as Property Trustee, the Trustee, the other trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust (the "Trust Agreement"), filed as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated March 25, 1997, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed above, and we have assumed that there exists no provision in any document that we have not reviewed that bears upon or is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Agreement and Certificate are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due creation or due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the CTBI Preferred Capital Trust March 25, 1997 Page 3 legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for the Preferred Security acquired by it, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, 12 Del. C. (S) 3801, et seq. 2. The Preferred Securities to be issued to the Preferred Security Holders have been duly authorized by the Trust Agreement and will be duly and validly issued and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. CTBI Preferred Capital Trust March 25, 1997 Page 4 We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Validity of Securities" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, /s/ Richards, Layton & Finger WF/nebg EX-8.1 10 OPINION OF GREENEBAUM DOLL RE: FEDERAL INCOME TAX Exhibit 8.1 [LETTERHEAD OF GREENEBAUM DOLL & MCDONALD PLLC] March 25, 1997 Board of Directors Community Trust Bancorp, Inc. CTBI Preferred Capital Trust 208 North Mayo Trail Pikeville, Kentucky 41501 Re: CTBI Preferred Capital Trust Cumulative Trust Preferred Securities ("Preferred Securities") Ladies and Gentlemen: We have acted as counsel to the Community Trust Bancorp, Inc., a Kentucky corporation ("Company"), in connection with the issuance by the Company of its Subordinated Debentures to CTBI Preferred Capital Trust, a statutory business trust formed under the laws of Delaware ("CTBI Trust"). CTBI Trust is filing a Registration Statement ("Registration Statement") on Form S-3 in connection with its issuance of the Preferred Securities. In that connection, you have requested our opinion as to the Federal income tax consequences of the purchase, ownership and disposition of the Preferred Securities. All defined terms used herein which are not defined herein shall have the meaning given such terms in the Registration Statement. We have examined (i) the Certificate of Trust of CTBI Trust filed with the Secretary of State of the State of Delaware on March 18, 1997, (ii) the form of the Registration Statement, (iii) the form of the Trust Agreement, (iv) the form of the Preferred Securities, (v) the form of the Guarantee, (vi) the form of the Subordinated Debentures and (vii) the form of the Indenture (in the case of the documents referenced in (iii) through (vi) above, in the form Community Trust Bancorp, Inc. CTBI Preferred Capital Trust March 25, 1997 Page 2 filed as an exhibit to the Registration Statement). Our opinion is based upon the premise that the transactions will be consummated in accordance with the documents furnished to us. In our opinion, for Federal income tax purposes, CBTI Trust will be classified as a grantor trust, and not as an association taxable as a corporation. We have reviewed the discussion set forth under the heading "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the form of Registration Statement submitted to us. While that discussion does not purport to discuss all possible United States federal income tax consequences of the purchase, ownership and disposition of Preferred Securities, in our opinion, such discussion constitutes, in all material respects, a fair and accurate summary of the United States federal income tax consequences of the purchase, ownership and disposition of Preferred Securities, based upon current law. SCOPE OF OPINION ---------------- This opinion represents our views as to the interpretation of existing law and cannot be taken as an assurance of how the law will subsequently develop. Accordingly, no assurance can be given that the Internal Revenue Service will not alter its present views, either prospectively or retroactively, or adopt new views with regard to any of the matters upon which we are rendering an opinion, nor can any assurance be given that the Internal Revenue Service will not challenge the positions which the Company or CTBI Trust intend to take. CONSENT ------- We hereby consent to the use of our name in the Registration Statement under the heading "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and to the filing of this opinion with the Securities and Exchange Commission and such state securities administrators or commissioners as may be necessary or appropriate. Very truly yours, /s/ Greenebaum Doll & McDonald PLLC EX-23.1 11 CONSENT OF ERNST & YOUNG Exhibit 23.1 ------------ CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the reference to our firm under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of Community Trust Bancorp, Inc. CTBI Preferred Capital Trust for the registration of 1,200,000 shares of Trust Preferred Securities and to the incorporation by reference therein of our report dated January 13, 1997, with respect to the consolidated financial statements of Community Trust Bancorp, Inc. included in the Community Trust Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 1996, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP /s/ Ernst & Young LLP March 21, 1997 EX-23.2 12 CONSENT OF CROWE CHIZEK EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 pertaining to the Community Trust Bancorp, Inc. CTBI Preferred Capital Trust of our report dated January 13, 1996 with respect to the consolidated financial statements of Community Trust Bancorp, Inc. (formerly Pikeville National Corporation) included in the Annual Report (Form 10-K) for the year ended December 31, 1995. We also consent to the reference to us under the heading "Experts" in the prospectus. /s/ Crowe, Chizek and Company LLP Crowe, Chizek and Company LLP South Bend, Indiana March 21, 1997 EX-24.1 13 MINUTES OF MEETING Exhibit 24.1 MINUTES OF MEETING OF THE BOARD OF DIRECTORS OF COMMUNITY TRUST BANCORP, INC. March 21, 1997 - -------------------------------------------------------------------------------- A meeting of the Board of Directors of Community Trust Bancorp, Inc., a Kentucky corporation ("Corporation"), was held on March 21, 1997, at the Corporation's principal offices. A majority of the Directors constituting a quorum were present and attended the meeting. Burlin Coleman was appointed Chairman of the Meeting and Jean R. Hale was appointed Secretary of the meeting. The Chairman announced that the first order of business was the consideration of the authorization of the issuance of subordinated debentures to a Delaware statutory trust and the issuance by such trust of preferred trust certificates to the public. ISSUE OF SUBORDINATED DEBENTURES: FORMATION OF BUSINESS ------------------------------------------------------- TRUST AND FILING OF REGISTRATION STATEMENTS ------------------------------------------- RESOLVED, that the Corporation, through its duly appointed officers, is hereby authorized and directed to issue up to $34,500,000 subordinated debentures ("Subordinated Debentures") to CTBI Preferred Capital Trust, a Delaware statutory business trust (the "Trust") in order to effectuate an issuance by the Trust of preferred trust certificates ("Preferred Securities") to the public through the filing of a Registration Statement on Form S-3 and Common Trust Certificates to the Corporation; and FURTHER RESOLVED, that the Board of Directors hereby authorizes and approves the filing with the Securities and Exchange Commission (the "Commission") in accordance with the Securities Act of 1933, as amended (the "Securities Act"), and in conformity with the rules and regulations thereunder, a registration statement on Form S-3 (the "Registration Statement"), relating to the issuance and sale of up to 1,380,000 Preferred Securities by the Trust including to the Over- Allotment Option, in substantially the form of the draft of the Registration Statement dated as of this date, attached as an exhibit hereto, together with any such changes as the appropriate officer(s) of the Corporation may deem necessary or advisable; and FURTHER RESOLVED, that Richard M. Levy, the Executive Vice President- Chief Financial Officer and Jean R. Hale, or either of them, are hereby authorized and directed, for and on behalf of the Corporation, to sign the Registration Statement, as changed or amended by the officer signing it (said signing to be conclusive evidence that the officers signing the Registration Statement consider such additions, changes or deletions necessary or advisable); and FURTHER RESOLVED, that each of the Directors of the Corporation is hereby authorized to sign the Registration Statement (either on behalf of the Corporation or as an officer or otherwise) through Richard M. Levy or Jean R. Hale, as duly authorized attorney or attorneys-in- fact; and FURTHER RESOLVED, that Richard M. Levy and Jean R. Hale authorized in the foregoing resolution to execute the Registration Statement are, or either of them, hereby authorized and empowered to execute in person or through any one of more of such authorized attorneys, on behalf of the Corporation and individually as an officer, such amendments to the Registration Statement as may be required or may be deemed by such person to be advisable, including any post-effective amendment, and to cause the same to be filed with the Commission; and FURTHER RESOLVED, that Richard M. Levy and Jean R. Hale authorized in the foregoing resolution to execute the Registration Statement are, or either of them, hereby authorized and empowered to execute in person or through any one of more of such authorized attorneys, on behalf of the Trust and individually as an officer, such amendments to the Registration Statement as may be required or may be deemed by such person to be advisable, including any post-effective amendment, and to cause the same to be filed with the Commission; and FURTHER RESOLVED, that the appropriate officer(s) of the Corporation and its counsel, Greenebaum Doll & McDonald PLLC, are authorized to appear on behalf of the Corporation and the Trust before the Commission with respect to any matter relating to the Registration Statement and any amendments thereto; and 2 FURTHER RESOLVED, that the appropriate officer(s) of the Corporation are hereby authorized to prepare and file a Form 8-A with the Commission registering the Preferred Securities under the Securities Exchange Act of 1934 on behalf of the Trust; and FURTHER RESOLVED, that the form of power of attorney set forth in the Registration Statement is hereby approved for use in connection with the Registration Statement and any amendments thereto; and FURTHER RESOLVED, that the President and Chief Executive Officer is hereby designated as the Corporation's agent for service with respect to the Registration Statement (including all amendments thereto) with all power provided in the rules and regulations of the Commission with respect to agents for service; and FURTHER RESOLVED, that the officers of the Corporation are hereby authorized and directed to take all additional actions and to execute such additional documents that they, in their individual discretion, deem necessary, appropriate or advisable to effect the registration of the Preferred Securities with the Commission; and FURTHER RESOLVED, that the Board of Directors hereby authorizes and directs the appropriate officers of the Corporation to take all actions necessary or appropriate to cause the Preferred Securities to be included in the National Association of Securities Dealers Automated Quotation System; and FURTHER RESOLVED, that it is advisable and in the best interest of the Corporation that the Preferred Securities be qualified or registered for sale in various jurisdictions, and that the President and Chief Executive Officer, or Executive Vice President-Chief Financial Officer, Secretary and Treasurer or either of them, is hereby authorized to determine the jurisdictions in which the appropriate action should be taken to qualify or register for sale all or part of the Preferred Securities as such officer or officers may deem advisable; and FURTHER RESOLVED, that such officers are hereby authorized to perform on behalf of the Corporation and the Trust any and all acts as they may deem necessary or advisable in order to comply with the applicable laws of any such jurisdiction, and in conjunction therewith to execute and file all requisite papers and documents, including but not limited to, applications, reports, surety bonds, irrevocable consents and appointments or attorneys for service of process, and that the execution 3 by such officers of any such papers or documents or the doing by them of any act in connection with the foregoing matter shall establish conclusively their authority therefrom the Corporation and the approval and ratification by the Corporation of the papers and documents so executed and the actions so taken; and FURTHER RESOLVED, that the Chairman and Chief Executive Officer, Executive Vice President, the Secretary, the Assistant Secretary, or any of them is hereby authorized and directed to execute, acknowledge, verify, deliver, file or publish in the name and on behalf of the Corporation and under its corporate seal, attested by its Secretary, Assistant Secretary or otherwise, any and all applications, reports, statements, issuer's covenants, resolutions, consents to service of process, powers of attorney, appointments, designations, waivers of hearing, bonds and such other documents and instruments as may be required appropriate or advisable under the Blue Sky Laws or the security acts of such jurisdictions as such officers or any of one or more them may deem necessary or appropriate or advisable for the purpose of registering, qualifying, exempting or permitting the issuance or sale by the Corporation and the Trust, or the sale by the Underwriters, brokers and dealers of the Preferred Securities and the Subordinated Debentures, as applicable, and for the purposes of qualifying registering, licensing or exempting the Corporation as a broker/dealer in connection with the sale of the Shares and to make any and all payments of examination, filing registration or other fees, costs and expenses and to take any and all further action which such officers or any one or more of them deem necessary or advisable in connection with the foregoing; and FURTHER RESOLVED, that the Board of Directors does hereby adopt as and for a resolution of the Board each resolution required by any state or other jurisdiction to be filed with it in connection with such registration or qualification (or exemption therefrom) as having been adopted by it in connection with any documents or instruments referred to in the preceding resolution if (i) in the opinion of the officers of the Corporation such resolution is necessary or appropriate and (ii) the Secretary or any Assistant Secretary of the Corporation evidences such adoption by inserting in the minute book of the Corporation a copy of such resolution, which will thereupon be deemed to have been adopted by the Board of Directors with the same force and effect as if presented to this meeting and inserted in the minutes thereof; and FURTHER RESOLVED, that the appropriate officer(s) of the Corporation are hereby authorized, in the name and on behalf of the Corporation and the Trust, to take all other action which may be 4 necessary or advisable in order to effect the registration of the Shares under the Blue Sky Laws of the various jurisdictions and with the National Association of Securities Dealers, Inc., and in connection therewith to execute, acknowledge, verify, deliver, file, or cause to be published any Registration Statements, applications, reports, issuer's covenants and other papers or instruments that may be required under such law, and to take any further action which they may deem necessary or advisable in order to maintain such registration for as long as they deem necessary or required by law. APPOINTMENT OF TRANSFER AGENT AND REGISTRAR ------------------------------------------- RESOLVED, that The Depository Trust Company, New York, New York ("DTC"), be and hereby is appointed sole Closing Agent, Registrar and Transfer Agent with respect to the Preferred Securities, to act in accordance with its general practice and with the regulations of DTC relating to the transfer and registration of the Preferred Securities in effect from time to time, a copy of such regulations as currently in effect being attached as an exhibit hereto; and FURTHER RESOLVED, that the proper officers of the Corporation be, and they hereby are, authorized and directed for and on behalf of the Corporation to execute and deliver to DTC such certificates and documents as may be required by DTC in connection with the foregoing agency appointment, and to take such action as may be necessary or proper in order to consummate the agency appointment authorized herein. APPROVAL OF PUBLIC OFFERING --------------------------- RESOLVED, that the Board of Directors hereby ratifies, approves and confirms the execution by Richard M. Levy, the Executive Vice President and Chief Financial Officer of the Corporation, of a letter of intent with Morgan Keegan & Company, Inc. in connection with a proposed public offering of the Preferred Securities by the Trust (the "Offering"); and FURTHER RESOLVED, that the Trust may issue, sell and deliver to a group of underwriters represented by Morgan Keegan & Company, Inc. and J.J.B. Hilliard, W.L. Lyons, Inc., (the "Underwriters"), a number of shares of Preferred Securities to be determined by the President and Chief Executive Officer, which number shall be approximately 1,200,000 but not exceeding 25% of the Corporation's Tier I Capital 5 (the "Shares"), together with an additional number of shares equal to as much as 15% of the total number of shares in the Offering pursuant to a thirty-day allotment option which the Corporation may grant to the Underwriters (the "Over-Allotment Option"); and FURTHER RESOLVED, that the proceeds of the Offering shall be used for expansion through new branches and acquisitions, to fund growth in the Corporation's indirect consumer loan portfolio and for general corporate purposes; and FURTHER RESOLVED, that the Executive Vice President and Chief Financial Officer of the Corporation, be and hereby is, authorized and directed, for and on behalf of the Corporation and the Trust, to determine the underwriting commission and the coupon rate at which the Preferred Securities will be offered to the public. AUTHORIZATION TO ENTER INTO --------------------------- UNDERWRITING AGREEMENT ---------------------- RESOLVED, that the Corporation enter into an underwriting agreement (the "Underwriting Agreement") with the Underwriters, substantially in the form attached as an exhibit hereto, together with such changes therein that the Executive Vice President and Chief Financial Officer, in his sole discretion, may deem necessary, appropriate or advisable in connection therewith; and FURTHER RESOLVED, that the Executive Vice President and the Chief Financial Officer, is hereby authorized and directed to execute and deliver, for and on behalf of the Corporation, the Underwriting Agreement and such other related documents, instruments or agreements that such officer, in his sole discretion, deems necessary, appropriate or advisable in connection therewith. The foregoing resolutions have been duly adopted by the Board of Directors. The Chairman stated that there was no further business to come before the meeting and upon motion duly made, seconded and carried, the meeting was adjourned. /s/ Jean R. Hale ------------------------------ Secretary of the Meeting APPROVED: /s/ Burlin Coleman - ----------------------------, Chairman of the Meeting 6 EX-25.1 14 FORM T-1 COMMUNITY TRUST BANCORP Exhibit 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) __ STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) John R. Towers, Esq. Senior Vice President and Corporate Secretary 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) --------------------- COMMUNITY TRUST BANCORP, INC. (Exact name of obligor as specified in its charter) KENTUCKY 61-0979818 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 2947, 208 NORTH MAYO TRAIL PIKEVILLE, KENTUCKY, 41501 (Address of principal executive offices) (Zip Code) --------------------- % SUBORDINATED DEBENTURES (Title of indenture securities) GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Boston Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22- 17940) and is incorporated herein by reference thereto. 4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS CORRESPONDING THERETO. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(B) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 21st day of March, 1997. STATE STREET BANK AND TRUST COMPANY By: /s/ PAUL D. ALLEN ------------------------------- PAUL D. ALLEN VICE PRESIDENT 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by COMMUNITY TRUST BANCORP, INC. of its % SUBORDINATED DEBENTURES, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ PAUL D. ALLEN ------------------------------- PAUL D. ALLEN VICE PRESIDENT DATED: MARCH 21, 1997 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company of Boston, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business December 31, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................ 1,561,409 Interest-bearing balances......................................... 7,562,240 Securities............................................................. 9,388,513 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary............................... 5,622,962 Loans and lease financing receivables: Loans and leases, net of unearned income ......................... 4,858,187 Allowance for loan and lease losses............................... 72,614 Loans and leases, net of unearned income and allowances........... 4,785,573 Assets held in trading accounts........................................ 874,700 Premises and fixed assets.............................................. 383,955 Other real estate owned................................................ 870 Investments in unconsolidated subsidiaries............................. 93,621 Customers' liability to this bank on acceptances outstanding........... 35,022 Intangible assets...................................................... 148,190 Other assets........................................................... 932,673 ---------- Total assets........................................................... 31,389,728 ========== LIABILITIES Deposits: In domestic offices............................................... 8,508,096 Noninterest-bearing............................................... 6,435,131 Interest-bearing.................................................. 2,072,965 In foreign offices and Edge subsidiary............................ 11,395,724 Noninterest-bearing............................................... 27,508 Interest-bearing.................................................. 11,368,216 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary............................... 7,518,222 Demand notes issued to the U.S. Treasury and Trading Liabilities....... 733,935 Other borrowed money................................................... 650,578 Bank's liability on acceptances executed and outstanding............... 35,022 Other liabilities...................................................... 770,029 ---------- Total liabilities...................................................... 29,611,606 ---------- EQUITY CAPITAL Common stock........................................................... 29,931 Surplus................................................................ 358,146 Undivided profits...................................................... 1,389,720 Cumulative foreign currency translation adjustments.................... 325 ---------- Total equity capital................................................... 1,778,122 ---------- Total liabilities and equity capital................................... 31,389,728 ==========
4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Charles F. Kaye 5 EX-25.2 15 FORM T-1 CTBI PREF CAP TRUST Exhibit 25.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) __ STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) John R. Towers, Esq. Senior Vice President and Corporate Secretary 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) --------------------- COMMUNITY TRUST BANCORP, INC. (Exact name of obligor as specified in its charter) KENTUCKY 61-0979818 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 2947, 208 NORTH MAYO TRAIL PIKEVILLE, KENTUCKY, 41501 (Address of principal executive offices) (Zip Code) --------------------- GUARANTEE (Title of indenture securities) GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Boston Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No.22-17940) and is incorporated herein by reference thereto. 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22- 17940) and is incorporated herein by reference thereto. 3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No.) 22-17940) and is incorporated herein by reference thereto. 4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS CORRESPONDING THERETO. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(b) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 21st day of March, 1997. STATE STREET BANK AND TRUST COMPANY By: /s/ Paul D. Allen --------------------------- Paul D. Allen Vice President 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by COMMUNITY TRUST BANCORP, INC. of its GUARANTEE, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ Paul D. Allen --------------------------- Paul D. Allen Vice President Dated: March 21, 1997 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company of Boston, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business December 31, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................ 1,561,409 Interest-bearing balances......................................... 7,562,240 Securities............................................................. 9,388,513 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary................................................... 5,622,962 Loans and lease financing receivables: Loans and leases, net of unearned income .......................... 4,858,187 Allowance for loan and lease losses............................... 72,614 Loans and leases, net of unearned income and allowances........... 4,785,573 Assets held in trading accounts........................................ 874,700 Premises and fixed assets.............................................. 383,955 Other real estate owned................................................ 870 Investments in unconsolidated subsidiaries............................. 93,621 Customers' liability to this bank on acceptances outstanding........... 35,022 Intangible assets...................................................... 148,190 Other assets........................................................... 932,673 ---------- Total assets........................................................... 31,389,728 ========== LIABILITIES Deposits: In domestic offices............................................... 8,508,096 Noninterest-bearing....................................... 6,435,131 Interest-bearing.......................................... 2,072,965 In foreign offices and Edge subsidiary............................ 11,395,724 Noninterest-bearing....................................... 27,508 Interest-bearing.......................................... 11,368,216 Federal funds purchased and securities sold under agrements to repurchase in domestic offices of the bank and of its Edge subsidiary................................................... 7,518,222 Demand notes issued to the U.S. Treasury and Trading Liabilities....... 733,935 Other borrowed money................................................... 650,578 Bank's liability on acceptances executed and outstanding............... 35,022 Other liabilities...................................................... 770,029 ---------- Total liabilities...................................................... 29,611,606 ---------- EQUITY CAPITAL Common stock........................................................... 29,931 Surplus................................................................ 358,146 Undivided profits...................................................... 1,389,720 Cumulative foreign currency translation adjustments.................... 325 ---------- Total equity capital................................................... 1,778,122 ---------- Total liabilities and equity capital................................... 31,389,728 ==========
4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Charles F. Kaye 5 EX-25.3 16 FORM T-1 COMMUNITY TRUST BANCORP Exhibit 25.3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 _________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) __ STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) John R. Towers, Esq. Senior Vice President and Corporate Secretary 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) _____________________ CTBI PREFERRED CAPITAL TRUST (Exact name of obligor as specified in its charter) DELAWARE XX-XXXXXXX (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 2947, 208 NORTH MAYO TRAIL PIKEVILLE, KENTUCKY, 41501 (Address of principal executive offices) (Zip Code) ____________________ PREFERRED SECURITIES (Title of indenture securities) GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee or of its parent, State Street Boston Corporation. (See note on page 2.) Item 3. through Item 15. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility. 1. A copy of the articles of association of the trustee as now in effect. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22- 17940) and is incorporated herein by reference thereto. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the articles of association. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility Qualification of Trustee (Form T-1) filed with the Registration Statement and of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in paragraph (1) or (2), above. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A copy of the existing by-laws of the trustee, or instruments corresponding thereto. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(B) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 21st day of March, 1997. STATE STREET BANK AND TRUST COMPANY By: /s/ Paul D. Allen ------------------------------- PAUL D. ALLEN VICE PRESIDENT 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by CTBI PREFERRED CAPITAL TRUST of its PREFERRED SECURITIES, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /S/ PAUL D. ALLEN _________________________ PAUL D. ALLEN VICE PRESIDENT DATED: MARCH 21, 1997 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company of Boston, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business December 31, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................... 1,561,409 Interest-bearing balances............................................ 7,562,240 Securities............................................................. 9,388,513 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary.................................. 5,622,962 Loans and lease financing receivables: Loans and leases, net of unearned income ...... 4,858,187 Allowance for loan and lease losses............ 72,614 Loans and leases, net of unearned income and allowances.............. 4,785,573 Assets held in trading accounts........................................ 874,700 Premises and fixed assets.............................................. 383,955 Other real estate owned................................................ 870 Investments in unconsolidated subsidiaries............................. 93,621 Customers' liability to this bank on acceptances outstanding........... 35,022 Intangible assets...................................................... 148,190 Other assets........................................................... 932,673 ---------- Total assets........................................................... 31,389,728 ========== LIABILITIES Deposits: In domestic offices.................................................. 8,508,096 Noninterest-bearing.......................... 6,435,131 Interest-bearing............................. 2,072,965 In foreign offices and Edge subsidiary............................... 11,395,724 Noninterest-bearing.......................... 27,508 Interest-bearing............................. 11,368,216 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary.................................. 7,518,222 Demand notes issued to the U.S. Treasury and Trading Liabilities....... 733,935 Other borrowed money................................................... 650,578 Bank's liability on acceptances executed and outstanding............... 35,022 Other liabilities...................................................... 770,029 ---------- Total liabilities...................................................... 29,611,606 ---------- EQUITY CAPITAL Common stock........................................................... 29,931 Surplus................................................................ 358,146 Undivided profits...................................................... 1,389,720 Cumulative foreign currency translation adjustments.................... 325 ---------- Total equity capital................................................... 1,778,122 ---------- Total liabilities and equity capital................................... 31,389,728 ==========
4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Charles F. Kaye 5 -----END PRIVACY-ENHANCED MESSAGE-----