S Y BANCORP INC (Form: 10-K405, Received: 03/22/2002 15:22:25)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K

Annual Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended
December 31, 2001

Commission File Number
1-13661

S.Y. BANCORP, INC.
1040 East Main Street
Louisville, Kentucky 40206
(502) 582-2571

Incorporated in Kentucky

I.R.S.No. 61-1137529

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:
Common stock, no par value
9.00% Cumulative trust preferred securities and
the guarantee with respect thereto

Name of each exchange on which registered:
American Stock Exchange
American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

The aggregate market value of registrant's voting stock (Common Stock, no par value) held by non-affiliates of the registrant as of February 28, 2002, was $208,173,297.

The number of shares of registrant's Common Stock, no par value, outstanding as of February 28, 2002, was 6,705,917.

Documents Incorporated by Reference

Portions of Registrant's definitive proxy statement related to Registrant's Annual Meeting of Stockholders to be held on April 24, 2002 (the "Proxy Statement"), are incorporated by reference into Part III of this Form 10-K.

S.Y. BANCORP, INC.
Form 10-K
Index

		Page
Part I:
Item 1.	Business	3
Item 2.	Properties	4
Item 3.	Legal Proceedings	4
Item 4.	Submission of Matters to a Vote of Security Holders	4
Part II:
Item 5.	Market for Registrant's Common Stock and Related Stockholder Matters	5
Item 6.	Selected Financial Data	6
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6
Item 7a.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8.	Financial Statements and Supplementary Data	23
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	47
Part III:
Item 10.	Directors and Executive Officers of the Registrant	47
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management	47
Item 13.	Certain Relationships and Related Transactions	48
Part IV:
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	48
Signatures		50
Index to Exhibits		51

Part I

Item 1. Business

S. Y. Bancorp, Inc. ("Bancorp"), was incorporated in 1988 and is a Kentucky corporation headquartered in Louisville, Kentucky. Bancorp is a bank holding company registered with, and subject to supervision, regulation and examination by the Board of Governors of the Federal Reserve System. Bancorp has two subsidiaries, Stock Yards Bank & Trust Company ("the Bank") and S.Y. Bancorp Capital Trust I ("the Trust"). The Bank is wholly owned and is a state chartered bank. Bancorp conducts no active business operations; accordingly, the business of Bancorp is substantially the same as that of the Bank. The Trust is a Delaware statutory business trust that is a 100%-owned finance subsidiary of Bancorp.

Stock Yards Bank & Trust Company

Stock Yards Bank & Trust Company is the only banking subsidiary of Bancorp and was originally chartered in 1904. The Bank is headquartered in Louisville, Kentucky and provides commercial and retail banking services in Louisville and southern Indiana through 17 full service banking offices (See "ITEM 2. PROPERTIES"). The Bank is chartered under the laws of the Commonwealth of Kentucky. In addition to traditional commercial and personal banking activities, the Bank has an investment management and trust department offering a wide range of trust and investment services. The Bank also originates and sells single-family residential mortgages through its operating division, Stock Yards Mortgage Company, and offers securities brokerage services through an arrangement with Raymond James Financial Services, Inc.

At December 31, 2001, the Bank had 347 full-time equivalent employees. Employees are not subject to a collective bargaining agreement. Bancorp and the Bank consider their relationships with employees to be good.

See Note 20 to Bancorp's consolidated financial statements for the year ended December 31, 2001 for information relating to the Bank's business segments.

Supervision and Regulation

Bank holding companies and commercial banks are extensively regulated under both federal and state law. Any change in applicable law or regulation may have a material effect on the business and prospects of Bancorp and the Bank.

Bancorp, as a registered bank holding company, is subject to the supervision of and regulation by the Federal Reserve Board under the Bank Holding Company Act of 1956. In addition, Bancorp is subject to the provisions of Kentucky's banking laws regulating bank acquisitions and certain activities of controlling bank shareholders.

The Bank is subject to the supervision of and regular examination by the Federal Deposit Insurance Corporation and the Kentucky Department of Financial Institutions. The Federal Deposit Insurance Corporation insures the deposits of the Bank to the current maximum of $100,000 per depositor.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("the 1994 Act") removed state law barriers to interstate bank acquisitions and permits the consolidation of interstate banking operations. Under the 1994 Act, adequately capitalized and managed bank holding companies may acquire banks in any state, subject to Community Reinvestment Act compliance, compliance with federal and state antitrust laws and deposit concentration limits and subject to any state laws restricting the transaction. Kentucky banks are also permitted to acquire a branch in another state if permitted by law of the other state. Kentucky currently does not permit de novo branching by out-of-state banks into

Kentucky, and it does not permit an out-of-state bank to acquire a bank in Kentucky that has been in existence less than five years.

The Gramm-Leach-Bliley Act ("the 1999 Act") repealed the Depression-era barrier between commercial and investment banking established by the Glass-Steagall Act, as well as the prohibition on the mixing of banking and insurance established by the Bank Holding Company Act of 1956. The 1999 Act allows for affiliations among banks, securities firms and insurance companies by means of a financial holding company ("FHC"). In most cases, the creation of an FHC is a simple election and notice to the Federal Reserve Board. The 1999 Act requires that, at the time of establishment of an FHC, all depository institutions within that corporate group must be "well managed" and "well capitalized" and must have received a rating of "satisfactory" or better under its most recent Community Reinvestment Act examination. Further, non-banking financial firms (for example an insurance company or securities firm) may establish an FHC and acquire a depository institution. While the distinction between banks and non-banking financial firms has been blurring over recent years, the 1999 Act will make it less cumbersome for banks to offer services "financial in nature" but beyond traditional commercial banking activities. Likewise, non-banking financial firms may find it easier to offer services that have, heretofore, been provided primarily by depository institutions. Management of Bancorp has chosen not to become an FHC at this time, but may chose to do so in the future.

In its 2000 session, the Kentucky General Assembly enacted a law allowing banks with a Kentucky charter and a CAMEL rating of 1 or 2 at its most recent state or federal examination to engage in any banking activity in which it could engage if: (a) it were operating as a national bank in any state, (b) it were operating as a state bank, state thrift or state savings bank in any state, or (c) it meets the qualified thrift lender test as determined by the Office of Thrift Supervision, or was operating as a federally chartered thrift or federal savings bank in any state.

CAMEL ratings are used by examiners of financial institutions to rate these institutions in five categories. These categories are capital adequacy, asset quality, management effectiveness, quantity and quality of earnings and liquidity. Before a bank engages in any of the activities above, it must obtain a legal opinion specifying the statutory or regulatory provisions permitting the activity in which the bank intends to engage. The result of this legislation was to broaden the activities in which a Kentucky state chartered bank may engage.

Item 2. Properties

The principal offices of Bancorp and the Bank are located at 1040 East Main Street, Louisville, Kentucky. Adjacent to the main location is the Bank's operations center. In addition to the main office complex, the Bank owned eight branch properties at December 31, 2001 (one of which is located on leased land). The Bank also leased eight branch facilities. Of the seventeen banking locations, fourteen are located in Louisville and three are located in nearby southern Indiana. See Notes 5 and 16 to Bancorp's consolidated financial statements for the year ended December 31, 2001, for additional information relating to amounts invested in premises, equipment and lease commitments.

Item 3. Legal Proceedings

See Note 16 to Bancorp's consolidated financial statements for the year ended December 31, 2001, for information relating to legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

None

Executive Officers of the Registrant

The following table lists the names and ages (as of December 31, 2001) of all current executive officers of Bancorp. Each executive officer is appointed by Bancorp's Board of Directors to serve at the pleasure of the Board. There is no arrangement or understanding between any executive officer of Bancorp and any other person(s) pursuant to which he/she was or is to be selected as an officer.

Name and Age of Executive Officer		Position and Offices With Bancorp
David H. Brooks Age 59		Chairman and Chief Executive Officer and Director
David P. Heintzman Age 42		President and Director
Kathy C. Thompson Age 40		Executive Vice President and Director
Phillip S. Smith Age 44		Executive Vice President
Gregory A. Hoeck Age 51		Executive Vice President
Nancy B. Davis Age 46		Executive Vice President, Secretary, Treasurer and Chief Financial Officer

Mr. Brooks was appointed Chairman and Chief Executive Officer of Bancorp and the Bank in 1993. Prior thereto, he was President of Bancorp and the Bank.

Mr. Heintzman was appointed President of Bancorp and the Bank in 1993. Prior thereto, he served as Treasurer and Chief Financial Officer of Bancorp and Executive Vice President of the Bank.

Ms. Thompson was appointed Executive Vice President of Bancorp and the Bank in 1996. She joined the Bank in 1992 as Senior Vice President and is Manager of the Investment Management and Trust Department.

Mr. Smith was appointed Executive Vice President of the Bank in 1996. Prior thereto, he was Senior Vice President of the Bank. He is primarily responsible for the commercial lending area of the Bank.

Mr. Hoeck joined the Bank as Executive Vice President in 1998. He is primarily responsible for the retail and marketing areas of the Bank. Prior to joining the Bank, Mr. Hoeck was an Executive Vice President for PNC Bank and the Retail Market Manager for the Kentucky and Indiana markets.

Ms. Davis was appointed Executive Vice President of Bancorp and the Bank in 1999. Prior thereto, she was Senior Vice President of Bancorp and the Bank. She was appointed Chief Financial Officer of Bancorp in 1993.

Part II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

Bancorp's common stock is traded on the American Stock Exchange under the ticker symbol SYI. The table below sets forth the quarterly high and low market prices of Bancorp's common stock and dividends declared per share. The payment of dividends by the Bank to Bancorp is subject to the

restriction described in Note 15 to the consolidated financial statements. On December 31, 2001, Bancorp had 949 shareholders of record.

	2001						2000
Quarter	High		Low		Cash Dividends Declared		High		Low		Cash Dividends Declared
First	$	24.50	$	20.25	$	0.11	$	22.50	$	18.63	$	0.09
Second		35.24		25.30		0.11		22.75		18.75		0.10
Third		34.45		29.15		0.11		22.00		19.00		0.10
Fourth		33.80		31.00		0.12		21.50		18.88		0.10

Item 6. Selected Financial Data

Selected Consolidated Financial Data

	Years Ended December 31
	2001			2000			1999			1998			1997
	(Dollars In Thousands Except Per Share Data)
Net interest income	$	34,945		$	31,154		$	27,470		$	23,294		$	19,723
Provision for loan losses		4,220			2,840			1,635			1,600			1,000
Net income		13,542			11,592			9,706			8,218			6,534
Per share data
Net income, basic	$	2.03		$	1.75		$	1.46		$	1.25		$	1.00
Net income, diluted		1.96			1.70			1.41			1.21			0.96
Cash dividends declared		0.45			0.39			0.33			0.28			0.24
Average balances
Stockholders' equity	$	66,433		$	54,656		$	48,052		$	40,691		$	34,174
Assets		884,483			747,816			637,276			540,696			437,037
Long-term debt		14,026			2,100			2,100			2,100			2,259
Ratios
Return on average assets		1.53	%		1.55	%		1.52	%		1.52	%		1.50	%
Return on average stockholders' equity		20.38	%		21.21	%		20.20	%		20.20	%		19.12	%
Average stockholders' equity to average assets		7.51	%		7.31	%		7.54	%		7.53	%		7.82	%

Per share information has been adjusted to reflect stock splits.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this discussion is to provide information as to the analysis of the consolidated financial condition and results of operations of S.Y. Bancorp, Inc. (Bancorp) and its wholly owned subsidiaries, Stock Yards Bank & Trust Company (the Bank) and S.Y. Bancorp Capital Trust I (the Trust). Bancorp, incorporated in 1988, has no active business operations. Thus, Bancorp's business is substantially the same as that of the Bank. The Bank has operated continuously since it opened in 1904. The Bank conducted business at one location for 85 years and then began branching. At December 31, 2001, the Bank had seventeen locations. The combined effect of added convenience with the Bank's focus on flexible, attentive customer service has been key to the Bank's growth and profitability. The wide range of services added by the wealth management group (investment management and trust, private banking and brokerage) and by the mortgage department help support the corporate philosophy of capitalizing on full service customer relationships.

Critical Accounting Policies

Bancorp has prepared all of the consolidated financial information in this report in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In preparing the consolidated financial statements in accordance with U.S. GAAP, Bancorp makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurances that actual results will not differ from those estimates.

We have identified the accounting policy related to the allowance for loan losses as critical to the understanding of Bancorp's results of operations, since the application of this policy requires significant management assumptions and estimates that could result in materially different amounts to be reported if conditions or underlying circumstances were to change. The impact and any associated risks related to these policies on our business operations are discussed in the "Allowance for Loan Losses" section below.

Forward-Looking Statements

This report contains forward-looking statements under the Private Securities Litigation Reform act that involve risks and uncertainties. Although Bancorp believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Factors that could cause actual results to differ from results discussed in forward-looking statements include, but are not limited to: economic conditions both generally and more specifically in the market in which Bancorp and its subsidiaries operate; competition for Bancorp's customers from other providers of financial services; government legislation and regulation which change from time to time and over which Bancorp has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations or financial condition of Bancorp's customers; or other risks detailed in Bancorp's filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of Bancorp.

The following discussion should be read in conjunction with Bancorp's consolidated financial statements and accompanying notes and other schedules presented elsewhere in this report.

Results of Operations

Net income was $13,542,000 or $1.96 per share on a diluted basis in 2001. This compares to $11,592,000 or $1.70 per share in 2000 and $9,706,000 or $1.41 per share in 1999. The increase in 2001 net income was attributable to growth in both net interest income and non-interest income that was partially offset by increased non-interest expenses. Earnings include a 12.5% increase in fully taxable equivalent net interest income and a 25.0% increase in non-interest income. All categories of non-interest income showed improvement when compared to the prior year. The strong results of our investment management and trust and mortgage departments for 2001 contributed significantly to this increase. Non-interest expenses increased 13.5%. Non-interest expenses increased in all categories reflective of continued expansion of the banking center network.

The following paragraphs provide a more detailed analysis of the significant factors affecting operating results.

Net Interest Income

Net interest income, the most significant component of Bancorp's earnings, is total interest income less total interest expense. Net interest spread is the difference between the taxable equivalent rate earned on average interest earning assets and the rate expensed on average interest bearing liabilities.

Net interest margin represents net interest income on a taxable equivalent basis as a percentage of average earning assets. Net interest margin is affected by both the interest rate spread and the level of non-interest bearing sources of funds, primarily consisting of demand deposits and stockholders' equity. The level of net interest income is determined by the mix and volume of interest earning assets, interest bearing deposits and interest bearing liabilities and by changes in interest rates. The discussion that follows is based on tax equivalent interest data.

Bancorp's net interest margin and net interest spread were affected negatively during the year by the unprecedented 475 basis point decrease in interest rates. Management believes that interest rates in 2002 will be less volatile and allow for improvement in the net interest margin and net interest spread during the year.

Comparative information regarding net interest income follows:

	2001			2000			1999			2001/2000 Change	2000/1999 Change
	(Dollars In Thousands)
Net interest income, tax equivalent basis	$	35,548		$	31,601		$	27,839		12.5%	13.5%
Net interest spread		3.61	%		3.72	%		4.03	%	(11) bp	(31) bp
Net interest margin		4.27	%		4.51	%		4.72	%	(24) bp	(21) bp
Average earning assets	$	831,918		$	700,579		$	590,011		18.7%	18.7%
Prime rate at year end		4.75	%		9.50	%		8.50	%	(475) bp	100 bp
Average prime rate		6.93	%		9.24	%		8.44	%	(231) bp	80 bp

bp = basis point = 1/100th of a percent

Prime rate is included above to provide a general indication of the interest rate environment in which the Bank operates. The Bank's variable rate loans are indexed to the Bank's prime rate and reprice as the prime rate changes, unless they reach a contractual floor or ceiling. A significant amount of the Bank's variable rate loans reached their floor during the year.

Asset/Liability Management and Interest Rate Risk

Managing interest rate risk is fundamental for the financial services industry. The primary objective of interest rate risk management is to neutralize effects of interest rate changes on net income. By considering both on and off-balance sheet financial instruments, Bank management evaluates interest rate sensitivity while attempting to optimize net interest income within the constraints of prudent capital adequacy, liquidity needs, market opportunities and customer requirements.

Interest Rate Simulation Sensitivity Analysis

Bancorp uses an earnings simulation model to measure and evaluate the impact of changing interest rates on earnings. The simulation model is designed to reflect the dynamics of all interest earning assets, interest bearing liabilities and off-balance sheet financial instruments, combining factors affecting rate sensitivity into a one year forecast. By forecasting management's estimate of the most likely rate environment and adjusting those rates up and down the model can reveal approximate interest rate risk exposure. The December 31, 2001 simulation analysis indicates that an increase in

interest rates would have a positive effect on net interest income, and a decrease in interest rates would have a negative effect on net interest income. These estimates are summarized below.

	Net Interest Income Change		Net Income Change
Increase 200 bp	3.87	%	6.80	%
Increase 100 bp	2.84		4.73
Decrease 100 bp	(3.78	)	(6.60	)
Decrease 200 bp	(6.13	)	(10.72	)

To assist in achieving a desired level of interest rate sensitivity, management has in the past entered into derivative financial instruments that are designed to mitigate the effect of changes in interest rates. Derivative financial instruments can be a cost and capital efficient method of modifying interest rate risk sensitivity. The Bank had no derivative financial instruments at December 31, 2001.

The following table presents the increases in net interest income due to changes in rate and volume computed on a tax equivalent basis and indicates how net interest income in 2001 and 2000 was impacted by volume increases and the lower average interest rate environment. The tax equivalent adjustments are based on a 35% tax rate. The change in interest due to both rate and volume has been allocated to the change due to rate and change due to volume in proportion to the relationship of the absolute dollar amounts of the change in each.

Taxable Equivalent Rate/Volume Analysis

			2001/2000									2000/1999
						Increase (Decrease) Due to									Increase (Decrease) Due to
			Net Change			Rate			Volume			Net Change			Rate			Volume
			(In Thousands)
Interest income
Loans			$	4,573		$	(4,698	)	$	9,271		$	12,429		$	1,570		$	10,859
Federal funds sold				193			(214	)		407			(340	)		208			(548	)
Mortgage loans held for sale				193			(30	)		223			(184	)		48			(232	)
Securities
	Taxable			210			(13	)		223			(234	)		(252	)		18
	Tax-exempt			269			(238	)		507			270			206			64

		Total interest income		5,438			(5,193	)		10,631			11,941			1,780			10,161

Interest expense
Deposits
	Interest bearing demand deposits			(242	)		(1,288	)		1,046			906			376			530
	Savings deposits			(303	)		(349	)		46			(47	)		(39	)		(8	)
	Money market deposits			(332	)		(745	)		413			549			282			267
	Time deposits			2,283			(529	)		2,812			5,839			2,322			3,517
Securities sold under agreements to repurchase and federal funds purchased				(868	)		(997	)		129			844			468			376
Other short-term borowings				(84	)		(81	)		(3	)		69			40			29
Long-term debt				1,038			16			1,022			19			19			—

		Total interest expense		1,492			(3,973	)		5,465			8,179			3,468			4,711

		Net interest income	$	3,946		$	(1,220	)	$	5,166		$	3,762		$	(1,688	)	$	5,450

Provision for Loan Losses

In determining the provision for loan losses charged to expense, management considers many factors. Among these are the quality of the loan portfolio, previous loss experience, the size and composition of the loan portfolio and an assessment of the impact of current economic conditions on borrowers' ability to pay. The provision for loan losses is summarized below:

	2001			2000			1999
	(Dollars In Thousands)
Provision for loan losses	$	4,220		$	2,840		$	1,635
Allowance to loans at year end		1.41	%		1.40	%		1.34	%
Allowance to average loans for year		1.52	%		1.52	%		1.49	%

The provision for loan losses increased during the year due to significant loan growth and in consideration of loans charged off and the increase in non-performing loans during the year. See "Nonperforming Loans and Assets" for further discussion of non-performing loans. See "Summary of Loan Loss Experience" for further discussion of loans charged off during the year.

The Bank's loan portfolio is diversified with no significant concentrations of credit. Geographically, most loans are extended to borrowers in the Louisville, Kentucky metropolitan area. The adequacy of the allowance is monitored on an ongoing basis and it is the opinion of management that the balance of the allowance for loan losses at December 31, 2001 is adequate to absorb losses inherent in the loan portfolio as of the financial statement date. See "Financial Condition-Allowance for Loan Losses" for more information on the allowance for loan losses.

Non-Interest Income and Non-Interest Expenses

The following table provides a comparison of the components of non-interest income and expenses for 2001, 2000 and 1999. The table shows the dollar and percentage change from 2000 to 2001 and from 1999 to 2000. Below the table is a discussion of significant changes and trends.

							2001/2000				2000/1999
	2001		2000		1999		Change		%		Change			%
	(Dollars In Thousands)
Non-Interest income
Investment management and trust services	$	7,256	$	6,327	$	5,194	$	929	14.7	%	$	1,133		21.8	%
Service charges on deposit accounts		7,000		5,528		3,484		1,472	26.6	%		2,044		58.7	%
Gains on sales of mortgage loans held for sale		1,995		1,043		1,511		952	91.3	%		(468	)	(31.0	)%
Gains on sales of securities available for sale		—		—		100		—	—			(100	)	(100.0	)%
Other		3,012		2,517		2,331		495	19.7	%		186		8.0	%

	$	19,263	$	15,415	$	12,620	$	3,848	25.0	%	$	2,795		22.1	%

Non-interest expenses
Salaries and employee benefits		17,644		15,559		13,750		2,085	13.4	%		1,809		13.2	%
Net occupancy expense		1,861		1,800		1,711		61	3.4	%		89		5.2	%
Furniture and equipment expense		2,523		2,309		2,282		214	9.3	%		27		1.2	%
Other		8,278		7,036		6,388		1,242	17.7	%		648		10.1	%

	$	30,306	$	26,704	$	24,131	$	3,602	13.5	%	$	2,573		10.7	%

The largest component of non-interest income is the income from investment management and trust services. This area of the Bank continues to grow through attraction of new business and customer retention. At December 31, 2001 assets under management totaled $1.179 billion compared to

$1.056 billion at December 31, 2000 and $914 million as of December 31, 1999. Included in these totals are the assets of the Bank's investment portfolio. These amounts were $90 million at year end 2001, $77 million at year end 2000 and $76 million at year end 1999. Growth in the department's assets include both personal and employee benefit accounts.

Growth in service charges on deposit accounts is primarily due to increased account volumes and an overdraft service for retail customers. Opening new branch offices and promotion of retail accounts have presented opportunities for growth in deposit accounts and increased fee income. The Bank also introduced a new retail deposit account product line during 2001 that has been successful at attracting new accounts. Additionally, in March 2000 the Bank began offering an overdraft service to retail depositors. The service allows checking customers meeting specific criteria to incur overdrafts up to a predetermined limit, generally $500. For each check paid resulting in our increasing an overdraft, the customer pays the standard overdraft charge.

The Bank operates a mortgage banking company as a division of the Bank. This division originates residential mortgage loans and sells the loans in the secondary market. The division offers conventional, VA and FHA financing, as well as a program for low-income first time home buyers. Loans are made for both purchase and refinancing of homes. Virtually all loans originated by the mortgage banking company are sold in the secondary market with servicing rights released. The interest rates on the loans sold are locked with the buyer and Bancorp bears no interest rate risk related to these loans. Interest rates on conventional mortgage loans directly impact the volume of business transacted by the mortgage banking division. Favorable rates in early 1999 stimulated home buying and refinancing, however, beginning in the second quarter of 1999 and continuing through 2000, rising rates resulted in lower levels of activity, particularly refinancing. Mortgage rates again became favorable during the second half of 2001 and the fourth quarter of 2001 saw record volumes of activity.

Other non-interest income has increased for several reasons and primarily reflects the Bank's growth. Contributing factors to the increase for 2001 include the continued growth of income related to debit cards and internet banking. Also contributing were income items related to the increase in mortgage banking activity such as application fees and title fees.

Salaries and benefits are the largest component of non-interest expenses. Increases in personnel expense rose in part from regular salary increases. Officer increases are effective January 1 and non-officer increases are effective on each individual's anniversary date. Also, the Bank continues to add employees to support growth. At December 31, 2001, the Bank had 347 full-time equivalent employees compared to 327 at the same date in 2000 and 316 for 1999. There are no significant obligations for post-retirement or post-employment benefits.

Net occupancy expenses have increased as the Bank has added banking centers. During 2001 and 1999, the Bank opened two locations; during 2000 the Bank opened one. At December 31, 2001 the Bank had seventeen banking center locations including the main office. Furniture and equipment expenses also have increased with the addition of banking centers. Further, the Bank continues to update computer equipment and software as technology advances. Costs of capital asset additions flow through the statement of income, over the lives of the assets, in the form of depreciation expense.

Other non-interest expenses have increased from numerous factors and reflect the Bank's growth. Among the most significant costs that increased were marketing, advertising, mail and telephone. The increase in marketing and advertising reflects the introduction of a new product line of retail checking products during the year.

Income Taxes

A three year comparison of income tax expense and effective tax rate follows:

	2001			2000			1999
	(Dollars In Thousands)
Income tax expense	$	6,140		$	5,433		$	4,618
Effective tax rate		31.2	%		31.9	%		32.2	%

Financial Condition

Earning Assets and Interest Bearing Liabilities

Summary information with regard to Bancorp's financial condition follows:

							2001/2000				2000/1999
	2001		2000		1999		Change		%		Change		%
	(Dollars In Thousands)
Average earning assets	$	831,918	$	700,579	$	590,011	$	131,339	18.7	%	$	110,568	18.7	%
Average interest bearing liabilities		704,196		589,219		493,866		114,977	19.5	%		95,353	19.3	%
Average total assets		884,483		747,816		637,276		136,667	18.3	%		110,540	17.3	%
Total year end assets		937,293		852,260		689,815		85,033	10.0	%		162,445	23.5	%

The Bank has experienced significant growth in earning assets over the last several years. Growth of average earning assets occurred primarily in the area of loans. Loan demand continued to be strong during 2001. From year end 2000 to year end 2001, commercial and industrial loans increased 10.9%. Construction and development loans increased 8.7%. Real estate mortgage loans increased 21.3%. Consumer loans increased 7.6%. Securities also grew during 2001 in conjunction with the overall growth in the asset size of Bancorp.

The increase in average interest bearing liabilities from 2000 to 2001 occurred primarily in interest bearing demand deposits, time deposits and federal funds purchased. The increase in interest bearing demand deposits during the year was primarily a function of the poor performance of the stock market and lower interest rates. As the stock market continued to perform poorly during 2001, many investors moved their funds into deposit accounts. Because of lower interest rates, depositors tended to favor demand and money market deposits versus time deposits. The increase in federal funds purchased was due to the Bank's net funding position. Federal funds purchased are discussed further under the heading "Liquidity". Bancorp also issued $20 million of trust preferred securities during 2001. The net proceeds of $18.9 million were used to pay off existing long-term debt and to fund the continued growth of Bancorp. See Note 9 and Note 10 to the consolidated financial statements for more details on long-term debt and trust preferred securities, respectively.

Average Balances and Interest Rates—Taxable Equivalent Basis

			Year 2001						Year 2000						Year 1999
			Average Balances		Interest		Average Rate		Average Balances		Interest		Average Rate		Average Balances		Interest		Average Rate
			(Dollars In Thousands)
Earning assets
Federal funds sold			$	14,384	$	634	4.41	%	$	6,242	$	441	7.07	%	$	14,795	$	781	5.28	%
Mortgage loans held for sale				5,375		376	7.00	%		2,235		183	8.19	%		5,141		368	7.16	%
Securities
	Taxable			64,125		3,616	5.64	%		57,434		3,406	5.93	%		59,860		3,640	6.08	%
	Tax-exempt			26,458		1,729	6.53	%		21,778		1,459	6.70	%		18,114		1,197	6.61	%
Loans, net of unearned income				721,576		59,918	8.30	%		612,890		55,345	9.03	%		492,101		42,907	8.72	%

Total earning assets				831,918		66,273	7.97	%		700,579		60,834	8.68	%		590,011		48,893	8.29	%

Less allowance for loan losses				10,356						8,613						7,172

				821,562						691,966						582,839
Non-earning assets
Cash and due from banks				29,251						25,672						23,996
Premises and equipment				18,428						16,729						16,454
Accrued interest receivable and other assets				15,242						13,449						13,987

Total assets			$	884,483					$	747,816					$	637,276

Interest bearing liabilities
Deposits
	Interest bearing demand deposits		$	164,589	$	3,886	2.36	%	$	127,056	$	4,128	3.25	%	$	110,049	$	3,222	2.93	%
	Savings deposits			30,016		390	1.30	%		28,053		693	2.47	%		28,345		740	2.61	%
	Money market deposits			66,020		1,696	2.57	%		53,423		2,027	3.79	%		45,789		1,478	3.23	%
	Time deposits			377,630		21,815	5.78	%		329,152		19,533	5.93	%		266,544		13,694	5.14	%
Securities sold under agreements to repurchase and federal funds purchased				49,610		1,668	3.36	%		47,088		2,536	5.39	%		39,231		1,692	4.31	%
Other short-term borrowings				2,305		67	2.91	%		2,347		151	6.43	%		1,808		82	4.54	%
Long-term debt				14,026		1,203	8.58	%		2,100		165	7.86	%		2,100		146	6.95	%

		Total interest bearing liabilities		704,196		30,725	4.36	%		589,219		29,233	4.96	%		493,866		21,054	4.26	%

Non-interest bearing liabilities
Non-interest bearing demand deposits				101,542						92,250						87,609
Accrued interest payable and other liabilities				12,312						11,691						7,749

		Total liabilities		818,050						693,160						589,224
		Stockholders' equity		66,433						54,656						48,052

		Total liabilities and stockholders' equity	$	884,483					$	747,816					$	637,276

		Net interest income			$	35,548					$	31,601					$	27,839

		Net interest spread					3.61	%					3.72	%					4.03	%

		Net interest margin					4.27	%					4.51	%					4.72	%

Notes

•: Yields on municipal securities have been computed on a fully tax equivalent basis using the federal income tax rate of 35%.
•: Average balances for loans include the principal balance of non-accrual loans.
•: Loan interest income includes loan fees and is computed on a fully tax equivalent basis using the federal income tax rate of 35%.
•: Loan fees included in interest income amounted to $1,376,000, $989,000 and $939,000 in 2001, 2000 and 1999, respectively.

Securities

The primary purpose of the securities portfolio is to provide another source of interest income, as well as liquidity management. In managing the composition of the balance sheet, Bancorp seeks a balance among earnings sources and credit and liquidity considerations.

The carrying value of securities is summarized as follows:

		December 31
		2001		2000		1999
		(In Thousands)
Securities available for sale
	U.S. Treasury and federal agency obligations	$	51,696	$	51,553	$	50,115
	Mortgage-backed securities		4,382		996		1,128
	Obligations of states and political subdivisions		18,266		15,210		9,662
	Other		2,540		2,175		1,928

		$	76,884	$	69,934	$	62,833

Securities held to maturity
	U.S. Treasury and federal agency obligations	$	—	$	—	$	1,000
	Mortgage-backed securities		5,720		7,369		8,486
	Obligations of states and political subdivisions		8,158		9,520		11,912

		$	13,878	$	16,889	$	21,398

The maturity distribution and weighted average interest rates of debt securities at December 31, 2001, are as follows:

	Within One Year				After One But Within Five Years			After Five But Within Ten Years			After Ten Years
	Amount		Rate		Amount	Rate		Amount	Rate		Amount	Rate
	(Dollars In Thousands)
Securities available for sale
U.S. Treasury and federal agencies	$	4,096	6.75	%	40,002	5.39	%	6,545	5.67	%	1,053	8.00	%
Mortgage-backed securities		—	—		—	—		802	6.50	%	3,580	6.50	%
Obligations of states and political subdivisions		—	—		3,603	4.42	%	5,542	4.77	%	9,121	5.14	%

	$	4,096	6.75	%	43,605	5.31	%	12,889	5.34	%	13,754	5.71	%

Securities held to maturity
Mortgage-backed securities	$	—	—		305	7.00	%	904	6.00	%	4,511	6.49	%
Obligations of states and political subdivisions		2,556	4.88	%	2,569	4.44	%	3,033	4.58	%	—	—

	$	2,556	4.88	%	2,874	4.71	%	3,937	4.91	%	4,511	6.49	%

Loan Portfolio

Bancorp's primary source of income is interest on loans. The composition of loans as of the end of the last five years follows:

	December 31
	2001		2000		1999		1998		1997
	(In Thousands)
Commercial and industrial	$	152,049	$	137,086	$	116,248	$	103,345	$	101,030
Construction and development		55,943		51,479		34,760		30,155		21,481
Real estate mortgage		506,081		417,170		349,164		277,994		217,830
Consumer		63,368		58,899		46,686		36,792		29,952

	$	777,441	$	664,634	$	546,858	$	448,286	$	370,293

The following tables show the amounts of commercial and industrial loans, and construction and development loans at December 31, 2001 which, based on remaining scheduled repayments of principal, are due in the periods indicated. Also shown are the amounts due after one year classified according to sensitivity to changes in interest rates.

	Maturing
	Within One Year		After One But Within Five Years		After Five Years		Total
	(In Thousands)
Commercial and industrial	$	59,876	$	62,462	$	29,711	$	152,049
Construction and development		55,943		—		—		55,943

	Interest Sensitivity
	Fixed Rate		Variable Rate
	(In Thousands)
Due after one but within five years	$	51,044	$	11,418
Due after five years		8,908		20,803

	$	59,952	$	32,221

Nonperforming Loans and Assets

Information summarizing nonperforming assets, including nonaccrual loans follows:

	December 31
	2001			2000			1999			1998			1997
	(Dollars In Thousands)
Nonaccrual loans	$	3,775		$	602		$	2,770		$	2,163		$	290
Loans past due 90 days or more and still accruing		1,346			2,342			1,645			197			682

Nonperforming loans	$	5,121		$	2,944		$	4,415		$	2,360		$	972
Foreclosed real estate		63			833			—			1,836			—
Other foreclosed property		—			—			85			58			—

Nonperforming assets	$	5,184		$	3,777		$	4,500		$	4,254		$	972

Nonperforming loans as a percentage of total loans		0.66	%		0.44	%		0.81	%		0.53	%		0.26	%
Nonperforming assets as a percentage of total assets		0.55	%		0.44	%		0.65	%		0.70	%		0.20	%

The increase in non-performing loans is primarily related to a few larger customers. Management believes these loans are well secured and expects little to no loss for Bancorp.

The threshold at which loans are generally transferred to nonaccrual of interest status is 90 days past due unless they are well secured and in the process of collection. Interest income recorded on nonaccrual loans for 2001 totaled $157,000. Interest income that would have been recorded in 2001 if nonaccrual loans were on a current basis in accordance with their original terms was $512,000.

In addition to the nonperforming loans discussed above, there were loans for which payments were current or less than 90 days past due where borrowers are experiencing significant financial difficulties. At December 31, 2001, these loans totaled approximately $1,353,000. These loans are monitored by management and considered in determining the level of the allowance for loan losses. Management believes these loans do not present significant exposure to loss. The allowance for loan losses is discussed further under the heading "Provision for Loan Losses".

Allowance for Loan Losses

An allowance for loan losses has been established to provide for loans that may not be fully repaid. Loan losses arise primarily from the loan portfolio, but may also be generated from other sources such as commitments to extend credit, guarantees and standby letters of credit. The allowance for loan losses is increased by provisions charged to expense and decreased by charge-offs, net of recoveries. Loans are charged off by management when deemed uncollectible; however, collection efforts continue and future recoveries may occur.

The allowance is maintained at a level considered by management to be adequate to cover losses that are inherent in the loan portfolio. Factors considered include past loss experience, general economic conditions and information about specific borrower situations including financial position and collateral values. Estimating inherent loss on any loan is subjective and ultimate losses may vary from current estimates. Estimates are reviewed periodically and adjustments are reported in income through the provision for loan losses in the periods in which they become known. The adequacy of the allowance for loan losses is monitored by the internal loan review staff and reported quarterly to the Audit Committee of the Board of Directors. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the adequacy of Bancorp's allowance for loan losses. Such agencies may require Bancorp to make additional provisions to the allowance based upon their judgments about information available to them at the time of their examinations. Management believes that the allowance for loan losses is adequate to absorb inherent losses on existing loans that may become uncollectible. See "Provision for Loan Losses" for further discussion of the allowance for loan losses.

Summary of Loan Loss Experience

The following table summarizes average loans outstanding, changes in the allowance for loan losses arising from loans charged off and recoveries on loans previously charged off by loan category and additions to the allowance charged to expense.

			Years Ended December 31
			2001			2000			1999			1998			1997
			(Dollars In Thousands)
Average loans			$	721,576		$	612,890		$	492,101		$	412,935		$	329,162

Balance of allowance for loan losses at beginning of year			$	9,331		$	7,336		$	6,666		$	5,921		$	5,155
Loans charged off
	Commercial and industrial			1,203			424			644			146			75
	Real estate mortgage			634			546			43			54			26
	Consumer			952			480			348			735			183

		Total loans charged off		2,789			1,450			1,035			935			284

Recoveries of loans previously charged off
	Commercial and industrial			32			508			5			14			3
	Real estate mortgage			8			7			10			18			9
	Consumer			163			90			55			48			38

		Total recoveries		203			605			70			80			50

Net loans charged off				2,586			845			965			855			234
Additions to allowance charged to expense				4,220			2,840			1,635			1,600			1,000

		Balance at end of year	$	10,965		$	9,331		$	7,336		$	6,666		$	5,921

Ratio of net charge-offs during year to average loans				0.36	%		0.14	%		0.20	%		0.21	%		0.07	%

The increase in commercial and industrial loans charged off during 2001 is primarily due to the partial charge-off of a few larger relationships. The increase in consumer loans charged off is a reflection of the economic downturn during 2001 and the Bank's aggressive policy of charging off non-performing consumer loans. The overall increase in net loans charged off is also a function of the increase in the size of the loan portfolio. See "Provision for Loan Losses" for discussion of the provision for loan losses.

The following table sets forth the allocation of the allowance for loan losses for the loan categories shown. Although specific allocations exist, the entire allowance is available to absorb losses in any particular loan category.

	December 31
	2001		2000		1999		1998		1997
	(In Thousands)
Commercial and industrial	$	2,936	$	2,334	$	2,743	$	2,625	$	2,337
Construction and development		1,066		2,285		58		51		201
Real estate mortgage		3,024		1,693		1,351		1,739		2,034
Consumer		1,779		1,686		981		921		163
Unallocated		2,160		1,333		2,203		1,330		1,186

	$	10,965	$	9,331	$	7,336	$	6,666	$	5,921

The ratio of loans in each category to total outstanding loans is as follows:

	December 31
	2001		2000		1999		1998		1997
Commercial and industrial	19.6	%	20.6	%	21.2	%	23.1	%	27.3	%
Construction and development	7.2	%	7.7	%	6.4	%	6.7	%	5.8	%
Real estate mortgage	65.1	%	62.8	%	63.8	%	62.0	%	58.8	%
Consumer	8.1	%	8.9	%	8.6	%	8.2	%	8.1	%

	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Selected ratios relating to the allowance for loan losses follow:

	Years Ended December 31
	2001		2000		1999
Provision for loans losses to average loans	0.58	%	0.46	%	0.33	%
Net charge-offs to average loans	0.36	%	0.14	%	0.20	%
Allowance for loan losses to average loans	1.52	%	1.52	%	1.49	%
Allowance for loan losses to year end loans	1.41	%	1.40	%	1.34	%
Loan loss coverage	9.24	x	23.51	x	16.54	x

Deposits

Bancorp's core deposits consist of non-interest and interest bearing demand deposits, savings deposits, certificates of deposit under $100,000, certain certificates of deposit over $100,000 and IRAs. These deposits, along with other borrowed funds, are used by Bancorp to support its asset base. By adjusting rates offered to depositors, Bancorp is able to influence the amounts of deposits needed to

meet its funding requirements. The average amount of deposits in the Bank and average rates paid on such deposits for the years indicated are summarized as follows:

	Years Ended December 31
	2001				2000				1999
	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
	(Dollars in Thousands)
Non-interest bearing demand deposits	$	101,542	—		$	92,250	—		$	87,609	—
Interest bearing demand deposits		164,589	2.36	%		127,056	3.25	%		110,049	2.93	%
Savings deposits		30,016	1.30	%		28,053	2.47	%		28,345	2.61	%
Money market deposits		66,020	2.57	%		53,423	3.79	%		45,789	3.23	%
Time deposits		377,630	5.78	%		329,152	5.93	%		266,544	5.14	%

	$	739,797			$	629,934			$	538,336

Maturities of time deposits of $100,000 or more outstanding at December 31, 2001, are summarized as follows:

	Amount
	(In Thousands)
3 months or less	$	47,428
Over 3 through 6 months		14,751
Over 6 through 12 months		29,501
Over 12 months		28,414

	$	120,094

Short-Term Borrowings

Securities sold under agreements to repurchase represent short-term borrowings from commercial customers as part of a cash management service. Repurchase agreements generally have maturities of one to four days from the transaction date.

Information regarding securities sold under agreements to repurchase follows:

	Years Ended December 31
	2001				2000				1999
	Amount		Rate		Amount		Rate		Amount		Rate
	(Dollars in thousands)
Securities sold under agreements to repurchase
Year end balance	$	51,431	1.94	%	$	52,276	5.48	%	$	53,455	5.24	%
Average during year		48,376	3.39	%		40,731	5.23	%		38,847	4.31	%

Maximum month end balance during year		51,543				52,276				54,974

Liquidity

The role of liquidity management is to ensure funds are available to meet depositors' withdrawal and borrowers' credit demands while at the same time maximizing profitability. This is accomplished by balancing changes in demand for funds with changes in the supply of those funds. Liquidity to meet the demand is provided by maturing assets, short-term liquid assets that can be converted to cash and the ability to attract funds from external sources, principally depositors. Due to the nature of services

offered by the Bank, management prefers to focus on transaction accounts and full service relationships with customers. Management believes it has the ability to increase deposits at any time by offering rates slightly higher than the market rate.

Bancorp's Asset/Liability Committee (ALCO), primarily made up of senior management, has direct oversight responsibility for Bancorp's liquidity position and profile. A combination of daily, weekly and monthly reports provided to management detail the following: internal liquidity metrics, composition and level of the liquid asset portfolio, timing differences in short-term cash flow obligations, available pricing and market access to the financial markets for capital and exposure to contingent draws on Bancorp's liquidity.

The Bank has a number of sources of funds to meet liquidity needs on a daily basis. The deposit base, consisting of consumer and commercial deposits and large dollar denomination ($100,000 and over) certificates of deposit, is a source of funds. The majority of these deposits come from long-term customers and are a stable source of funds. The Bank has no brokered deposits, and has an insignificant amount of deposits on which the rate paid exceeded the market rate by more than 50 basis points when the account was established. In addition, federal funds purchased continue to provide an available source of liquidity.

Other sources of funds available to meet daily needs include the sales of securities under agreements to repurchase and funds made available under a treasury tax and loan note agreement with the federal government. Also, the Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB). As a member of the FHLB, the Bank has access to credit products of the FHLB. At December 31, 2001, the amount of available credit from the FHLB totaled $128 million. To date, the Bank has not needed to access this source of funds. Finally, the Bank has federal funds purchased lines with correspondent banks totaling $56 million and Bancorp has a $6 million line of credit with a correspondent bank.

Bancorp's liquidity depends primarily on the dividends paid to it as the sole shareholder of the Bank. As discussed in Note 15 to Bancorp's consolidated financial statements, the Bank may pay up to $20,370,000 in dividends to Bancorp without regulatory approval subject to the ongoing capital requirements of the Bank.

Over the normal course of business, Bancorp enters into certain forms of off-balance sheet transactions, including unfunded loan commitments and letters of credit. These transactions are managed through Bancorp's various risk management processes. Management considers both on-balance sheet and off-balance sheet transactions in its evaluation of Bancorp's liquidity.

Other Off-Balance Sheet Activities

In the normal course of business, Bancorp is party to activities that contain credit, market and operational risk that are not reflected in whole or in part in Bancorp's consolidated financial statements. Such activities include: traditional off-balance sheet credit-related financial instruments, commitments under operating leases and long-term debt.

Bancorp provides customers with off-balance sheet credit support through loan commitments and standby letters of credit. Summarized credit-related financial instruments, including both commitments to extend credit and letters of credit at December 31, 2001 are as follows:

	Amount of Commitment Expiration Per Period
	Total		Less than 1 year	1-3 Years	3-5 Years	Over 5 Years
	(In Thousands)
Unused loan commitments	$	138,612	47,364	20,018	20,032	51,198
Standby letters of credit		10,835	6,933	371	3,531	—

Since many of the unused commitments are expected to expire or be only partially used, the total amount of commitments in the preceding table does not necessarily represent future cash requirements.

In addition to owned banking facilities, the Corporation has entered into long-term leasing arrangements to support the ongoing activities of Bancorp. The required payments under such commitments and long-term debt at December 31, 2001 are as follows:

	Payments Due by Period
	Total		Less than 1 Year	1-3 Years	3-5 Years	Over 5 Years
	(In Thousands)
Operating leases	$	4,412	676	1,026	836	1,874
Long-term debt		270	—	—	—	270
Long-term debt—trust preferred securities		20,000	—	—	—	20,000

Capital

Information pertaining to Bancorp's capital balances and ratios follows:

	Years Ended December 31
	2001			2000			Change
	(Dollars in Thousands)
Stockholders' equity	$	71,684		$	60,288		18.90	%
Dividends per share	$	0.45		$	0.39		15.38	%
Tier 1 risk-based capital		11.85	%		8.87	%	298	bp
Total risk-based capital		13.14	%		10.16	%	298	bp
Leverage ratio		9.69	%		7.38	%	231	bp

The increase in stockholders' equity from 2001 to 2000 was due to the strong earnings of 2001 coupled with a philosophy to retain approximately 75% of earnings in equity.

Bank holding companies and their subsidiary banks are required by regulators to meet risk-based capital standards. These standards, or ratios, measure the relationship of capital to a combination of balance sheet and off-balance sheet risks. The value of both balance sheet and off-balance sheet items are adjusted to reflect credit risks. Note 18 to the consolidated financial statements provides more details of regulatory capital requirements, as well as, capital ratios of the Bank. Bancorp and the Bank exceed regulatory capital ratios required to be well capitalized. These ratios for Bancorp and the Bank had decreased over the last several years as assets grew more quickly than equity. In 2001, Bancorp issued $20 million of trust preferred securities which qualify as regulatory capital under Federal Reserve guidelines and significantly improved Bancorp's and the Bank's capital ratios. See Note 10 to the consolidated financial statements for more details on the trust preferred securities. Management considers the effects of growth on capital ratios as it contemplates plans for expansion.

In January 1999, the Board of Directors declared a 2-for-1 stock split to be effected in the form of a 100% stock dividend. The new shares were distributed in February 1999. This capital change was made to enhance shareholder value by increasing the number of shares of Bancorp's stock outstanding and to reduce the per share market price of the stock. Per share information has been restated to reflect the stock splits. In November 1999, Bancorp announced a 200,000 share common stock buy back program representing approximately 3% of its common stock. The repurchased shares may be used for, among other things, issuance of shares for the stock options or employee stock ownership or purchase plans. At December 31, 2001, shares repurchased pursuant to this program totaled 92,071.

A component of equity is accumulated other comprehensive income (losses) which for Bancorp consists of net unrealized gains or losses on securities available for sale and a minimum pension

liability, both net of taxes. Accumulated other comprehensive income was $645,000 and $21,000 at December 31, 2001 and 2000, respectively. The $624,000 increase in accumulated other comprehensive income (losses) is primarily a reflection of the effect of the interest rate environment on the valuation of the Bank's portfolio of securities available for sale.

The following table presents various key financial ratios:

	Years Ended December 31
	2001		2000		1999
Return on average assets	1.53	%	1.55	%	1.52	%
Return on average stockholders' equity	20.38	%	21.21	%	20.20	%
Dividend pay out ratio, based on basic EPS	22.17	%	22.29	%	22.60	%
Average stockholders' equity to average assets	7.51	%	7.31	%	7.54	%

Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement No. 141, "Business Combinations" which supersedes Accounting Principles Board (APB) Opinion No. 16, "Business Combinations." Statement No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. The elimination of the pooling-of-interests method is effective for transactions initiated after June 30, 2001. The remaining provisions of Statement No. 141 are effective for transactions accounted for using the purchase method that are completed after June 30, 2001.

In July 2001, the Financial Accounting Standards Board also issued Statement of Financial Accounting Standards No. 142, "Goodwill and Intangible Assets" which supersedes APB Opinion No. 17, "Intangible Assets." Statement No. 142 eliminates the current requirement to amortize goodwill and intangible assets, addresses the amortization of intangible assets with a defined life and addresses impairment testing and recognition for goodwill and intangible assets. Statement No. 142 will apply to goodwill and intangible assets arising from transactions completed before and after the Statement's effective date. Statement No. 142 is effective January 1, 2002. Management believes the impact of adoption will be immaterial to Bancorp's consolidated financial statements, as current goodwill and intangible amortization is approximately $70,000 per year. At December 31, 2001, unamortized goodwill was $682,000.

In August 2001, the Financial Accounting Standards Board issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While Statement No. 144 supercedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," it retains many of the fundamental provisions of that statement. Statement No. 144 also supercedes the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business. However, it retains the requirement in Opinion No. 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. By broadening the presentation of discontinued operations to include more disposal transactions, the Financial Accounting Standards Board has enhanced management's ability to provide information that helps financial statement users to assess the effects of a disposal transaction on the ongoing operations of an entity. Statement No. 144 is effective for fiscal years beginning after December 15, 2001 and interim financial periods within those fiscal years. Management believes that adopting Statement No. 144 will not have an impact on the consolidated financial statements.

Quarterly Operating Results

Following is a summary of quarterly operating results for 2001 and 2000:

		2001								2000
		4th Qtr.		3rd Qtr.		2nd Qtr.		1st Qtr.		4th Qtr.		3rd Qtr.		2nd Qtr.		1st Qtr.
		(In Thousands, Except Per Share Data)
Interest income		$	16,115	$	16,485	$	16,603	$	16,468	$	16,502	$	15,756	$	14,648	$	13,481
Interest expense			6,609		7,698		8,099		8,320		8,548		7,759		6,858		6,068

	Net interest income		9,506		8,787		8,504		8,148		7,954		7,997		7,790		7,413
Provision for loan losses			1,445		900		1,075		800		925		750		585		580

Net interest income after provision			8,061		7,887		7,429		7,348		7,029		7,247		7,205		6,833
Non-interest income			5,206		4,836		4,851		4,370		3,979		4,112		4,002		3,322
Non-interest expenses			7,888		7,811		7,367		7,240		6,703		6,743		6,915		6,343

Income before income taxes			5,379		4,912		4,913		4,478		4,305		4,616		4,292		3,812
Income tax expense			1,760		1,380		1,561		1,439		1,318		1,505		1,390		1,220

	Net income	$	3,619	$	3,532	$	3,352	$	3,039	$	2,987	$	3,111	$	2,902	$	2,592

Basic earnings per share		$	0.54	$	0.53	$	0.50	$	0.46	$	0.45	$	0.47	$	0.44	$	0.39
Diluted earnings per share			0.52		0.51		0.49		0.44		0.44		0.46		0.43		0.38

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is included in item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

Item 8. Financial Statements and Supplementary Data

The following consolidated financial statements of Bancorp and report of independent auditors are included below:

Consolidated Balance Sheets—December 31, 2001 and 2000

Consolidated Statements of Income—years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Changes in Stockholders' Equity—years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Comprehensive Income—years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Cash Flows—years ended December 31, 2001, 2000 and 1999

Notes to Consolidated Financial Statements

Independent Auditors' Report

Management's Report on Consolidated Financial Statements

Consolidated Balance Sheets

			December 31,
			2001		2000
			(Dollars In Thousands)
Assets
Cash and due from banks			$	29,803	$	44,597
Federal funds sold				218		29,020
Mortgage loans held for sale				13,963		2,330
Securities available for sale (amortized cost $75,563 in 2001 and $69,601 in 2000)				76,884		69,934
Securities held to maturity (approximate fair value $14,174 in 2001 and $17,004 in 2000)				13,878		16,889
Loans				777,441		664,634
Less allowance for loan losses				10,965		9,331

Net loans				766,476		655,303
Premises and equipment				19,421		17,497
Accrued interest receivable and other assets				16,650		16,690

Total assets			$	937,293	$	852,260

Liabilities
Deposits
	Non-interest bearing		$	118,165	$	103,172
	Interest bearing			635,386		622,485

		Total deposits		753,551		725,657
Securities sold under agreements to repurchase and federal funds purchased				79,031		52,276
Other short-term borrowings				1,880		1,813
Accrued interest payable and other liabilities				10,877		10,126
Long-term debt				270		2,100
Long-term debt—trust preferred securities				20,000		—

Total liabilities				865,609		791,972

Stockholders' equity
Common stock, no par value; 10,000,000 shares authorized; issued and outstanding 6,672,294 in 2001 and 6,637,477 in 2000				5,711		5,595
Surplus				14,404		14,292
Retained earnings				50,924		40,380
Accumulated other comprehensive income				645		21

Total stockholders' equity				71,684		60,288

Total liabilities and stockholders' equity			$	937,293	$	852,260

See accompanying notes to consolidated financial statements.

Consolidated Statements of Income

		Years Ended December 31,
		2001		2000		1999
		(In Thousands, Except Per Share Data)
Interest income
Loans		$	59,837	$	55,337	$	42,899
Federal funds sold			634		441		781
Mortgage loans held for sale			376		183		368
Securities
	Taxable		3,616		3,406		3,640
	Tax-exempt		1,208		1,020		836

Total interest income			65,671		60,387		48,524

Interest expense
Deposits			27,787		26,381		19,134
Securities sold under agreements to repurchase and federal funds purchased			1,668		2,536		1,692
Other short-term borrowings			67		151		82
Long-term debt			1,204		165		146

Total interest expense			30,726		29,233		21,054

Net interest income			34,945		31,154		27,470
Provision for loan losses			4,220		2,840		1,635

Net interest income after provision for loan losses			30,725		28,314		25,835

Non-interest income
Investment management and trust services			7,256		6,327		5,194
Service charges on deposit accounts			7,000		5,528		3,484
Gains on sales of mortgage loans held for sale			1,995		1,043		1,511
Gains on sales of securities available for sale			—		—		100
Other			3,012		2,517		2,331

Total non-interest income			19,263		15,415		12,620

Non-interest expenses
Salaries and employee benefits			17,644		15,559		13,750
Net occupancy expense			1,861		1,800		1,711
Furniture and equipment expense			2,523		2,309		2,282
Other			8,278		7,036		6,388

Total non-interest expense			30,306		26,704		24,131

Income before income taxes			19,682		17,025		14,324
Income tax expense			6,140		5,433		4,618

Net income		$	13,542	$	11,592	$	9,706

Net income per share, basic		$	2.03	$	1.75	$	1.46

Net income per share, diluted		$	1.96	$	1.70	$	1.41

See accompanying notes to consolidated financial statements.

Consolidated Statements of Changes in Stockholders' Equity

	Three Years Ended December 31, 2001
	Common Stock
	Number of Shares		Amount			Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total
	(In Thousands, Except Share Data)
Balance December 31, 1998	6,593,338		$	5,535		$	14,075		$	23,868		$	465		$	43,943
Net income	—			—			—			9,706			—			9,706
Change in other comprehensive income, net of tax	—			—			—			—			(1,816	)		(1,816	)
Shares issued for stock options exercised and employee benefit plans	76,721			169			968			—			—			1,137
Cash dividends, $0.33 per share	—			—			—			(2,198	)		—			(2,198	)
Shares repurchased	(23,000	)		(77	)		(441	)		—			—			(518	)

Balance December 31, 1999	6,647,059			5,627			14,602			31,376			(1,351	)		50,254
Net income	—			—			—			11,592			—			11,592
Change in other comprehensive income, net of tax	—			—			—			—			1,372			1,372
Shares issued for stock options exercised and employee benefit plans	39,368			131			520			—			—			651
Cash dividends, $0.39 per share	—			—			—			(2,588	)		—			(2,588	)
Shares repurchased	(48,950	)		(163	)		(830	)		—			—			(993	)

Balance December 31, 2000	6,637,477			5,595			14,292			40,380			21			60,288
Net income	—			—			—			13,542			—			13,542
Change in other comprehensive income, net of tax	—			—			—			—			624			624
Shares issued for stock options exercised and employee benefit plans	54,938			183			557			—			—			740
Cash dividends, $0.45 per share	—			—			—			(2,998	)		—			(2,998	)
Shares repurchased	(20,121	)		(67	)		(445	)		—			—			(512	)

Balance December 31, 2001	6,672,294		$	5,711		$	14,404		$	50,924		$	645		$	71,684

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income

				Years Ended December 31,
				2001			2000			1999
				(In Thousands)
Net income				$	13,542		$	11,592		$	9,706
Other comprehensive income (loss), net of tax:
	Unrealized gains (losses) on securities available for sale:
		Unrealized holding gains (losses) arising during the period			652			1,448			(1,628	)
		Less reclassification adjustment for gains included in net income			—			—			65
Minimum pension liability adjustment					(28	)		(76	)		(123	)

			Other comprehensive income (loss)		624			1,372			(1,816	)

			Comprehensive income	$	14,166		$	12,964		$	7,890

See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

		Years Ended December 31,
		2001			2000			1999
		(In Thousands)
Operating activities
Net income		$	13,542		$	11,592		$	9,706
Adjustments to reconcile net income to net cash provided by operating activities
	Provision for loan losses		4,220			2,840			1,635
	Depreciation, amortization and accretion, net		1,831			1,798			1,493
	Provision for deferred income taxes		(338	)		(987	)		(203	)
	Gains on sales of securities available for sale		—			—			(100	)
	Gains on sales of mortgage loans held for sale		(1,995	)		(1,043	)		(1,511	)
	Loss on the sale of other real estate		28			—			—
	Origination of mortgage loans held for sale		(121,481	)		(50,253	)		(89,097	)
	Proceeds from sales of mortgage loans held for sale		111,843			51,574			97,791
	Income tax benefit of stock options exercised		162			37			394
	Increase in accrued interest receivable and other assets		(301	)		(4,785	)		(487	)
	Increase (decrease) in accrued interest payable and other liabilities		952			(28	)		3,371

Net cash provided by operating activities			8,463			10,745			22,992

Investing activities
Net (increase) decrease in federal funds sold			28,802			(23,020	)		1,000
Purchases of securities available for sale			(33,850	)		(13,654	)		(77,492	)
Proceeds from sales of securities available for sale			—			—			10,618
Proceeds from maturities of securities available for sale			27,809			8,635			75,016
Proceeds from maturities of securities held to maturity			3,023			4,504			6,391
Net increase in loans			(115,296	)		(118,621	)		(99,537	)
Purchases of premises and equipment			(3,619	)		(2,678	)		(2,178	)
Proceeds from sales of other real estate			839			1,401			1,235

Net cash used in investing activities			(92,292	)		(143,433	)		(84,947	)

Financing activities
Net increase in deposits			27,894			155,695			52,350
Net increase (decrease) in securities sold under agreements to repurchase and federal funds purchased			26,755			(1,179	)		14,926
Net increase (decrease) in short-term borrowings			67			(2,141	)		3,095
Repayments of long-term debt			(1,830	)		—			—
Net proceeds from long-term debt — trust preferred securities			18,944			—			—
Issuance of common stock			578			614			349
Common stock repurchases			(512	)		(993	)		(518	)
Cash dividends paid			(2,861	)		(2,524	)		(2,095	)

Net cash provided by financing activities			69,035			149,472			68,107

Net increase (decrease) in cash and cash equivalents			(14,794	)		16,784			6,152
Cash and cash equivalents at beginning of year			44,597			27,813			21,661

Cash and cash equivalents at end of year		$	29,803		$	44,597		$	27,813

Supplemental cash flow information:
	Income tax payments	$	6,588		$	5,500		$	5,915
	Cash paid for interest		30,863			28,989			21,099

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

Principles of Consolidation and Nature of Operations

The consolidated financial statements include the accounts of S.Y. Bancorp, Inc. (Bancorp) and its wholly-owned subsidiaries, Stock Yards Bank & Trust Company (the Bank) and S.Y. Bancorp Capital Trust I. Significant intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform with the 2001 presentation.

The Bank is engaged in commercial and retail banking services, trust and investment management services, and mortgage banking services. Bancorp's market area is Louisville, Kentucky and surrounding communities including southern Indiana.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of related revenues and expenses during the reporting period. Actual results could differ from those estimates.

Statement of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and amounts due from banks.

Securities

Securities intended to be held until maturity are carried at amortized cost. Securities available for sale include securities that may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate and prepayment risk changes. Securities available for sale are carried at fair value with unrealized gains or losses, net of tax effect, included in stockholders' equity. Amortization of premiums and accretion of discounts are recorded using the interest method. Gains or losses on sales of securities are computed on a specific identification cost basis for securities. For securities for which impairment is other than temporary, losses are reflected in operations.

Mortgage Loans Held for Sale

Mortgage loans held for sale are carried at the lower of aggregate cost or market value. Gains on sales of mortgage loans are recorded at the time of funding by an investor at the difference between the sales proceeds and the loan's carrying value.

Loans

Loans are stated at the unpaid principal balance less deferred loan fees. Interest income on loans is recorded on the accrual basis except for those loans in a nonaccrual income status. Loans are placed in a nonaccrual income status when the prospects for recovering both principal and accrued interest are considered doubtful or when a default of principal or interest has existed for 90 days or more unless such a loan is well secured and in the process of collection. Interest received on nonaccrual loans is generally applied to principal. Nonaccrual loans are returned to accrual status once principal recovery is reasonably assured.

Loans are classified as impaired when it is probable the Bank will be unable to collect interest and principal according to the terms of the loan agreement. These loans are measured based on the present value of future cash flows discounted at the loans' effective interest rate or at the fair value of the loans' collateral, if applicable. Generally, impaired loans do not accrue interest.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level that adequately provides for losses inherent in the loan portfolio. Management determines the adequacy of the allowance based on reviews of individual credits, recent loss experience, current economic conditions, the risk characteristics of the various loan categories and such other factors that, in management's judgment, deserve current recognition in estimating loan losses. The allowance for loan losses is increased by the provision for loan losses and reduced by net loan charge-offs.

Premises and Equipment

Premises and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation of premises and equipment is computed using both accelerated and straight-line methods over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the terms of the related leases or over the useful lives of the improvements, whichever is shorter.

Other Assets

Goodwill has been amortized over 15 years on a straight-line basis through December 31, 2001. The amount of goodwill impairment, if any, is measured based on projected discounted future operating cash flows using a discount rate reflecting Bancorp's average cost of funds.

Other real estate is carried at the lower of cost or fair value minus estimated selling costs. Any write downs to fair value at the date of acquisition are charged to the allowance for loan losses. Expenses incurred in maintaining assets, write downs to reflect subsequent declines in value and realized gains or losses are reflected in operations.

Income Taxes

Bancorp accounts for income taxes using the asset and liability method. The objective of the asset and liability method is to establish deferred tax assets and liabilities for temporary differences between the financial reporting and the tax bases of Bancorp's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized on the statement of income in the period that includes the enactment date.

Net Income Per Share

Basic net income per common share is determined by dividing net income by the weighted average number of shares of common stock outstanding. Diluted net income per share is determined by dividing net income by the weighted average number of shares of common stock outstanding plus the weighted average number of shares that would be issued upon exercise of dilutive options, assuming proceeds are used to repurchase shares pursuant to the treasury stock method.

Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement No. 141, "Business Combinations" which supersedes Accounting Principles Board (APB) Opinion No. 16, "Business

Combinations." Statement No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. The elimination of the pooling-of-interests method is effective for transactions initiated after June 30, 2001. The remaining provisions of Statement No. 141 are effective for transactions accounted for using the purchase method that are completed after June 30, 2001.

(2) Restrictions on Cash and Due from Banks

The Bank is required to maintain an average reserve balance in cash or with the Federal Reserve Bank relating to customer deposits. At December 31, 2001, the amount of those required reserve balances was approximately $7,671,000.

(3) Securities

The amortized cost and approximate fair value of securities available for sale follows:

			Unrealized
	Amortized Cost		Unrealized				Approximate Fair Value
	Amortized Cost		Gains		Losses		Approximate Fair Value
	(In Thousands)
December 31, 2001
U.S. Treasury and federal agencies	$	50,711	$	1,168	$	183	$	51,696
Mortgage-backed securities		4,361		28		7		4,382
Obligations of states and political subdivisions		17,951		382		67		18,266
Other		2,540		—		—		2,540

	$	75,563	$	1,578	$	257	$	76,884

December 31, 2000
U.S. Treasury and federal agencies	$	51,454	$	197	$	98	$	51,553
Mortgage-backed securities		1,000		—		4		996
Obligations of states and political subdivisions		14,972		322		84		15,210
Other		2,175		—		—		2,175

	$	69,601	$	519	$	186	$	69,934

The amortized cost and approximate fair value of securities held to maturity follows:

			Unrealized
	Amortized Cost		Unrealized				Approximate Fair Value
	Amortized Cost		Gain		Losses		Approximate Fair Value
	(In Thousands)
December 31, 2001
Mortgage-backed securities	$	5,720	$	145	$	—	$	5,865
Obligations of states and political subdivisions		8,158		151		—		8,309

	$	13,878	$	296	$	—	$	14,174

December 31, 2000
Mortgage-backed securities	$	7,369	$	50	$	3	$	7,416
Obligations of states and political subdivisions		9,520		71		3		9,588

	$	16,889	$	121	$	6	$	17,004

A summary of debt securities as of December 31, 2001 based on maturity is presented below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. For mortgage-backed securities, the expected remaining life is reflected rather than contractual maturities.

	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Approximate Fair Value		Amortized Cost		Approximate Fair Value
	(In Thousands)
Due within one year	$	4,007	$	4,096	$	2,556	$	2,586
Due after one year through five years		42,775		43,605		2,874		2,959
Due after five years through ten years		12,711		12,889		3,937		4,014
Due after ten years		13,530		13,754		4,511		4,615

	$	73,023	$	74,344	$	13,878	$	14,174

Securities with a carrying value of approximately $63,963,000 at December 31, 2001 and $63,264,000 at December 31, 2000 were pledged to secure public deposits and certain borrowings.

(4) Loans

The composition of loans follows:

	December 31,
	2001		2000
	(In Thousands)
Commercial and industrial	$	152,049	$	137,086
Construction and development		55,943		51,479
Real estate mortgage		506,081		417,170
Consumer		63,368		58,899

	$	777,441	$	664,634

The Bank's credit exposure is diversified with secured and unsecured loans to individuals, small businesses and corporations. No specific industry concentration exceeds 10% of loans. While the Bank has a diversified loan portfolio, a customer's ability to honor contracts is dependent upon the economic stability and geographic region and/or industry in which that customer does business. Loans outstanding and related unfunded commitments are primarily concentrated within the Bank's market area that encompasses Louisville, Kentucky and surrounding communities including southern Indiana.

Information about impaired loans follows:

	December 31,
	2001		2000
	(In Thousands)
Principal balance of impaired loans	$	3,775	$	602
Impaired loans with a Statement No. 114 valuation allowance		1,747		134
Amount of Statement No. 114 valuation allowance		599		114
Impaired loans with no Statement No. 114 valuation allowance		2,028		468
Average balance of impaired loans for year		3,113		2,325

Interest income on impaired loans (cash basis) was $157,000, $32,000 and $0 in 2001, 2000, and 1999, respectively. Interest income that would have been recorded if nonaccrual loans were on a current basis in accordance with their original terms was $512,000, $271,000 and $175,000 in 2001, 2000 and 1999, respectively.

Loans to directors and their associates, including loans to companies for which directors are principal owners, and executive officers amounted to approximately $4,994,000 and $4,678,000 at December 31, 2001 and 2000, respectively. These loans were made on substantially the same terms, and interest rates and collateral, as those prevailing at the same time for other customers. During 2001 new loans of $8,804,000 were made to officers and directors and affiliated companies, repayments amounted to $8,431,000. An additional $57,000 in loans was removed due to the retirement of a board member during the year.

An analysis of the changes in the allowance for loan losses for the years ended December 31, 2001, 2000, and 1999 follows:

		Years Ended December 31,
		2001		2000		1999
		(In Thousands)
Balance at January 1		$	9,331	$	7,336	$	6,666
Provision for loan losses			4,220		2,840		1,635
Loans charged off			2,789		1,450		1,035
Recoveries			203		605		70

	Net loan charge-offs		2,586		845		965

Balance at December 31		$	10,965	$	9,331	$	7,336

(5) Premises and Equipment

A summary of premises and equipment follows:

	December 31,
	2001		2000
	(In Thousands)
Land	$	3,221	$	2,746
Buildings and improvements		15,078		14,124
Furniture and equipment		11,813		10,342
Construction in progress		2		57

		30,114		27,269
Accumulated depreciation and amortization		10,693		9,772

	$	19,421	$	17,497

Depreciation expense related to premises and equipment was $1,695,000 in 2001, $1,601,000 in 2000 and $1,376,000 in 1999.

(6) Income Taxes

Income taxes consist of the following:

			Years Ended December 31,
			2001			2000			1999
			(In Thousands)
Applicable to operations:
	Current		$	6,475		$	6,420		$	4,821
	Deferred			(335	)		(987	)		(203	)

		Total applicable to operations		6,140			5,433			4,618
Charged (credited) to stockholders' equity:
	Unrealized gain (loss) on securities available for sale			345			772			(895	)
	Stock options exercised			(162	)		(37	)		(394	)
	Minimum pension liability adjustment			(15	)		(41	)		(66	)

			$	6,308		$	6,127		$	3,263

An analysis of the difference between the statutory and effective tax rates follows:

	Years Ended December 31,
	2001		2000		1999
U.S. Federal income tax rate	35.0	%	35.0	%	35.0	%
Tax exempt interest income	-2.4	%	-2.0	%	-1.9	%
Other, net	-1.4	%	-1.1	%	-0.9	%

	31.2	%	31.9	%	32.2	%

The effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

		December 31,
		2001		2000
		(In Thousands)
Deferred tax assets
Allowance for loan losses		$	3,838	$	3,266
Deferred compensation			816		626
Other			159		357

	Total deferred tax assets		4,813		4,249

Deferred tax liabilities
Securities			795		396
Property and equipment			354		196
Other			16		14

	Total deferred tax liabilities		1,165		606

	Net deferred tax asset	$	3,648	$	3,643

No valuation allowance for deferred tax assets was recorded as of December 31, 2001 and 2000 because Bancorp has sufficient prior taxable income to allow for utilization of the deductible temporary differences within the carryback period.

(7) Deposits

The composition of interest bearing deposits follows:

	December 31,
	2001		2000
	(In Thousands)
Interest bearing demand	$	186,284	$	140,094
Savings		30,531		26,632
Money market		64,107		80,769
Time deposits greater than $100,000		120,094		102,957
Other time deposits		234,370		272,033

	$	635,386	$	622,485

Interest expense related to certificates of deposit and other time deposits in denominations of $100,000 or more was $6,492,000, $5,348,000 and $3,737,000, respectively, for the years ended December 31, 2001, 2000 and 1999.

At December 31, 2001, the scheduled maturities of time deposits were as follows:

	(In Thousands)
2002	$	217,367
2003		73,678
2004		17,805
2005		36,630
2006 and thereafter		8,984

	$	354,464

(8) Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase generally mature within one to four days from the transaction date. Information concerning securities sold under agreements to repurchase is summarized as follows:

	December 31,
	2001			2000
	(Dollars In Thousands)
Average balance during the year	$	48,376		$	40,731
Average interest rate during the year		3.39	%		5.23	%
Maximum month-end balance during the year	$	51,543		$	52,276

(9) Long-term Debt

Bancorp has a $6,000,000 line of credit with a correspondent bank. The balance outstanding at December 31, 2001 and 2000 was $0 and $1,800,000, respectively. The interest rate on the line is indexed to either LIBOR or the lending bank's prime rate with payments due quarterly. The terms of the note include a number of financial and general covenants, including capital and return on asset requirements as well as restrictions on additional long-term debt, future mergers and significant dispositions without the consent of the lender. The note is renewable on an annual basis.

The Bank also has subordinated debentures outstanding amounting to $270,000 at December 31, 2001 and $300,000 at December 31, 2000 that are due in October 2049. Interest due on these debentures is at a variable rate equal to one percent less than the Bank's prime rate adjusted annually on January 1. For 2001, the rate on these debentures was 8.50%. The debentures are subordinated to the claims of creditors and depositors of the Bank and are subject to redemption by the Bank at the principal amount outstanding, upon the earlier of the death of the registered owners, or an event of default by the registered owners with respect to loans from the Bank. The owners may redeem the debentures at any time.

(10) Long-term Debt—Trust Preferred Securities

On June 1, 2001, S.Y. Bancorp Capital Trust I (the Trust), a Delaware statutory business trust and 100%-owned finance subsidiary of Bancorp, issued $20.0 million of 9.00% Cumulative Trust Preferred Securities ("the Securities") which mature on June 30, 2031; however prior redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules. Proceeds from issuance of the securities, net of underwriting fees and offering expenses were $18.9 million. The principal asset of S.Y. Bancorp Capital Trust I is a $20.0 million subordinated debenture of Bancorp. The subordinated debenture also bears interest at the rate of 9.00% and matures June 30, 2031, subject to prior redemption under certain circumstances. Bancorp owns all the common securities of the Trust.

The securities, the assets of the Trust, and the common securities issued by the Trust are redeemable in whole or in part on or after June 30, 2006, or at any time in whole, but not in part, from the date of issuance upon the occurrence of certain events. The Securities are included in Tier 1 capital for regulatory capital adequacy determination purposes, subject to certain limitations.

The obligations of Bancorp with respect to the issuance of the Securities constitute a full, irrevocable and unconditional guarantee on a subordinated basis by Bancorp of the Trust's obligation with respect to the Securities.

Subject to certain exceptions and limitations, Bancorp may, from time to time, defer subordinated debenture interest payments, which could result in a deferral of distribution payments on the related Securities and, with certain exceptions, prevent Bancorp from declaring or paying cash distributions on Bancorp's common stock or debt securities that rank pari passu or junior to the subordinated debenture.

(11) Net Income per Share and Common Stock Dividends

The following table reflects the numerators (net income) and denominators (average shares outstanding) for the basic and diluted net income per share computations:

	2001		2000		1999
	(In Thousands, Except Per Share Data)
Net income, basic and diluted	$	13,542	$	11,592	$	9,706

Average shares outstanding		6,660		6,634		6,654
Effect of dilutive securities		241		185		217

Average shares outstanding including dilutive securities		6,901		6,819		6,871

Net income per share, basic	$	2.03	$	1.75	$	1.46

Net income per share, diluted	$	1.96	$	1.70	$	1.41

(12) Advances from the Federal Home Loan Bank

The Bank has an agreement with the Federal Home Loan Bank of Cincinnati (FHLB) that enables the Bank to borrow under terms to be established at the time of the advance. Advances from the FHLB would be collateralized by certain first mortgage loans under a blanket mortgage collateral agreement and FHLB stock. The Bank has not taken any advances under this agreement.

(13) Employee Benefit Plans

The Bank has the following defined contribution plans: employee stock ownership plan and 401(k) profit sharing plan. Prior to March 2001, the Bank also had a money purchase plan. This plan was eliminated during 2001 and the assets of the plan were combined with the profit sharing plan. The

plans are available to all employees meeting certain eligibility requirements. Expenses of the plans for 2001, 2000, and 1999 were $824,000, $1,094,000, and $904,000, respectively. Contributions are made in accordance with the terms of the plans. As of December 31, 2001 and 2000, the employee stock ownership plan held 89,489 and 82,723, respectively, shares of Company stock.

The Bank also sponsors an unfunded, non-qualified, defined benefit retirement plan for certain key officers. At December 31, 2001 and 2000 the accumulated benefit obligations for the plan were $1,769,000 and $1,573,000, respectively. Discount rates of 6.75% in 2001 and 7.00% in 2000 were used in determining the actuarial present value of the projected benefit obligation. Expenses of the plan were $242,000 in 2001, $132,000 in 2000, and $142,000 in 1999.

Obligations for other post-retirement and post-employment benefits are not significant.

(14) Stock Options

In 1995, shareholders approved a stock incentive plan. Under this plan there have been a total of 720,000 shares of common stock reserved for issuance of stock options to Bank employees and non-employee directors. As of December 31, 2001, 164,500 shares were available for future grant. Bancorp also has an older stock option plan under which all options have been granted. Options granted which do not vest immediately are subject to a vesting schedule of 20% per year. The options granted in 1984 at an exercise price of $0.861 per share were granted below market value of the Bank's common stock at the grant date and do not expire. All other options were granted at an exercise price equal to the market value of common stock at the time of grant and expire ten years after the grant date.

Activity with respect to outstanding options follows:

	Shares		Weighted average price per share
	(In Thousands, Except Per Share Data)
Outstanding at December 31, 1998	396,004		$	8.43
Granted	48,900			23.94
Exercised	(51,340	)		1.23
Forfeited	(2,200	)		18.86

Outstanding at December 31, 1999	391,364			11.19
Granted	138,950			20.79
Exercised	(14,724	)		7.52
Forfeited	(13,750	)		21.41

Outstanding at December 31, 2000	501,840			12.43
Granted	81,500			33.53
Exercised	(52,416	)		9.22
Forfeited	(4,200	)		20.70

Outstanding at December 31, 2001	526,724		$	17.14

The weighted average fair values of options granted in 2001, 2000 and 1999 were $8.72, $5.70 and $6.23, respectively.

Options outstanding at December 31, 2001 were as follows:

Option price per share	Expiration	Shares	Options exercisable
$0.861	none	9,184	9,184
6.421	2004	45,320	45,320
7.250	2005	124,400	124,400
8.375	2005	30,400	30,400
14.500	2007	31,000	26,240
20.500	2008	28,400	18,800
23.938	2009	43,340	31,940
24.000	2009	500	200
20.25-21.00	2010	56,230	33,030
20.630	2010	76,450	44,810
23.90-33.60	2011	81,500	—

		526,724	364,324

Bancorp applies the provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock options granted at the market value of common stock at the time of grant. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation" Bancorp's proforma net income and income per share would have been as follows:

	2001		2000		1999
	(In Thousands, Except Per Share Data)
Net income as reported	$	13,542	$	11,592	$	9,706
Net income proforma		13,229		11,342		9,431
Income per share, basic as reported		2.03		1.75		1.46
Income per share, basic proforma		1.99		1.71		1.42
Income per share, diluted as reported		1.96		1.70		1.41
Income per share, diluted proforma	$	1.92	$	1.66	$	1.37

The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option pricing model. Assumptions used for grants were dividend yields of 1.54%, 1.54%, and 1.53%; expected volatility of 17.39%, 16.33%, and 16.53% and expected lives of 7 years. Risk free interest rates were 5.02% for the December 2001 grant, 6.60% for the January 2000 grant, 5.04% for the December 2000 grant and 5.15% for 1999.

(15) Dividend Restriction

Bancorp's principal source of funds is dividends received from the Bank. Under applicable banking laws, bank regulatory authorities must approve the declaration of dividends in any year if such dividends are in an amount in excess of the sum of net income of that year and retained earnings of the preceding two years. At January 1, 2002, the retained earnings of the Bank available for payment of dividends without regulatory approval were approximately $20,370,000.

(16) Commitments and Contingent Liabilities

As of December 31, 2001, the Bank had various commitments and contingent liabilities outstanding that arose in the normal course of business, such as standby letters of credit and commitments to extend credit, which are properly not reflected in the consolidated financial statements. In management's opinion, commitments to extend credit of $149,447,000, including standby letters of

credit of $10,835,000, represent normal banking transactions, and no significant losses are anticipated to result therefrom. The Bank's exposure to credit loss in the event of nonperformance by the other party to these commitments is represented by the contractual amount of these instruments. The Bank uses the same credit and collateral policies in making commitments and conditional guarantees as for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit and financial guarantees written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements.

The Bank leases certain facilities, improvements and equipment under non-cancelable operating leases. Future minimum lease commitments for these leases are $676,000 in 2002; $589,000 in 2003; $437,000 in 2004; $441,000 in 2005; $395,000 in 2006 and $1,874,000 in the aggregate thereafter. Rent expense, net of sublease income, was $615,000 in 2001, $655,000 in 2000, and $623,000 in 1999.

Also, as of December 31, 2001, there were various pending legal actions and proceedings in which claims for damages are asserted. Management, after discussion with legal counsel, believes the ultimate result of these legal actions and proceedings will not have a material adverse effect on the consolidated financial position or results of operations of Bancorp.

(17) Fair Value of Financial Instruments

The estimated fair values of financial instruments at December 31 are as follows:

	2001					2000
	Carrying Amount		Fair Value			Carrying Amount		Fair Value
	(In Thousands)
Financial assets
Cash and short-term investments	$	30,021	$	30,021		$	73,617	$	73,617
Mortgage loans held for sale		13,963		13,963			2,330		2,330
Securities		90,762		91,058			86,823		86,938
Loans, net		766,476		773,258			655,303		648,954
Accrued interest receivable		4,616		4,616			5,209		5,209
Financial liabilities
Deposits	$	753,551	$	762,684		$	725,657	$	728,278
Short-term borrowings		80,911		80,911			54,089		54,089
Long-term debt		20,270		19,360			2,100		2,100
Accrued interest payable		546		546			683		683
Off balance sheet financial instruments
Commitments to extend credit		—		—			—		—
Standby letters of credit		—		(163	)		—		(168	)

Management used the following methods and assumptions to estimate the fair value of each class of financial instrument for which it is practicable to estimate the value.

Cash, Short-Term Investments, Accrued Interest Receivable/Payable and Short-Term Borrowings

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities

For securities, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities or dealer quotes.

Loans

The fair value of loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits

The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-rate certificates of deposits is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Long-term Debt

Rates currently available to Bancorp for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Commitments to Extend Credit and Standby Letters of Credit

The fair values of commitments to extend credit are estimated using fees currently charged to enter into similar agreements and the creditworthiness of the customers. The fair values of standby letters of credit are based on fees currently charged for similar agreements or the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.

Limitations

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments. Because no market exists for a significant portion of Bancorp's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(18) Regulatory Matters

Bancorp and the Bank are subject to various capital requirements prescribed by banking regulations and administered by federal banking agencies. Under these requirements, Bancorp and the Bank must meet minimum amounts and percentages of Tier I and total capital, as defined, to risk weighted assets and Tier I capital to average assets. Risk weighted assets are determined by applying certain risk weightings prescribed by the regulations to various categories of assets and off-balance sheet commitments. Capital and risk weighted assets may be further subject to qualitative judgments by

regulators as to components, risk weighting and other factors. Failure to meet the capital requirements can result in certain mandatory, and possibly discretionary, corrective actions prescribed by the regulations or determined to be necessary by the regulators, which could materially affect the consolidated financial statements. Management believes Bancorp and the Bank met all capital requirements to which they were subject as of December 31, 2001.

As of December 2001 and 2000, the most recent notifications from the Bank's primary regulator categorized the Bank as well capitalized under the regulatory framework. To be categorized as well capitalized, the Bank must maintain a total risk-based capital ratio of at least 10%; a Tier I ratio of at least 6%; and a leverage ratio of at least 5%. All banks are required to have a total capital ratio of at least 8%, a Tier I ratio of at least 4% and a leverage ratio of at least 3%. There are no conditions or events since those notifications that management believes have changed the Bank's categories.

A summary of Bancorp's and the Bank's capital ratios at December 31, 2001 and 2000 follows:

		2001				2000
		Actual				Actual
		Amount		Ratio		Amount		Ratio
		(Dollars in Thousands)
Total risk-based capital(1)
	Consolidated	$	99,926	13.14	%	$	67,993	10.16	%
	Bank		90,889	11.98	%		68,213	10.21	%
Tier 1 risk-based capital(1)
	Consolidated		90,130	11.85	%		59,317	8.87	%
	Bank		81,119	10.69	%		59,549	8.91	%
Leverage(2)
	Consolidated		90,130	9.69	%		59,317	7.38	%
	Bank		81,119	8.78	%		59,549	7.43	%

(1): Ratio is computed in relation to risk-weighted assets.
(2): Ratio is computed in relation to average assets.

(19) S.Y. Bancorp, Inc. (parent company only)

Condensed Balance Sheets

	December 31,
	2001		2000
	(In Thousands)
Assets
Cash on deposit with subsidiary bank	$	5,988	$	282
Investment in and receivable from subsidiary bank		85,710		62,853
Other assets		2,091		976

Total assets	$	93,789	$	64,111

Liabilities and stockholders' equity
Other liabilities	$	2,105	$	2,023
Long-term debt		20,000		1,800
Stockholders' equity		71,684		60,288

Total liabilities and stockholders' equity	$	93,789	$	64,111

Condensed Statements of Income

	Years Ended December 31,
	2001		2000		1999
	(In Thousands)
Income—Dividends from subsidiary bank	$	3,132	$	2,731	$	2,323
Expenses		1,415		278		243

Income before income taxes and equity in undistributed net income of subsidiary		1,717		2,453		2,080
Income tax benefit		496		97		85

Income before equity in undistributed net income of subsidiary		2,213		2,550		2,165
Equity in undistributed net income of subsidiary		11,329		9,042		7,541

Net income	$	13,542	$	11,592	$	9,706

Condensed Statements of Cash Flows

		Years Ended December 31,
		2001			2000			1999
		(In Thousands)
Operating activities
Net income		$	13,542		$	11,592		$	9,706
Adjustments to reconcile net income to net cash provided by operating activities:
	Equity in undistributed net income of subsidiary		(11,329	)		(9,042	)		(7,541	)
	Increase in receivable from subsidiary		(704	)		(506	)		(178	)
	Income tax benefit of stock options exercised		162			37			394
	(Increase) decrease in other assets		(59	)		(115	)		106
	(Decrease) increase in other liabilities		(55	)		405			(135	)

Net cash provided by operating activities			1,557			2,371			2,352

Investing activities
Increase in capital investment in subsidiary			(10,200	)		—			—

Net cash used by investing activities			(10,200	)		—			—

Financing activities
Repayments of long-term debt			(1,800	)		—			—
Net proceeds from long-term debt—trust preferred securities			18,944			—			—
Issuance of common stock			578			614			349
Common stock repurchases			(512	)		(993	)		(518	)
Cash dividends paid			(2,861	)		(2,524	)		(2,095	)

Net cash provided (used) by financing activities			14,349			(2,903	)		(2,264	)

Net increase (decrease) in cash			5,706			(532	)		88
Cash at beginning of year			282			814			726

Cash at end of year		$	5,988		$	282		$	814

(20) Segments

The Bank's, and thus Bancorp's principal activities include commercial and retail banking, investment management and trust, and mortgage banking. Commercial and retail banking provides a

full range of loans and deposit products to individual consumers and businesses. Investment management and trust provides wealth management services including brokerage, estate planning and administration, retirement plan management and custodian or trustee services. Mortgage banking originates residential loans and sells them, servicing released, to the secondary market.

The financial information for each business segment reflects that which is specifically identifiable or allocated based on an internal allocation method. The measurement of the performance of the business segments is based on the management structure of the Bank and is not necessarily comparable with similar information for any other financial institution. The information presented is also not necessarily indicative of the segments' operations if they were independent entities.

Principally, all of the net assets of S.Y. Bancorp, Inc. are involved in the commercial and retail banking segment.

Selected financial information by business segment follows:

	Years Ended December 31,
	2001		2000		1999
	(In Thousands)
Net interest income
Commercial and retail banking	$	34,470	$	30,625	$	27,049
Investment management and trust		29		67		87
Mortgage banking		446		462		334

Total	$	34,945	$	31,154	$	27,470

Non-interest income
Commercial and retail banking	$	8,970	$	7,111	$	4,865
Investment management and trust		7,694		6,850		5,685
Mortgage banking		2,599		1,454		2,070

Total	$	19,263	$	15,415	$	12,620

Net income
Commercial and retail banking	$	10,823	$	9,066	$	7,640
Investment management and trust		2,094		2,142		1,759
Mortgage banking		625		384		307

Total	$	13,542	$	11,592	$	9,706

Independent Auditors' Report

To the Board of Directors and Stockholders
S.Y. Bancorp, Inc.:

We have audited the accompanying consolidated balance sheets of S.Y. Bancorp, Inc. (Bancorp) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders' equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2001. These consolidated financial statements are the responsibility of Bancorp's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of S.Y. Bancorp, Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

Louisville, Kentucky
January 23, 2002

Management's Report on Consolidated Financial Statements

The accompanying consolidated financial statements and other financial data were prepared by the management of S.Y. Bancorp, Inc. (Bancorp), which has the responsibility for the integrity of the information presented. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts that are the best estimates and judgments of management with consideration given to materiality.

Management is further responsible for maintaining a system of internal controls designed to provide reasonable assurance that the books and records reflect the transactions of Bancorp and that its established policies and procedures are carefully followed. Management believes that Bancorp's system, taken as a whole, provides reasonable assurance that transactions are executed in accordance with management's general or specific authorization; transactions are recorded as necessary to permit preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and to maintain accountability for assets; access to assets is permitted only in accordance with management's general or specific authorization, and the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

Management also seeks to assure the objectivity and integrity of Bancorp's financial data by the careful selection and training of qualified personnel, an internal audit function and organizational arrangements that provide an appropriate division of responsibility.

Bancorp's independent auditors, KPMG LLP, have audited the consolidated financial statements. Their audit was conducted in accordance with auditing standards generally accepted in the United States of America, which provide for consideration of Bancorp's internal controls to the extent necessary to determine the nature, timing, and extent of their audit tests.

The Board of Directors pursues its oversight role for the consolidated financial statements through the Audit Committee. The Audit Committee meets periodically and privately with management, the internal auditor, and the independent auditors to review matters relating to financial reporting, the internal control systems, and the scope and results of audit efforts. The internal and independent auditors have unrestricted access to the Audit Committee, with and without the presence of management, to discuss accounting, auditing, and financial reporting matters. The Audit Committee also recommends the appointment of the independent auditors to the Board of Directors.

/s/ David H. Brooks David H. Brooks Chairman and Chief Executive Officer
/s/ David P. Heintzman David P. Heintzman President
/s/ Nancy B. Davis Nancy B. Davis Executive Vice President, Secretary, Treasurer and Chief Financial Officer

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Part III

Item 10. Directors and Executive Officers of the Registrant

Information regarding the directors and executive officers of Bancorp is incorporated herein by reference to the discussion under the heading, "PROPOSALS—DIRECTORS' PROPOSAL TO ELECT DIRECTORS," and SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE in Bancorp's Proxy Statement for the 2002 Annual Meeting of Shareholders and the section captioned EXECUTIVE OFFICERS OF THE REGISTRANT in this Form 10-K.

Information regarding principal occupation of directors of Bancorp follows:

David H. Brooks—Chairman and Chief Executive Officer, S.Y. Bancorp, Inc. and Stock Yards Bank & Trust Company;

James E. Carrico—Managing Director, Acordia of Kentucky;

Jack M. Crowner—Owner, Jack Crowner & Associates;

Charles R. Edinger, III—Vice President, J. Edinger & Son. Inc.;

Carl T. Fischer, Jr.—Farmer and horse breeder;

Stanley A. Gall, M.D.—Professor and Chair Emeritus, University of Louisville;

David P. Heintzman—President, S.Y. Bancorp, Inc. and Stock Yards Bank & Trust Company;

Bruce P. Madison—Vice President and Treasurer, Plumbers Supply Company, Inc.;

Jefferson T. McMahon—Retired; private investor;

Nicholas X. Simon—President, Publishers Printing Company, LLC;

Norman Tasman—President, Tasman Industries and Hide Processing;

Kathy C. Thompson—Executive Vice President, S.Y. Bancorp, Inc. and Stock Yards Bank & Trust Company.

Item 11. Executive Compensation

Information regarding the compensation of Bancorp's executive officers and directors is incorporated herein by reference to the discussion under the heading, "CORPORATE GOVERNANCE AND OTHER MATTERS—BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES" in Bancorp's Proxy Statement for the 2002 Annual Meeting of Shareholders.

Information appearing under the headings "REPORT ON EXECUTIVE COMPENSATION" and "Shareholder Return Performance Graph" in the section entitled "EXECUTIVE COMPENSATION AND OTHER INFORMATION" in Bancorp's Proxy Statement for the 2002 Annual Meeting of Shareholders shall not be deemed to be incorporated by reference in this report, notwithstanding any general statement contained herein incorporating portions of such Proxy Statement by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is incorporated herein by reference to the discussion under the headings, "DIRECTORS' PROPOSAL TO ELECT DIRECTORS" and "SECURITY

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT," in Bancorp's Proxy Statement for the 2002 Annual Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated herein by reference to the discussion under the heading, "TRANSACTIONS WITH MANAGEMENT AND OTHERS," in Bancorp's Proxy Statement for the 2002 Annual Meeting of Shareholders.

Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) 1.	The following financial statements are included in this Form 10-K:
	Consolidated Balance Sheets—December 31, 2001 and 2000
	Consolidated Statements of Income—years ended December 31, 2001, 2000 and 1999
	Consolidated Statements of Changes in Stockholders' Equity—years ended December 31, 2001, 2000 and 1999
	Consolidated Statements of Comprehensive Income—years ended December 31, 2001, 2000 and 1999
	Consolidated Statements of Cash Flows—years ended December 31, 2001, 2000 and 1999
	Notes to Consolidated Financial Statements
	Independent Auditors' Report
(a) 2.	List of Financial Statement Schedules
	Schedules to the consolidated financial statements of Bancorp are omitted since they are either not required under the related instructions, are inapplicable, or the required information is shown in the consolidated financial statements or notes thereto.
(a) 3.	List of Exhibits
	3.1		Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on January 12, 1988.
	3.2		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on May 8, 1989.
	3.3		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on June 30, 1994.
	3.4		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on April 29, 1998.
	3.5		Bylaws of Bancorp, as amended, currently in effect.
	10.1	*	S.Y. Bancorp, Inc. Stock Option Plan as amended.
	10.2	*	Stock Yards Bank &Trust Company Senior Officers Security Plan adopted December 23, 1980.
	10.3	*	Form of Indemnification agreement between Stock Yards Bank & Trust Company, S.Y. Bancorp, Inc. and each member of the Board of Directors.
	10.4	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and David H. Brooks.

10.5	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and David P. Heintzman.
10.6	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and Kathy C. Thompson.
10.7	*	S.Y. Bancorp, Inc. 1995 Stock Incentive Plan.
10.8	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and David H. Brooks.
10.9	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and David P. Heintzman.
10.10	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and Kathy C. Thompson.
10.11	*	Senior Executive Severance Agreement, as amended, executed in February, 1997 between Stock Yards Bank & Trust Company and Nancy B. Davis.
10.12	*	S.Y. Bancorp, Inc. Amended and Restated 1995 Stock Incentive Plan.
21		Subsidiaries of the Registrant.
23		Independent Auditors' Consent.

*: Indicates matters related to executive compensation.

Copies of the foregoing Exhibits will be furnished to others upon request and payment of Bancorp's reasonable expenses in furnishing the exhibits.

(b): Reports on Form 8-K

None

(c): Exhibits

The exhibits listed in response to Item 14(a) 3 are filed as a part of this report.

(d): Financial Statement Schedules

None

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 12, 2002		S.Y. BANCORP, INC.
		By:	/s/ DAVID H. BROOKS David H. Brooks Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ DAVID H. BROOKS David H. Brooks	Chairman and Chief Executive Officer and Director (principal executive officer)	March 12, 2002
/s/ DAVID P. HEINTZMAN David P. Heintzman	President and Director	March 12, 2002
/s/ NANCY B. DAVIS Nancy B. Davis	Executive Vice President, Secretary, Treasurer and Chief Financial Officer (principal financial and accounting officer)	March 12, 2002
/s/ JAMES E. CARRICO James E. Carrico	Director	March 12, 2002
/s/ JACK M. CROWNER Jack M. Crowner	Director	March 12, 2002
/s/ CHARLES R. EDINGER, III Charles R. Edinger, III	Director	March 12, 2002
/s/ CARL T. FISCHER, JR. Carl T. Fischer, Jr.	Director	March 12, 2002
/s/ STANLEY A. GALL, M.D. Stanley A. Gall, M.D.	Director	March 12, 2002
/s/ BRUCE P. MADISON Bruce P. Madison	Director	March 12, 2002
/s/ JEFFERSON T. MCMAHON Jefferson T. McMahon	Director	March 12, 2002
/s/ NICHOLAS X. SIMON Nicholas X. Simon	Director	March 12, 2002
/s/ NORMAN TASMAN Norman Tasman	Director	March 12, 2002
/s/ KATHY C. THOMPSON Kathy C. Thompson	Executive Vice President and Director	March 12, 2002

Index to Exhibits

Exhibit Number
3.1		Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on January 12, 1988.
3.2		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on May 8, 1989.
3.3		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on June 30, 1994.
3.4		Articles of Amendment to the Articles of Incorporation of Bancorp filed with the Secretary of State of Kentucky on April 29, 1998.
3.5		Bylaws of Bancorp, as amended, currently in effect.
10.1	*	S.Y. Bancorp, Inc. Stock Option Plan as amended.
10.2	*	Stock Yards Bank &Trust Company Senior Officers Security Plan adopted December 23, 1980.
10.3	*	Form of Indemnification agreement between Stock Yards Bank & Trust Company, S.Y. Bancorp, Inc. and each member of the Board of Directors.
10.4	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and David H. Brooks.
10.5	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and David P. Heintzman.
10.6	*	Senior Executive Severance Agreement executed in July, 1994 between Stock Yards Bank & Trust Company and Kathy C. Thompson.
10.7	*	S.Y. Bancorp, Inc. 1995 Stock Incentive Plan.
10.8	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and David H. Brooks.
10.9	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and David P. Heintzman.
10.10	*	Amendment Number One to the Senior Executive Severance Agreement executed in February, 1997 between Stock Yards Bank & Trust Company and Kathy C. Thompson.
10.11	*	Senior Executive Severance Agreement, as amended, executed in February, 1997 between Stock Yards Bank & Trust Company and Nancy B. Davis.
10.12	*	S.Y. Bancorp, Inc. Amended and Restated 1995 Stock Incentive Plan.
21		Subsidiaries of the Registrant.
23		Independent Auditors' Consent.

*: Indicates matters related to executive compensation.

QuickLinks

Documents Incorporated by Reference
S.Y. BANCORP, INC. Form 10-K Index
Part I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

Part II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Part III

Item 10. Directors and Executive Officers of the Registrant

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management

Item 13. Certain Relationships and Related Transactions

Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

ARTICLES OF INCORPORATION

S.Y. BANCORP, INC.

The undersigned incorporator, LEONARD KAUFMAN, executes these Articles of Incorporation for the purpose of forming and does hereby form a corporation under the laws of the Commonwealth of Kentucky in accordance with the following provisions:

ARTICLE I

NAME

The name of the corporation is S.Y. BANCORP, INC. (hereinafter called the "Corporation").

ARTICLE II

PURPOSES

The purpose's of the Corporation are to engage in and to carry on business of a bank holding company and to engage in any or all business enterprises for which corporations may be organized and which the Board of Directors may deem beneficial, profitable and in the best interests of the Corporation, and to do all other things deemed by the Board of Directors to be necessary or desirable in connection with any of the Corporation's businesses.

ARTICLE III

POWERS

The Corporation shall have all the powers conferred upon a corporation organized under the provisions of Chapter 271A of the

The Corporation shall have all the powers conferred upon a corporation organized under the provisions of Chapter 271A of, the Kentucky Revised Statutes and shall have all powers necessary, proper, convenient or desirable in order to fulfill and further the purposes of the Corporation.

ARTICLE IV

DURATION

The Corporation is to have perpetual existence.

ARTICLE V

& PRINCIPAL

REGISTERED OFFICE AND RESIDENT AGENT

The registered and principal office of the Corporation in the Commonwealth of Kentucky is 1040 East Main Street, Louisville, Jefferson County, Kentucky 40206. The resident agent is Leonard Kaufman, 1040 East Main Street, Louisville, Jefferson County, Kentucky 40206.

ARTICLE VI

CAPITAL STOCK

The total number of shares which may be issued by the Corporation is three million (3,000,000) shares of Common Stock having no par value. Every shareholder is entitled to one vote per share and may vote same as provided by law.

ARTICLE VII

PREEMPTIVE RIGHT

Shareholders of the Corporation shall have no preemptive right to acquire unissued or treasury shares of the Corporation or securities convertible into such shares or carrying a right to subscribe to or acquire shares.

ARTICLE VIII

INCORPORATOR

The name and address of the incorporator IS Leonard Kaufman, 1040 East Main Street, Louisville, Jefferson County, Kentucky 40206.

ARTICLE IX

DIRECTORS

The affairs of the Corporation are to be conducted by a Board of Directors of not less than three (3) nor more than twenty five (25) members, the number and their election to be determined in the manner provided in the By-laws. The initial Board of Directors of the Corporation shall consist of three (3) persons who shall serve until the first annual meeting of shareholders or until their successors are elected. The names and addresses of said initial directors are:

Leonard Kaufman David H. Brooks R. Keith Cullinan 1007 Alta Circle 7106 Shefford Lane West 516 Club Lane Louisville, Kentucky 40205 Louisville, Kentucky 40222 Louisville, KY 40207

ARTICLE X

BYLAWS

The Bylaws for the Corporation may be adopted, amended and repealed by the Board of Directors, subject to repeal or change by action of the shareholders.

SIGNED by the Incorporator at Louisville, Kentucky, this 12th day of January, 1988.

/s/ Leonard Kaufman
---------------------------
LEONARD KAUFMAN

THIS INSTRUMENT PREPARED BY:

/s/ M. Brooks Senn
---------------------------

SENN, MILLER & SMITH
607 Portland Building
Louisville, Kentucky 40202
(502) 585-3330

ARTICLES OF AMENDMENT TO THE

ARTICLES OF INCORPORATION OF

S. Y. BANCORP, INC.

Pursuant to the applicable provisions of the Kentucky Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation:

FIRST: The name of the corporation is S.Y. BANCORP, INC. (hereinafter called the "Corporation").

SECOND: The Articles of Incorporation of the Corporation are amended by adding thereto a new Article XI reading in its entirety as follows:

ARTICLE XI

LIABILITY OF DIRECTORS

No director of the corporation shall be personally liable to the Corporation or its shareholders for monetary damages for any breach of his or her duties as a director, except for liability (i) for any transaction in which the director's personal financial interest is in conflict with the financial interests of the Corporation or its share-holders; (ii) 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; (iii) for any vote for or assent to an unlawful distribution to share holders as prohibited under KRS 271B.8-330; or (iv) for any transaction from which the director derived an improper personal benefit.

Any repeal or modification of this Article XI by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such repeal or modification.

THIRD: The date the foregoing Amendment (the "Amendment") was adopted is April 20, 1989.

FOURTH: (a) The Amendment was approved by the shareholders of the Corporation at the Annual Meeting of shareholders called for and held on April 20, 1989 (the "Annual Meeting"), following written notice given to all shareholders of record (whether or not entitled to vote) in the manner and within the time provided for by the Kentucky Business Corporation Act, stating that one of the purposes of the Annual Meeting was to consider the Amendment, a copy of which was enclosed with such notice.

(b) Holders of shares of Common stock, no par value, of the Corporation were entitled to vote on the Amendment, with each share of said Common stock having one vote. The number of shares of said Common stock indisputably represented at the Annual Meeting and the total number of votes cast for and against the Amendment are as follows:

                     Number of Shares   Total        Total       Total
Number of Shares     Represented        Vote         Vote        Vote
Outstanding          at the Meeting     For          Against     Abstain
----------------     --------------     ---          -------     -------
  1,235,220            796,703         729,934       40,900      25,860

DATED: April 25, 1989.

S.Y. BANCORP, INC.

By: /s/ LEONARD KAUFMAN
    ----------------------------------
    Leonard Kaufman, Chairman of
    the Board of Directors and
    Chief Executive Officer

ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF S.Y. BANCORP, INC.

Pursuant to the applicable provisions of the Kentucky Business Corporation Act, S.Y. Bancorp, Inc., a Kentucky corporation (the "Company"), hereby adopts the following Articles of Amendment to its Articles of Incorporation:

FIRST: The name of the corporation is S.Y. Bancorp, Inc.

SECOND: At a meeting of the Board of Directors of the Company duly called and held on January 11, 1994, at which a quorum was present and acting throughout, the following resolutions were duly adopted setting forth and declaring the advisability of proposed amendments to the Articles of Incorporation of the Company:

WHEREAS, the Board of Directors of the Corporation deems it to be in the best interests of the Corporation and its shareholders to amend the Articles of Incorporation (the "Articles") to provide for the classification of the Board of Directors into three classes, with one class to be elected each year, to provide that directors may be removed only for cause, and to require an increased shareholder vote to amend such amendment.

NOW, THEREFORE, BE IT RESOLVED that the Articles of the Corporation be amended by revising Article IX thereof so that, as amended, such Article shall provide in its entirety as follows:

ARTICLE IX

DIRECTORS

SECTION 1. The business and affairs of the corporation shall be managed and conducted by or under the direction of the board of directors. The number of directors of the corporation shall be fixed from time to time by or in the manner provided in the bylaws, but the number thereof shall never be less than nine (9). The directors shall be divided into three classes, each class to consist, as nearly as may be, of one third of the number of directors constituting the whole board. The term of office of those of the first class shall expire at the annual meeting of shareholders to be held in 1995. The term of office of the second class shall expire at the annual meeting of shareholders to be held in 1996. The term of office of the third class shall expire at the annual meeting of shareholders to be held in 1997. At each annual meeting of shareholders following such initial classification and election, directors elected to succeed those directors whose terns have expired shall be elected for a term of office to expire at the third succeeding annual meeting of shareholders following their election. Each director shall be entitled to serve for the term for which he was elected or until his successor shall be elected and qualified, whichever period is longer.

SECTION 2. At a meeting of shareholders called expressly for that purpose, directors shall be removed, but only upon a showing of cause, by a vote of the majority of the shareholders then entitled to vote at the election of directors, provided that if less than the entire Board is removed, no director may be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors. For purposes of this section, "cause" shall mean the participation by a director in any transaction in which his personal financial interests are in conflict with the financial interests of the corporation or its

shareholders; any act or omission not in good faith or which involves intentional misconduct or which is known to a director to be a violation of law; or the participation by a director in any transaction from which the director derived an improper personal benefit.

SECTION 3. Anything contained in these Articles of Incorporation to the contrary notwithstanding (and notwithstanding that a lesser percentage may be specified or permitted by law), the affirmative vote of the holders of at least 66(2)/(3)% of the voting power of all of the then outstanding shares of the corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal any provision of this Article IX.

WHEREAS, the Board of Directors of the Corporation deems it to be in the best interests of the Corporation and its shareholders to amend the Articles to provide for certain increased shareholder voting requirements in connection with certain business combination transactions and to require an increased shareholder vote to amend such amendment.

NOW, THEREFORE, BE IT RESOLVED that the Articles of the Corporation be amended by adding thereto a new Article XII to provide in its entirety as follows:

ARTICLE XII

BUSINESS COMBINATIONS

A. Definitions. For purposes of this Article XII:

1. "Affiliate," including the term "affiliated person," means a person who, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person.

2. "Associate," when used to indicate a relationship with any person, means:

(a) any corporation or organization (other than the Company or any Subsidiary) of which such person is an officer, director or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities;

(b) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and

(c) any relative or spouse of such person, or any relative of such spouse, any one of whom has the same home as such person or is a director or officer of the Company or any of its Affiliates.

3. "Announcement Date" means the first general public announcement of the proposal or intention to make a proposal of a Business Combination or its first communication generally to shareholders of the Company, whichever is earlier.

4. "Beneficial Owner," when used with respect to any Voting Stock, means a person who, individually or with any Affiliate or Associate:

(a) beneficially owns such Voting Stock, directly or indirectly;

(b) has the right to acquire Voting Stock, whether such right is exercisable immediately or only after the passage of time and whether or not such right is exercisable only after specified conditions are net pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants, options or otherwise;

(d) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of Voting Stock with any other person who beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, such shares of Voting Stock.

5. "Book Value" means, as of any date of determination thereof, the consolidated book value of a share of common stock of the Company as determined by the certified public accountants serving or selected by the Company at the time any evaluation is to be made pursuant to this Article XII and shall be computed in accordance with generally accepted accounting principles consistent with computations for prior years of the Company. In computing the book value no allowance of any kind shall be made for good will or other similar intangible assets of the Company.

6. "Business Combination" means:

(a) Unless the merger or consolidation does not alter the contract rights of the stock as expressly set forth in these Articles of Incorporation or change or convert in whole or in part the outstanding shares of stock of the Company, any merger or consolidation of the Company or any Subsidiary with any Interested Shareholder or any other corporation, whether or not itself an Interested Shareholder, which is, or after the merge or consolidation would be, an Affiliate or Associate of an Interested Shareholder who was an Interested Shareholder prior to the transaction;

(b) Any sale, lease, transfer or other disposition, other than in the ordinary course of business, in one transaction or a series of transactions in any twelve month period, to any Interested Shareholder or any Affiliate or Associate of any Interested Shareholder, other than the Company or any Subsidiaries, of any assets of the Company or any Subsidiary having, measured at the time the transaction or transactions are approved by the Board of Directors of the Company, an aggregate book value as of the end of the Company's most recently ended fiscal quarter of 5% or more of the total Market Value of the outstanding stock of the Company or of its net worth as of the end of its most recently ended fiscal quarter;

(c) The issuance or transfer by the Company or any Subsidiary, in one transaction or a series of transactions in any twelve month period, of any Equity Securities of the Company or any Subsidiary which have an aggregate Market Value of 5% or more of the total Market Value of the outstanding stock of the Company, determined as of the end of the Company's most recently ended fiscal quarter prior to the first such issuance or transfer, to any Interested Shareholder or any Affiliate or Associate of any Interested Shareholder, other than the Company or any of its Subsidiaries, except pursuant to the exercise of warrants or rights to purchase securities offered pro rata to all holders of the Company's Voting Stock or any other method affording substantially proportionate treatment to the holders of Voting Stock;

(d) The adoption of any plan or proposal for the liquidation or dissolution of the Company in which anything other than cash will be received by an Interested Shareholder or any Affiliate or Associate of any Interested Shareholder;

(e) Any reclassification of securities, including any reverse stock split; or recapitalization of the Company; or any merger or consolidation of the Company with any of its Subsidiaries; or any other transaction which has the effect, directly or indirectly, in one transaction or a series of transactions, of increasing by 5% or more the proportionate amount of the outstanding shares of any class of Equity Securities of the Company or any Subsidiary which is directly or indirectly beneficially owned by any Interested Shareholder or any Affiliate or Associate of any Interested Shareholder; or

(f) Any receipt by an Interested Shareholder or any Affiliate or Associate of such Interested Shareholder of the benefit, directly or indirectly, except proportionately as a shareholder of the Company, of any loans, advances, guaranties, pledges or other financial assistance, or any tax credits or other tax advantages provided by or through the Company.

7. "Continuing Director" means any member of the Board of Directors who is not an Affiliate or Associate of an Interested Shareholder or any of its Affiliates, other than the Company or any Subsidiary, and who was a director of the Company prior to the time the Interested Shareholder became an Interested Shareholder, and any other member of the Board of Directors who is not an Affiliate or Associate of an Interested Shareholder or any of its Affiliates, other than the Company or any Subsidiary, and was recommended or elected by a majority of the Continuing Directors at a meeting at which a quorum consisting of a majority of the Continuing Directors was present.

8. "Determination Date" means the date on which an Interested Shareholder first became an Interested Shareholder.

9. "Equity Security" means:

(a) any stock or similar security, certificate of interest, or participant in any profit sharing agreement, voting trust certificate, or certificate of deposit for the foregoing;

(b) any security convertible, with or without consideration, into an equity security, or any warrant or other security carrying any right to subscribe to or purchase an equity security; or

(c) any put, call, straddle, or other option, right or privilege of acquiring an equity security from or selling an equity security to another without being bound to do so.

10. "Independent Member" of the board of directors means any director who is not an officer or full time employee of the Company or an Affiliate or Associate of an Interested Shareholder or any of its Affiliates.

11. "Interested Shareholder" means any person, other than the Company or any Subsidiary, who:

(a) is the Beneficial Owner, directly or indirectly, of 20% or more of the voting power of the outstanding Voting Stock of the Company; or

(b) is an Affiliate of the Company and at any time within the three year period immediately prior to the date in question was the Beneficial Owner, directly or indirectly, of 20% or more of the voting power of the then outstanding Voting Stock of the Company.

For the purpose of determining whether a person is an Interested Shareholder, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned by the person through application of paragraph 4 of this Section A but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants, options or otherwise. The term "interested shareholder" shall not mean any entity or person holding or owning Voting Stock for, or through participation in, any purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, pension, stock ownership or similar plan for employees or officers of the Company or any Subsidiaries.

12. "Market Value" means:

(a) in the case of stock, the highest closing sale price during the 30 calendar day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange listed stocks, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30 calendar day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotation is available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors at a meeting of the Board of Directors at which a quorum consisting of at least a majority of the then Continuing Directors is present; and

(b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Continuing Directors at a

meeting of the Board of Directors at which a quorum consisting of at least a majority of the then Continuing Directors is present.

13. "Subsidiary" means any corporation of which voting stock having a majority of the votes entitled to be cast is owned, directly or indirectly, by the Company.

14. "Valuation Date" means:

(a) for a Business Combination voted upon by shareholders, the later of the day prior to the date of the shareholders' vote or the date 20 business days prior to the consummation of the Business Combination; and

(b) for a Business Combination not voted upon by shareholders, the date of the consummation of the Business Combination.

15. "Voting Stock" means shares of capital stock of the Company entitled to vote generally in an election of directors.

B. MINIMUM SHARE VOTE REQUIREMENTS. In addition to any affirmative vote otherwise required by law or these Articles of Incorporation (and notwithstanding that a lesser percentage may be specified by law or these Articles of Incorporation) and except as otherwise expressly provided in
Section C of this Article XII, any Business Combination shall require the recommendation of the Board of Directors and the affirmative vote of the holders of at least (i) 80% of the voting power of the then outstanding Voting Stock of the Company, voting together as a single class, and (ii) two thirds of the voting power of the then outstanding Voting Stock of the Company other tan Voting Stock beneficially owned by the Interested Shareholder who is, or whose Affiliate is, a party to the Business Combination or by and Affiliate or Associate of such Interested Shareholder, voting together as a single class.

C. EXEMPTIONS FROM MINIMUM SHARE VOTE REQUIREMENTS. The provisions of
Section B of this Article XII shall not be applicable to any Business Combination, and such Business Combination shall require only such affirmative vote (if any) as is required by law or any other provisions of these Articles of Incorporation, if all conditions specified in either of the following paragraphs 1 or 2 are met:

1. The Business Combination shall have been approved by a resolution adopted by a majority of the Continuing Directors at a meeting of the Board of Directors at which a quorum consisting of at least a majority of the then Continuing Directors was present; or

2. Each of the following three conditions have been met:

(a) The aggregate amount of cash and the Market Value as of the Valuation Date of consideration other than cash to be received per share by shareholders in such Business Combination is at least equal to the higher of the following:

(i) the highest per share price paid by such Interested Shareholder for any shares of stock acquired by it (X) within the three year period immediately prior to the Announcement Date with respect to such Business Combination, or (Y) within the three year period immediately prior to, or in, the transaction in which such Interested Shareholder became an Interested Shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which such highest per share acquisition price was paid through the consummation date of the Business Combination at the rate for one year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of stock since such earliest date, up to the amount of such interest; and

(ii) a multiple of Book Value of the Company equal to the highest such multiple paid by such Interested Shareholder for any shares of stock acquired by it (XX) within the three year period immediately prior to the Announcement Date with respect to such Business Combination, or (YY) within the three year period immediately prior to or in, the transaction in which such Interested Shareholder became an Interested Shareholder, whichever is higher, times the Book Value per common share of the Company determined as of the Valuation Date.

(b) The consideration to be received by shareholders in such Business Combination is in cash or in the same form as the Interested Shareholder has used to acquire the largest number of shares previously acquired by it.

(c) The holders of all outstanding shares of stock not beneficially owned by such Interested Shareholder immediately prior to the consummation of such Business Combination are entitled to receive in such Business Combination cash or other consideration fro such shares in compliance with clauses (a) and (b) of this paragraph.

D. RESTRICTION ON BUSINESS COMBINATIONS. Notwithstanding anything to the contrary contained in these Articles of Incorporation or the Kentucky Business Corporation Act, the Company shall not engage in any Business Combination with any entity or person who is at the time of such Business Combination an Interested Shareholder prior to January 11, 1994, for a period of three years following the Determination Date unless such Business Combination or the Transaction in which the Interested Shareholder became an Interested Shareholder is approved by a majority of the Independent Members of the board of directors of the Company prior to the Determination Date.

E. AMENDMENT OR REPEAL. Notwithstanding any requirements of law or any other provisions of these Articles of Incorporation (and notwithstanding that a lesser percentage may be specified by law or these Articles of Incorporation), the affirmative vote of the holders of at least (i) 80% of the voting power of the then outstanding Voting Stock if the Company, voting together as a single class, and (ii) two thirds of the voting power of the then outstanding Voting

Stock of the Company which is not beneficially owned by any Interested Shareholder, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article XII.

Third: Pursuant to the aforesaid resolutions of the Board of Directors, the foregoing amendments were presented to the shareholders of the Company for their consideration and vote at the annual meeting of shareholders duly called and held on April 27, 1994. There were 1,461,350 outstanding shares of common stock of the Company entitles to vote at such annual meeting, and the holder of each share was entitled to cast one vote on each of the foregoing amendments. There were 899,173 shares of common stock indisputably represented at the annual meeting in person or by proxy. A total of 800,838 undisputed votes were cast by the holders of common stock for the proposed amendment to Article IX to classify the Board of Directors into three classed; a total of 804,015 undisputed votes were cast by the holders of common stock for the proposed amendment to Article IX to provide that directors may be removed only for cause; and a total of 820,405 undisputed votes were cast by the holders of common stock for the proposed amendment adding Article XII. In each case, the number of votes cast for the amendment was sufficient for its approval by the holders of the outstanding common shares, and the amendments were duly adopted by the shareholders.

Fourth: The amendments do not provide for an exchange, reclassification or cancellation of issued shares of stock of the Company.

IN TESTIMONY WHEREOF, these Articles of Amendment have been executed on behalf of the undersigned corporation, by and through its duly authorized officer, this second day of June, 1994.

S.Y. Bancorp, Inc.

By: /s/ David P. Heintzman
    ------------------------------
David P. Heintzman, President

THIS INSTRUMENT PREPARED BY:

/s/ C. Craig Bradley, Jr.
----------------------------------
C. Craig Bradley, Jr.
STITES & HARBISON
400 W. Market Street, Suite 1800
Louisville, Kentucky 40202-3352

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF S.Y. BANCORP, INC.

Pursuant to the applicable provisions of the Kentucky Business Corporation Act, S.Y. BANCORP, INC., a Kentucky corporation (the "Company"), hereby adopts the following Articles of Amendment to its Articles of Incorporation:

FIRST: The name of the corporation is S.Y. Bancorp, Inc.

SECOND: At a meeting of the Board of Directors of the Company duly called and held on February 10, 1998, at which a quorum was present and acting throughout, the following resolution was adopted setting forth and declaring the advisability of a proposed amendment to the Articles of Incorporation of the Company:

WHEREAS, the Board of Directors of the Corporation deems it to be advisable and in the best interests of the Corporation and its shareholders to amend the Articles of Incorporation (the "Articles") to increase the number of authorized shares of common stock which the Corporation may issue from time to time for its lawful corporate purposes.

NOW, THEREFORE, BE IT RESOLVED that the Articles of the Corporation be amended by revising Article VI thereof so that, as amended, such Article shall provide in its entirety as follows:

ARTICLE VI

CAPITAL STOCK

"The total number of shares which may be issued by the Corporation is ten million (10,000,000) shares of Common Stock having no par value. Every shareholder is entitled to one vote per share and may vote same as provided by law."

THIRD: Pursuant to the aforesaid resolution of the Board of Directors, the foregoing amendment was presented to the shareholders of the Company for their consideration and vote at the annual meeting of shareholders duly called and held on April 22, 1998. There were 3,290,082 outstanding shares of common stock of the Company entitled to vote at such annual meeting, and the holder of each share was entitled to cast one vote on the foregoing amendment. There were 2,756,775 shares of common stock indisputably represented at the annual meeting in person or by proxy. A total of 2,695,654 undisputed votes were cast by the holders of common stock for the proposed amendment, which was sufficient for its approval by the holders of the outstanding common shares, and the amendment was duly adopted by the shareholders.

FOURTH: The amendment does not provide for an exchange, reclassification or cancellation of issued shares of stock of the Company.

IN TESTIMONY WHEREOF, these Articles of Amendment have been executed on behalf of the undersigned corporation, by and through its duly authorized officer, this 28th day of April, 1998.

S.Y. BANCORP, INC.

By: /s/ David P. Heintzman
   -------------------------------
     David P. Heintzman, President

THIS INSTRUMENT PREPARED BY:

/s/ C. Craig Bradley, Jr.
---------------------------

C. Craig Bradley, Jr.
STITES & HARBISON
400 W. Market Street, Suite 1800
Louisville, Kentucky 40202-3352

EXHIBIT 3.5

BYLAWS

S.Y. BANCORP, INC.

ADOPTED: JANUARY 14, 1988

AMENDED: AUGUST 8, 1988

AMENDED: FEBRUARY 4, 1992

AMENDED: MARCH 14, 1995

AMEMDED MARCH 12,2002

TABLE OF CONTENTS

ARTICLE I
IDENTIFICATION

Section 1.01.        Name                                                           5

Section 1.02.        Registered and Other Offices                                   5

Section 1.03.        Seal                                                           5

Section 1.04.        Fiscal Year                                                    5
                                   ARTICLE II

                                  CAPITAL STOCK

Section 2.01.        Payment for Shares                                             5

Section 2.02.        Certificates Representing Shares                               5

Section 2.03.        Transfer of Shares                                             6

Section 2.04.        Lost, Destroyed or Stolen Certificates                         6

                                   ARTICLE III

                                  SHAREHOLDERS
Section 3.01.        Place of Meetings                                              6

Section 3.02.        Annual Meeting                                                 6

Section 3.03.        Special Meetings                                               7

Section 3.04.        Notice of Meetings -Waiver                                     7

Section 3.05.        Quorum                                                         7

Section 3.06.        Closing of Transfer Books and Fixing of Record Date            7

Section 3.07.        Voting List                                                    7

Section 3.08.        Proxies                                                        8

Section 3.09.        Voting of Shares                                               8

Section 3.10.        Voting of Shares by Certain Holders                            8

Section 3.11.        Cumulative Voting                                              8

Section 3.12.        Shareholder Action Without a Meeting                           8

Section 3.13.        Nomination of Directors                                        9

Section 13.14.       Notice of Shareholder Business                                 9

ARTICLE IV

THE BOARD OF DIRECTORS

Section 4.01.        General Powers, Number and Election                           10

Section 4.02.        Qualifications and Emeritus Directors                         11

Section 4.03.        Vacancies and Additional Directors                            11

Section 4.04.        Removal of Directors                                          11

Section 4.05.        Place of Meetings                                             11

Section 4.06.        Organization and Regular Meetings                             11

Section 4.07.        Special Meetings -Notice                                      11

Section 4.08.        Quorum                                                        12

Section 4.09.        Manner of Acting                                              12

Section 4.10.        Director Action without a Meeting                             12

Section 4.11.        Compensation                                                  12

Section 4.12.        Standing and Special Committees                               12

Section 4.13.        Executive Committee                                           12

                                    ARTICLE V

                                    OFFICERS

Section 5.01.        Executive and Other Officers                                  12

Section 5.02.        Election and Term of Office                                   13

Section 5.03.        Vacancies                                                     13

Section 5.04.        Chairman of the Board                                         13

Section 5.05.        President                                                     13

Section 5.06.        Vice Presidents                                               13

Section 5.07.        Secretary                                                     13

Section 5.08.        Cashier                                                       13

Section 5.09.        Transfer of Authority                                         13

Section 5.10.        Authority of Officers                                         13

ARTICLE VI

INDEMNIFICTION

Section 6.01.        Indemnification                                               14

Section 6.02.        Right to Indemnification                                      14

Section 6.03.        Right to Indemnification -Successful Defense                  15

Section 6.04.        Advance Expenses                                              15

Section 6.05.        Conduct of Litigation                                         15

Section 6.06         Indemnification -Officers and Employees                       15

Section 6.07         Indemnification Not Exclusive                                 15

Section 6.08         Report to Shareholders                                        16

Section 6.09         Insurance                                                     16

Section 6.10         Definitions and Construction                                  16

                                   ARTICLE VII

                                EMERGENCY BYLAWS

Section 7.01.        Existence and Effect of Emergency                             17

Section 7.02.        Emergency Powers                                              17

Section 7.03.        Actions During Emergency                                      17

Section 7.04.        Amendments                                                    17

                                  ARTICLE VIII

                                   AMENDMENTS

Section 8.01.        Method                                                        18

BYLAWS OF S.Y. BANCORP, INC.

ARTICLE I

IDENTIFICATION

SECTION 1.01. NAME. The name of the corporation is S.Y. BANCORP, INC. (the "Corporation").

SECTION 1.02. REGISTERED AND OTHER OFFICES. The address of the registered office and principal office of the Corporation is 1040 East Main Street, Louisville, Kentucky 40206. The Board of Directors, from time to time, shall designate a registered agent of the Corporation whose business office is identical with such registered office and may establish and maintain branch offices or other facilities for the conduct of the business of the Corporation at other locations.

SECTION 1.03. SEAL. The Board of Directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and other appropriate wording, provided, that the presence or absence of such seal on or from a writing shall neither add to or detract from the legality thereof or affect its validity in any manner or respect.

SECTION 1.04. FISCAL YEAR. The fiscal year of the Corporation shall begin on the first day of January and end on the last day of December of each year, but may be changed by resolution of the Board of Directors.

ARTICLE II

CAPITAL STOCK

SECTION 2.01. PAYMENT FOR SHARES. The consideration for the issuance of shares by the Corporation may be paid only by an equivalent in money paid or labor done, or property actually received and applied to the purpose for which the Corporation was created. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable. Neither labor nor property shall be received in payment of consideration for the issuance of shares of the Corporation at a greater value than the market price at the time such labor was done or property delivered. In the absence of fraud in the transaction, the judgment of the Board of Directors as to the market price of the consideration received for shares shall be conclusive unless the person questioning the market value shall, by a clear preponderance of the evidence, establish a different market price. No certificate shall be issued for any share until such share is fully paid.

SECTION 2.02. CERTIFICATES REPRESENTING SHARES. Certificates representing shares of the Corporation shall be in such form as may be determined, from time to time, by the Board of Directors. Such certificates shall (a) bear the facsimile signatures of any two officers of the Corporation; (b) be sealed with the facsimile seal of the Corporation; and (c) bear the manual signature of the transfer agent and registrar of the Corporation appointed from time to time by the Board of Directors of the Corporation. All certificates shall be consecutively numbered and shall state on the face thereof that the Corporation is organized under the laws of the Commonwealth of Kentucky, the name of the person to whom issued, the number and class of shares, the designation of the series, if any, which such certificate represents and the par value of each share represented by such certificates or the fact that such shares have no par value. (Amended August 8, 1988)

SECTION 2.03. TRANSFER OF SHARES. The Corporation shall register a transfer of a certificate evidencing shares of the Corporation presented to it for transfer if:

(a) The certificate is properly endorsed by the registered holder or by his duly authorized agent and surrendered to the Corporation for cancellation;

(b) Reasonable assurance is given the Corporation that the endorsements are genuine and effective;

(d) Any applicable law relating to the collection of taxes has been complied with.

SECTION 2.04. LOST, DESTROYED, OR STOLEN CERTIFICATES. The Corporation shall issue a new certificate in the place of the original certificate when the holder of record of the certificate:

(a) Makes proof in affidavit form that it has been lost, destroyed, or wrongfully taken;

(b) Requests the issuance of a new certificate before the Corporation has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of any adverse claim;

(c) Furnishes to the Corporation a bond in such form and amount, and with such surety or sureties, as the Corporation may require indemnifying the Corporation against any claim that may be made on account of the alleged loss, destruction or wrongful taking of the Certificate; and

(d) Satisfies any other reasonable requirements imposed by the Corporation.

ARTICLE III

SHAREHOLDERS

SECTION 3.01. PLACE OF MEETINGS. The Board of Directors may designate any place within or without the Commonwealth of Kentucky as the place of meeting for the annual or any special meeting of shareholders called by the Board of Directors. If no designation is made, or if a special meeting of shareholders is called or ordered held by any person other than the Board of Directors, the place of the meeting shall be the principal office of the Corporation in the Commonwealth of Kentucky.

SECTION 3.02. ANNUAL MEETING. The annual meeting of shareholders shall be held within the first 180 calendar days of each year, on such date and at such time and place as the Board of Directors shall determine for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the date designated for any annual meeting, or any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of shareholders held as soon thereafter as may be convenient. If an annual meeting is not held within any eighteen (18) month period, the circuit court of the county where the registered office of the Corporation is located may, on the application of any shareholder, summarily order a meeting to be held.

SECTION 3.03. SPECIAL MEETINGS. Special meetings of the shareholders may be called by the chief executive officer of the Corporation, by the Board of Directors or any member thereof or by the holders of not less than one-fifth (1/5) of all the shares entitled to vote at such meeting.

SECTION 3.04. NOTICE OF MEETINGS -WAIVER. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the chief executive officer of the Corporation or Secretary of the Corporation or the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the records of the Corporation with postage thereon prepaid. Notice of any shareholders' meeting may be waived in writing by any shareholder at any time before or after the meeting. Attendance by a shareholder, without objection as to notice, whether in person or by proxy, at a shareholders' meeting shall constitute a waiver of notice of the meeting.

SECTION 3.05. QUORUM. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders. If less than a majority of the shares entitled to vote are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice except if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given. The shareholders present at a duly organized meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

SECTION 3.06. CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATE. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in the case of a meeting of shareholders, not less than ten (10) days prior to the date of which the particular action requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of share- holders entitled to notice of or to vote at a meeting of share- holders, or shareholders entitled to receive payment of a dividend, the first day on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination shall apply to any adjournment thereof.

SECTION 3.07. VOTING LIST. The Secretary of the Corporation shall make a complete record of the shareholders entitled to vote at any meeting of shareholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for

the purposes thereof. Failure to comply with the requirements of this section shall not affect the validity of any action taken at the meeting.

SECTION 3.08. PROXIES. At all meetings of shareholders, a shareholder may vote either in person or by proxy executed in writing by the shareholder or his duly authorized attorney-in-fact filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy, but in no event shall a proxy, unless coupled with an interest, be voted on after three (3) years from the date of its execution. The revocation of the proxy shall not be effective until the Secretary of the Corporation has received written notice of the revocation.

SECTION 3.09. VOTING OF SHARES. Except as otherwise provided in the Articles of Incorporation of the Corporation and subject to the provisions of
Section 3.11 of these Bylaws, each outstanding share of the capital stock of the Corporation shall be entitled to one (1) vote on each matter submitted to vote at a meeting of shareholders

SECTION 3.10. VOTING OF SHARES BY CERTAIN HOLDERS. At all meetings of shareholders:

(a) Shares of the Corporation standing in the name of another corporation, domestic or foreign, may be voted by either the president of such corporation or by proxy appointed by him unless some other person produces a certified copy of a resolution of the Board of Directors of such other corporation authorizing such other person to vote such shares.

(b) Shares of the Corporation held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but such trustee shall not be entitled to vote shares held by him unless such shares are transferred into his name.

(c) Shares of the Corporation held jointly by three (3) or more fiduciaries acting under an instrument becoming effective after June 30, 1946, shall be voted in a manner determined by the majority of such fiduciaries unless the instrument or order appointing the fiduciaries otherwise directs.

(d) Shares of the Corporation standing in the name of a receiver may be voted by such receiver and such shares held by or under the control of a receiver may be voted by such receiver without transfer thereof unto his name if authority so to do be obtained in an appropriate order of the court by which such receiver was appointed.

(e) A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

SECTION 3.11. CUMULATIVE VOTING. At each election for directors, each shareholder of the Corporation entitled to vote at such election shall have the right to cast, in person or by proxy, as many votes in the aggregate as he shall be entitled to vote, multiplied by the number of directors to be elected at such election; and each shareholder may cast the whole number of votes for one candidate, or distribute such votes among two or more candidates.

SECTION 3.12. SHAREHOLDER ACTION WITHOUT A MEETING. Any action required to be taken at a meeting of shareholders of the Corporation, or any action which may be taken at a meeting of such shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same effect as an unanimous

vote of shareholders, and may be stated as such in any articles or documents filed with the Secretary of State of Kentucky.

SECTION 3.13. NOMINATION OF DIRECTORS.

(1) Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as Directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of shareholders (a) by or at the direction of the Board of Directors or (b) by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.13, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set for the in this Section 3.13.

(2) Nominations by shareholders shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation (a) in the case of an annual meeting, not less than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than 30 days from such anniversary date, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made, and (b) in the case of a special meeting at which directors are to be elected, not later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to the shareholder giving the notice (i) the name and address, as they appear on the corporation's books, of such shareholder and (ii) the class and number of shares of the corporation which are beneficially owned by such shareholder and also which are owned of record by such shareholder; and (c) as to the beneficial owner, if any, on whose behalf the nomination is made, (i) the name and address of such person and (ii) the class and number of shares of the corporation which are beneficially owned by such person. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee.

(3) No person shall be eligible to serve as a director of the corporation unless nominated in accordance with the procedures set forth in this Section
3.13. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provision of this Section 3.13, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulation thereunder with respect to the mattes set forth in this Section 3.13.

SECTION 3.14. NOTICE OF SHAREHOLDER BUSINESS.

(1) At an annual meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting (a) pursuant to the corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the corporation who is a shareholder of record a the time of giving of the notice provided for in this Section 3.14, who shall be entitled to vote at such meeting and who complies with the notice procedures set fort in this Section 3.14.

(2) For business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (1) on this Section 3.14, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the meeting is changed by more than 30 days from such anniversary date notice by the shareholder to be timely must be received no later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conduct such business at the meeting, (b) the name and address, as they appear on the corporation's books, of the shareholder proposing such business, and the name and address of the beneficial owner, if any, one whose behalf the proposal is made, (c) the class and number of shares of the corporation which are owned beneficially and of record by such shareholder of record and by the beneficial owner, if any, on whose behalf the proposal is made and (d), any material interest of such shareholder of record and the beneficial owner, if any, on whose behalf the proposal is made in such business.

(3) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 3.14. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures described by these Bylaws, and if he should so determine, he shall so declare to the meeting any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing, provision of this Section 3.14, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1964, as amended and the rules and regulation thereunder with respect to the matters set forth in this Section 3.14.

ARTICLE IV

THE BOARD OF DIRECTORS

SECTION 4.01. GENERAL POWERS, NUMBER AND ELECTION. The business and affairs of the Corporation shall be managed by a Board of Directors of not less than three (3) nor more than twenty-five (25) directors who shall be elected at each annual meeting of shareholders of the Corporation to hold office until the next succeeding annual meeting and until their successors shall have been elected and qualified within the limits specified in the preceding sentence, the number of directors to be elected at each annual meeting of shareholders may be fixed, from time to time, by resolution adopted by the Board of Directors prior to the giving of

notice of such meeting as provided in Section 3.04 of these Bylaws; PROVIDED that (a) any such resolution of the Board of Directors fixing the number of directors to be so elected shall be subject to any later resolution adopted by the shareholders of the Corporation at such annual meeting, or (b) if the number of directors to be elected at any annual meeting is not fixed by the Board of Directors, the number of directors to be so elected shall be fixed by the shareholders at such annual meeting.

SECTION 4.02. QUALIFICATIONS AND EMERITUS DIRECTORS. (a) No person shall be eligible for election as a director of the Corporation if he or she has attained the age of seventy (70) years on the date of the annual meeting of shareholders at which he or she would be nominated for election or reelection.

(b) A director of the Corporation who shall become ineligible for reelection by reason of his or her attaining the age of seventy (70) years shall, upon expiration of his or her term of office during which he or she attained such age, be an emeritus director of the Corporation. He or she shall be eligible to attend all meetings of the Board of Directors and provide general policy advice thereto but shall not be authorized to vote on any matter coming before the Board of Directors. An emeritus director shall receive such compensation as may be determined, from time to time, by resolution of the Board of Directors.

SECTION 4.03. VACANCIES AND ADDITIONAL DIRECTORS. (a) Any vacancy occurring in the Board of Directors by reason of the death, resignation, disqualification or inability to act of any director may be filled by the affirmative vote of the majority of the remaining directors even though less than a quorum of the Board of Directors. A director elected to fill any such vacancy shall be elected for the unexpired term of his predecessor in office.

(b) The Board of Directors may, from time to time but within the limits specified in Section 4.01 of these Bylaws, increase the number of directors of the Corporation, and any directorship to be filled by reason of such increase may be filled by the affirmative vote of a majority of the full Board of Directors for a term of office continuing until the next annual meeting of shareholders.

SECTION 4.04. REMOVAL OF DIRECTORS. At a meeting of share- holders called expressly for that purpose, directors shall be removed, with or without cause, by a vote of the majority of the shareholders then entitled to vote at the election of directors, provided that if less than the entire Board is removed, no director may be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors.

SECTION 4.05. PLACE OF MEETINGS. All meetings of the Board of Directors shall be held at the principal office of the Corporation.

SECTION 4.06. ORGANIZATION AND REGULAR MEETINGS. The organization meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after and at the same place as the annual meeting of shareholders for the purpose of organization, election of officers, appointment of committees and consideration of such other business as may properly come before the meeting. Regular quarterly meetings of the Board of Directors shall be held, without notice other than this Bylaw, at 3:30 P.M. (local time) on the first Tuesday of March, June, September and December of each year. The Board of Directors may, by resolution, change the date or time of such regular quarterly meetings and may provide, by resolution, the date and time for the holding of additional regular meetings of the Board of Directors, such changed or additional regular meetings to be held without notice other than such resolution.

SECTION 4.07. SPECIAL MEETINGS - NOTICE. Special meetings of the Board of Directors may be called by the chief executive officer of the Corporation, the President or any director of the Corporation. Notice of any special meeting shall be given by word of mouth,

letter, telegram, cable or radiogram received not later than during the day immediately preceding the day of the meeting. Any director may waive notice of any special meeting. The attendance of a director at any special meeting shall constitute a waiver of notice of such meeting, except where a director attends such meeting for the express purpose of objecting to the trans- action of any business because the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any special meeting of the Board of Directors, need be specified in the notice or waiver of notice of such meeting.

SECTION 4.08. QUORUM. A majority of the members of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that if less than a majority of the directors are present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.

SECTION 4.09. MANNER OF ACTING. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act by a greater number is required by statute, the Articles of Incorporation or these Bylaws.

SECTION 4.10. DIRECTOR ACTION WITHOUT A MEETING. Any action required to be taken at a meeting of the directors of the Corporation, or any action which may be taken at a meeting of the Board of Directors or of a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall have the same effect as an unanimous vote.

SECTION 4.11. COMPENSATION. Directors, as such, shall not receive any stated salaries for their services, but the Board of Directors may, by resolution, from time to time determine the amount, manner and conditions of payment of compensation payable to directors for their services and for attendance at meetings of the Board of Directors or committees thereof. Nothing in this section shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore.

SECTION 4.12. COMMITTEES. The Board of Directors may, from time to time, appoint such committees as it may deem necessary or appropriate with such powers and duties as may be provided in the resolution appointing such committees.

SECTION 4.13. EXECUTIVE COMMITTEE. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an Executive Committee which, to the extent provided for in such resolution, shall have and may exercise all the authority of the Board of Directors or any standing or special committee thereof, but the Executive Committee so designated shall not have any authority to amend the articles of incorporation of the Corporation, adopt a plan of merger or consolidation, recommend to the shareholders the sale, lease, exchange or other disposition of all or substantially all the property and assets of the Corporation otherwise than in the usual and regular course of its business, recommend to the shareholders a voluntary dissolution of the Corporation or a revocation thereof or amend the Bylaws of the Corporation.

ARTICLE V

OFFICERS

SECTION 5.01. EXECUTIVE AND OTHER OFFICERS. The officers of the Corporation shall consist of a President, Secretary, a Treasurer and such Vice Presidents and other officers as the Board of Directors may, from time to time, elect with such authority and duties as the Board of Directors may determine. The Board of Directors may also elect a Chairman of the Board and create and elect such assistant officers as it may from time to time determine.

SECTION 5.02. ELECTION AND TERM OF OFFICE. The President, Secretary, and Treasurer of the Corporation shall be elected at the organization meeting of the Board of Directors as provided in Sections 4.06 of these Bylaws. All other officers of the Corporation may be elected at such organization meeting or at any regular or special meeting of the Board of Directors. All officers of the Corporation shall serve at the pleasure of the Board of Directors and may be removed by the Board of Directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the con- tract rights, if any, of the person so removed. Election of an officer shall not of itself create contract rights.

SECTION 5.03. VACANCIES. Whenever any vacancy occurs in the office of President, Secretary or Treasurer by death, resignation, removal or otherwise, such vacant office shall be filled by the Board of Directors as soon as convenient at any regular or special meeting of the Board of Directors.

SECTION 5.04. CHAIRMAN OF THE BOARD. If the Board of Directors elects a Chairman of the Board, he shall, if so designated by the Board of Directors at the time of his election, be the chief executive officer of the Corporation. In such event, the Chairman of the Board, subject to the control of the Board of Directors, shall have general charge of the business affairs and property of the Corporation and control over and supervision of its several officers. He shall preside at all meetings of the shareholders and of the Board of Directors at which he shall be present, discharge all the duties that devolve upon a presiding officer and perform such other duties as the Bylaws provide or the Board of Directors may prescribe.

SECTION 5.05. PRESIDENT. If a Chairman of the Board is not elected by the Board of Directors or, if at the time of his election, is not designated as chief executive officer of the Corporation, then the President shall be the chief executive officer of the Corporation and shall have all the powers and duties specified in Section 5.04 of this Article V. If a Chairman of the Board is elected by the Board of Directors and designated chief executive officer of the Corporation, the President shall have such powers and perform such duties as the Bylaws provide or the Board of Directors may prescribe.

SECTION 5.06. VICE PRESIDENTS. All Vice Presidents elected by the Board of Directors shall perform such duties as the Board of Directors or the chief executive officer of the Corporation may prescribe.

SECTION 5.07. SECRETARY. The Secretary shall attend all meetings of the shareholders and of the Board of Directors and shall keep, or cause to be kept, in a book provided for such purpose, a true and complete record of the proceedings of such meetings. He shall be custodian of the records and the seal of the Corporation and see that the seal is affixed to all documents, the execution of which on behalf of the Corporation under its seal may be required. He shall attend to the giving of all notices and shall perform such other duties as the Board of Directors or the chief executive officer of the Corporation may prescribe.

SECTION 5.08. TREASURER. The Treasurer shall be the chief financial officer of the Corporation and, in general, perform all duties and have all powers incident thereto and shall perform such other duties as the Board of Directors or the chief executive officer of the Corporation may prescribe.

SECTION 5.09. TRANSFER OF AUTHORITY. In case of the absence of any officer of the Corporation or for any other reason that the Board of Directors may deem sufficient, the Board of Directors, by the majority vote of the full Board of Directors, may transfer the powers or duties of that officer to any other officer or to any director or employee of the Corporation.

SECTION 5.10. AUTHORITY OF OFFICERS. All officers of the Corporation elected as such by the Board of Directors are each vested with the full authority to transact for, and in the

name of the Corporation, all matters incident to the business of the Corporation including, without limitation, the authority to:

(a) Execute deeds, contracts and other instruments in writing;

(b) Sign checks and drafts of the Corporation;

(d) Vote, in person or by proxy, any stock standing in the Corporation's name, except that such stock shall not be voted in any manner whatsoever contrary to specific instructions contained in a resolution adopted by the Board of Directors of the Corporation.

ARTICLE VI

INDEMNIFICATION AND INSURANCE

SECTION 6.01. INDEMNIFICATION. The Corporation shall indemnify any person made a party to any proceeding by reason of the fact that he is or was a director of the Corporation if (a) he conducted himself in good faith; and (b) he reasonably believed (1) in the case of conduct in his official capacity with the Corporation, that his conduct was in its best interests; and (2) in all other cases, that his conduct was at least not opposed to the Corporation's best interests; and (3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Indemnification shall be made against judgments, penal- ties, fines, settlements and reasonable expenses actually incurred by the person in connection with the proceeding, except that if the proceeding was by or in the right of the Corporation, indemnification may be made only against such reasonable expenses and shall not be made in respect of any proceeding in which the person shall have been adjudged to be liable to the Corporation. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, be determinative that the person did not meet the requisite standard of conduct as set forth in this section; PROVIDED, that a director shall not be indemnified under this section in respect of any proceeding charging improper personal benefit to the director, whether or not involving action in his official capacity, in which he shall have been adjudged to be liable on the basis that personal benefit was improperly received by him.

SECTION 6.02 RIGHT TO INDEMNIFICATION. No indemnification under Section 6.01 of this Article VI shall be made by the Corporation unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in Section 6.01. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or (b) if such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding; or (c) by special legal counsel selected by the Board of Directors or a committee thereof by vote as set forth in clauses (a) or (b) of this section, or if the requisite quorum of the full board cannot be obtained therefor and such committee cannot be established, by a majority vote of the full board (in which selection directors who are parties may participate); or (c) by the shareholders. Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in a manner specified in clause (c) of this section in the preceding

sentence for the selection of such counsel. Shares held by directors who are parties to the proceeding shall not be voted on the subject matter under this section.

SECTION 6.03. RIGHT TO INDEMNIFICATION -SUCCESSFUL DEFENSE. A director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in Section 6.01, shall be indemnified by the Corporation against reasonable expenses incurred by him in connection with the proceeding.

SECTION 6.04. ADVANCE EXPENSES. Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the Corporation in advance of the final disposition of such proceeding upon receipt by the Corporation of: (a) a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification by the Corporation as authorized in this Article VI, and (b) a written undertaking by or on behalf of the director to repay such amount if it shall ultimately be determined that he has not met such standard of conduct, and after a determination that the facts then known to those making the determination would not preclude indemnification under this Article VI. If requested by the Board of Directors in its discretion, the undertaking required by clause (b) of this section shall be secured by collateral sufficient to cover all amounts advanced. Determinations and authorizations of payments under this section shall be made in the manner specified in Section 6.02.

SECTION 6.05 CONDUCT OF LITIGATION.

(a) If any claim or action is made or brought against a director for which the director may be indemnified under these Bylaws, the director shall, to the extent not inconsistent with any private insurance coverage obtained by the Corporation:

(1) Permit the Corporation to conduct the director's defense of the claim or action at the Corporation's expense and with the use of counsel selected by the Corporation;

(2) Retain counsel acceptable to the director and the Corporation to defend the claim or action, and permit the Corporation to monitor and direct the director's defense.

(b) The Corporation shall at all times have the option to undertake the director's defense of any claim or action for which the director may be indemnified under these Bylaws. If the Corporation elects to conduct the director's defense, the director shall cooperate fully with the Corporation in the defense of the claim or action. If the Corporation elects to conduct the director's defense after the director proceeds under Section 6.05 (a) (2), the Corporation shall reimburse the director for the reasonable costs, including attorneys' fees, incurred by the director in enabling the Corporation to undertake the director's defense.

SECTION 6.06. INDEMNIFICATION - OFFICERS AND EMPLOYEES. The Corporation may indemnify and advance expenses to an officer, employee or agent of the Corporation to the same extent that it indemnifies and advances expenses to directors pursuant to this Article VI and to such further extent, consistent with the law, as may be provided by general or specific action of the Board of Directors, or contract.

SECTION 6.07. INDEMNIFICATION NOT EXCLUSIVE. (a) The Corporation, in addition to indemnification provided for in this Article VI, shall indemnify and advance expenses to a director to such further extent, consistent with law, as may be provided by general or specific action of the Board of Directors or contract. Nothing contained in this Article VI shall limit the Corporation's power to pay or reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding.

(b) The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

SECTION 6.08. REPORT TO SHAREHOLDERS. Any indemnification of, or advance of expenses to, a director in accordance with this Article VI, if arising out of a proceeding by or in the right of the Corporation, shall be reported in writing to the shareholders with or before the notice of the next shareholders' meeting.

SECTION 6.09 INSURANCE. The Corporation shall have the power to and may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or who, while a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation has the power to indemnify him against such liability under the provisions of this Article VI.

SECTION 6.10 DEFINITIONS AND CONSTRUCTION. For purposes of this Article VI:

(a) "Director" means any person who is or was a director of the Corporation and any person who, while a director of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan.

(b) "Corporation" includes any domestic or foreign predecessor entity of the Corporation in a merger, consolidation or other transaction in which the predecessor's existence ceased upon consummation of such transaction.

(d) "Official capacity" means: (i) when used with respect to a director, the office of the director in the Corporation, and (ii) when used with respect to a person other than a director as contemplated in Section 6.06 of this Article VI, the elective or appointive office in the Corporation held by the officer or the employment or agency relationship undertaken by the employee or agent in behalf of the Corporation; but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise or employee benefit plan.

(e) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

(f) "Proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

(g) The Corporation shall be deemed to have requested a director, officer, employee or agent of the Corporation to serve an employee benefit plan whenever the performance by him of his duties to the Corporation also imposes duties on, or otherwise involved services by, him with respect to the plan or participants or beneficiaries of the plan. Excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed "fines"; and action taken or omitted by him with respect to an employee benefit plan in the performance of

his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Corporation.

ARTICLE VII

EMERGENCY BYLAWS

SECTION 7.01. EXISTENCE AND EFFECT OF EMERGENCY. Notwithstanding any different provision in the preceding or succeeding Articles of these Bylaws or in the Articles of Incorporation of the Corporation, or the Kentucky Business Corporation Act, the Emergency Bylaws provided in this Article VII shall be operative during any emergency in the conduct of the business of the Corporation resulting from an attack on the United States or on the locality in which the Corporation conducts its business or customarily holds meetings of its Board of Directors or its shareholders or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee thereof cannot readily be convened for action. To the extent not inconsistent with the provisions of this Article, the Bylaws provided in the preceding or succeeding Articles shall remain in effect during such emergency and upon its termination these Emergency Bylaws shall cease to be operative.

SECTION 7.02. EMERGENCY POWERS. During any such emergency:

(1) A meeting of the Board of Directors may be called by any officer or director of the Corporation. Notice of the time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting.

(2) At any such meeting of the Board of Directors, a quorum shall consist of the director or directors in attendance.

(3) The Board of Directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

(4) The Board of Directors, either before or during any such emergency, may, effective in the emergency, change the principal office of the Corporation or designate several alternative offices or branch offices, or authorize the officers so to do.

SECTION 7.03. ACTIONS DURING EMERGENCY. No officer, director or employee of the Corporation acting in accordance with these Emergency Bylaws shall be liable except for willful misconduct, nor shall such officer, director or employee be liable for any action taken by him in good faith in such emergency in furtherance of the ordinary business affairs of the Corporation even though not authorized by the Bylaws then in effect.

SECTION 7.04. AMENDMENTS. These Emergency Bylaws shall be subject to repeal or change by further action of the Board of Directors or by action of the shareholders, but no such repeal or change shall modify the provisions of
Section 7.03 with regard to action taken prior to the time of such repeal or change. Any amendment of these Emergency Bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency.

ARTICLE VIII

AMENDMENTS SECTION 8.01. METHOD. The Board of Directors of the Corporation shall have the power to alter, amend or repeal the Bylaws of the Corporation or adopt new Bylaws, at any regular or special meeting at which a quorum is present, by vote of a majority of the whole Board of Directors, subject, however, to repeal or change by action of the shareholders at any annual or special meeting of shareholders at which a quorum is present by vote of a majority of the shares entitled to vote at such meeting provided that the notice of such shareholders' meeting shall have included notice of any such shareholders' proposed repeal or change.

STOCK YARDS BANK & TRUST COMPANY

STOCK OPTION PLAN

STOCK YARDS BANK & TRUST COMPANY, a banking corporation organized and existing under the laws of the Commonwealth of Kentucky, hereby adopts the following Stock Option Plan for certain of its officers and key employees:

1. DEFINITIONS.

Unless otherwise required by the context, as used herein:

(a) "Bank" means Stock Yards Bank & Trust Company, a Kentucky, banking corporation

(b) "Board" means the Board of Directors of the Bank.

(d) "Committee" means the Stock Option Plan Committee administering the Plan.

(e) "Incentive Stock Option" or "ISO" means an "incentive stock option" as contemplated by and defined in Section 422A(b) of the Code.

(f) "Option Price" means the price to be paid for Stock upon exercise of an ISO or RSO.

(g) "Optionee" means an individual to whom an ISO or RSO is granted under the Plan.

(h) "Plan" means this Stock Yards Bank & Trust Company Stock Option Plan.

(i) "Regular Stock Option" or "RSO" means a right to purchase Stock granted under the Plan which does not constitute an "incentive stock option" as contemplated by and defined in Section 422A(b) of the Code.

(j) "Stock" means the Common Stock of the Bank, currently having a par value of $10 per share.

(k) "Subsidiary" means any company or companies whose relationship to the Bank, whether established before or after adoption of the Plan, is such that the Bank would be deemed to be the "parent corporation" of such company or companies within the meaning of 8425(e) of the Code.

2. PURPOSE OF THE PLAN.

The Plan is intended to advance the interests of the Bank by providing officers and other key employees who have substantial responsibility for the direction and management of the Bank with additional incentives for high levels of performance so as to promote the success of the Bank, to Increase their proprietary interest in such success, to encourage them to remain in the Bank's employ, and to recognize the past contributions of such officers and key employees to the

success of the Bank. It is intended that the aims of the Plan be effectuated through the granting of two (2) types of options under the Plan: Incentive Stock Options and Regular Stock Options.

3. ADMINISTRATION OF THE PLAN.

The Plan shall be administered, construed and interpreted by the Committee. All members of the Board shall be members of the Committee, except that no member of the Board who is eligible for selection as an Optionee shall be a member of the Committee. The decision of a majority of the members of the Committee shall constitute the decision of the Committee and the Committee may act either at a meeting at which a majority of the members of the Committee if; present, or by a writing signed by all members of the Committee. The Committee shall have the sole, final and conclusive authority, consistent with and subject to the provisions of the Plan, to determine:

(a) The Optionees to whom IS0s or RSOs shall be granted under the Plan;

(b) The number of shares of the Stock to be granted under each ISO or RSO;

(d) The terms and conditions of each ISO or RSO between the Bank and an Optionee.

4. ELIGIBILITY.

The officers and other key employees of the Bank or any Subsidiary, opinion of the Committee, are from time to time materially responsible for the management of the business of the Bank or any Subsidiary, shall be eligible to be granted ISOs or RSOs under the Plan. No member of the Board who is not also a full time employee of the Bank or a Subsidiary shall be eligible for selection as an Optionee.

5. STOCK SUBJECT TO PLAN.

The aggregate number of authorized but unissued shares of Stock which may be issued and delivered under the Plan shall not exceed Twenty-Four Thousand (24.000) shares pursuant to the exercise of ISOs and Six Thousand (6,000) shares pursuant to the exercise of RSOs; subject, however, in each case. To adjustment to reflect a change in capitalization of the Bank.shall terminate for any reason as to any shares of Stock, such shares may again be subjected to an option under the Plan.

6. TERMS OF OPTIONS.

(a) Each option granted under the Plan shall be evidenced by a written agreement (an "Incentive Stock Option Grant and Agreement" for 1S0s and. a "Regular Stock Option Grant and Agreement" for RSOs) between the Bank and the Optionee stating the total number of shares of Stock to which it pertains. Except as may be otherwise provided in such agreement, an ISO or RSO may be exercised in whole or in part at any time or times during its term, but no option may be exercised for a fractional share of Stock.

(b) All RSOs granted under the Plan shall contain such terms and conditions not inconsistent with the Plan as the Committee may deem appropriate in each case; provided, that the per share Option Price under each RSO shall be not less than the par value of the Stock at the time the RSO is granted.

(c) All ISOs granted under the Plan shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent with the Plan as the Committee may deem appropriate in each case:

(i) OPTION PRICE. The Option Price under each ISO shall be determined by the Committee at the time the ISO is granted, but in no event shall such Option Price be less than 100% of the fair market value of the Stock on the date of grant. If the Stock is traded in the over-the-counter market, such fair market value shall be deemed to be the mean between the asked and the bid prices on such day as reported by NASDAQ. If the Stock is traded on an exchange, such fair market value shall be deemed to be the closing price on that exchange on the date of the grant. If the Stock is neither traded in the over-the-counter market or on an exchange, then such fair market value shall be that determined by the Committee in good faith.

(ii) GRANT AND TERMINATION. No ISO shall be granted after ten (10) years from the earlier of the date ,the Plan is adopted by the Board or approved by the shareholders of the Bank. An ISO shall terminate, and is not thereafter exercisable, at the earliest of the following times:

(1) ten (10) years after the date of grant;

(2) one (1) year after the date of termination of the Optionee's employment with the Bank or any Subsidiary, whether by death, retirement, permanent or total disability (within the meaning of Section 105(d)(4) of the Code) or any other reason;

(3) any earlier time set by the grant.

Leave of absence approved by the Committee or a transfer of employment from the Bank to parent corporation or any Subsidiary or from a Subsidiary to the Bank, parent corporation or any other Subsidiary, shall not constitute termination of employment.

Upon the death of an Optionee, any ISO granted to such deceased Optionee may be exercised by the Optionee's estate or by the person or persons entitled thereto by will or by applicable laws of descent and distribution ("Optionee Representative"), to the full extent such ISO was exercisable on the date of Optionee's death so long as the ISO is exercised within the time specified in this Section 6(c)(ii).

(iii) OUTSTANDING OPTIONS. No ISO shall be exercisable so long as there is outstanding (within the meaning of Section 422A(c)(7) of the Code) in the hands of the Optionee any Incentive Stock Option which was granted before the granting of such ISO to such Optionee to purchase shares of stock in the Bank or in a corporation which (at the time of the granting of such ISO) is a parent or subsidiary corporation of the Bank or is a predecessor corporation of any of such corporations. For purposes of this Section 6(c)(iii), any Incentive Stock Option shall be treated as outstanding until such option is exercised in full or expires by reason of lapse of time.

(iv) MAXIMUM AMOUNT. The aggregate fair market value (determined as of the time an ISO is granted) of the shares of Stock for which any Optionee may be granted an ISO in any calendar year (under this or any other Incentive Stock Option plan established by the Bank and its parent and any Subsidiary) shall not exceed $100,000 plus any "unused limit carryover" (as defined in Section 422A of the Code) to such year.

(v) EXERCISE AND TRANSFERABILITY. An ISO may be exercised during the lifetime of the Optionee only by the Optionee, and after the death of the Optionee, only as provided in Section 6(c)(ii) above. No ISO shall be transferable except by will or the laws of descent and distribution, and then only to the extent provided herein.

(vi) 10% SHAREHOLDERS. No ISO shall be granted to any Optionee who, at the time of such grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Bank or any Subsidiary, unless at the time of such grant, the Option Price is fixed at not less than 110% of the fair market value of the Stock subject to the ISO, and exercise of such option is prohibited by its terms after the expiration of five (5) years from the date such ISO is granted.

7. ADJUSTMENT OF SHARES; REORGANIZATION.

(a) The aggregate number of shares of Stock which may be issued and delivered pursuant to exercise of options under the Plan, the shares of stock subject to any outstanding ISO or RSO, and the Option Price per share, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Stock subsequent to the effective date of the Plan resulting from (1) a subdivision or consolidation of shares or any other capital adjustment, (2) the payment of a stock dividend, or (3) any other increase or decrease in such shares.

(b) If the Bank shall be the surviving corporation in any merger or consolidation, any outstanding ISO or RSO shall pertain, apply, and relate to the securities to which a holder of the number of shares of Stock subject to the ISO or RSO would have been entitled after the merger or consolidation.

(c) Upon dissolution or liquidation of the Bank, or upon a merger or consolidation in which the Bank is not the surviving corporation, all ISOs and RSOs outstanding under the Plan shall terminate, PROVIDED, that each Optionee or Optionee Representative shall have the right, prior to such dissolution or liquidation, or such merger or consolidation, to exercise his ISO or RSO in whole or in part.

8. EXERCISE OF OPTION; EMPLOYEES' AND OPTIONEES' RIGHTS.

(a) Subject to the provisions of Section 9 below concerning Alternative Option Settlement Provisions, an ISO or RSO granted under the Plan shall be exercised by a written notice thereof, delivered in person or mailed by certified mail, return receipt requested, to the Bank accompanied by payment of the Option Price in cash or certified funds. Such notice shall be signed by the Optionee, Optionee Representative or holder of the option, as the case may be, contain such representations and agreements, if any, as may be required pursuant to the provisions of Section 12(b) below, and state the number of shares of Stock with respect to which the ISO or RSO is being exercised, the person or persons in whose name or names the certificates for Stock are to be registered, such persons' names and respective tax identification numbers and such other information as the Committee may from time to time prescribe.

(b) No employee or other person shall have any claim or right to be granted an ISO or RSO under the Plan except as the Committee shall have conferred in its discretion in the administration of the Plan. Participation in the Plan shall not confer upon any Optionee any right with respect to continuation of employment by the Bank or any Subsidiary or parent corporation, nor interfere with the right of the Bank or such Subsidiary or parent corporation to terminate at any time the employment of any Optionee. An ISO or RSO shall not confer any rights as a shareholder upon the holder thereof, except only as to shares of Stock actually delivered pursuant to the Plan.

(c) Subject to the provisions of Section 9 below, promptly after exercise of an ISO or RSO and the payment in cash or certified funds of the Option Price, the Optionee, Optionee Representative or holder of the option shall be entitled to the issuance of a stock certificate evidencing his ownership of such shares of Stock. An Optionee, Optionee Representative or holder of the option shall have none of the rights of a shareholder until shares are issued to him,

and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued except as provided in the Plan.

9. ALTERNATIVE OPTION SETTLEMENT PROVISIONS.

Each Optionee, Optionee Representative or holder of the option may, by written notice addressed and delivered to the Committee at the office of the Bank, request that, in lieu of exercising an ISO or an RSO, he or she receive shares of Stock, cash, or a combination of Stock and cash, having a fair market value equal to the amount by which the fair market value of the shares of Stock subject to the option at the time of such request exceeds the Option Price (the "Option Settlement"), as follows:

(a) The Committee shall, in its sole discretion, determine whether to permit an Option Settlement in lieu of exercising the ISO or the RSO and, if the Committee so determines, to determine what portion of the Option Settlement shall be in cash and what portion shall be in shares of Stock.

(b) For the purpose of calculating the amount of the Option Settlement, the fair market value of a share of Stock shall be determined on the date the written notice referred to above is received by the Committee.

(c) Upon the payment of a Settlement Option, the ISO or the RSO concerning which the Settlement Option was paid shall be cancelled the same as if such option had been exercised in full..

10. EXPIRATION AND TERMINATION OF THE PLAN.

Except as provided in Section 6(c) above, options may be granted under the Plan at any time or from time to time as long as the total number of shares optioned or purchased under this Plan does not exceed the number of shares provided for in Section 5 above. The Plan may be abandoned or terminated at any time by the Committee except with respect to any options then outstanding under the Plan.

11. AMENDMENT.

The Committee may amend the Plan from time to time, except that, without the approval of the holders of a majority of the shares represented and entitled to be voted at a duly held meeting of the shareholders of the Bank:

(a) The maximum number of shares of Stock which may be issued or delivered under the Plan may not be changed except as provided in the Plan;

(b) The Option Price under any ISO or RSO may not be changed except as provided in the Plan;

(c) The period during which an ISO may be exercised may not be extended beyond the period provided in Section 6(c) above; and

(d) The provisions relating to those persons eligible to be granted ISOs or RSOs under the Plan shall not be changed.

No amendment of the Plan may, however, without the consent of the Optionee, Optionee Representative or holder of the option, as the case may be, make any changes in any outstanding

ISO or RSO theretofore granted under the Plan which would adversely affect the rights of such Optionee, Optionee Representative or holders of the options.

12. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAWS.

(a) No Optionee, Optionee Representative or holder of the option shall be entitled to the privilege of stock ownership as to any shares of Stock not actually issued and delivered to them.

(b) Each ISO and RSO granted under the Plan shall be subject to satisfaction of and no shares of Stock shall be purchased upon the exercise of any ISO or RSO or issued by the Bank unless and until all applicable requirements for the registration or exemption from registration under the Securities Act of 1933 and applicable state securities laws of the shares of Stock issuable upon exercise of each such option, and any other applicable regulations of regulatory agencies having jurisdiction have been satisfied. Such requirements may include at the discretion of the Committee, a representation and warranty by the Optionee, Optionee Representative or holder of the option that the shares of Stock being purchased are being acquired for investment and not with a view to the distribution thereof and placement on the shares of the Stock such legends or other restrictive endorsements as legal counsel for the Bank shall deem necessary or proper.

13. TAX WITHHOLDING.

The Bank shall have the right to deduct any sums required by federal, state or local tax laws to be withheld due to the exercise of any ISO or RSO but, in the alternative, the Optionee, Optionee Representative or holder of the option may elect to pay such sums to the Bank at the time of exercise of the ISO or RSO. There is no obligation hereunder that Optionees, Optionee Representatives or holders of the option be advised of the existence of the tax or the amount which the Bank may be so required to withhold.

14. GOVERNING LAW AND INTERPRETATION.

(a) The Plan and the option agreements referred to herein shall be governed by, and construed in accordance with, the laws of the Commonwealth of Kentucky.

(b) The terms of the Plan applicable to Incentive Stock Options are subject to all present and future regulations and rulings of the Secretary of the Treasury or his delegate relating to the qualification of Incentive Stock Options under Section 422A of the Code. If any provision of the Plan relating to IS0s conflicts with said Section 422A or any such regulations or rulings, then that provision of the Plan shall, to the extent it is applicable to Incentive Stock Options hereunder, be void and of no effect.

15. EFFECTIVE DATE.

The Plan shall be adopted and become effective upon approval by the Board and shall be submitted for approval and ratification by the affirmative vote of the holders of a majority of the outstanding shares of the Bank present or represented by proxy at the annual meeting of the shareholders to be held on January 8, 1985, or any adjournment thereof. The effective date of each ISO or RSO shall be the day on which it is granted to any Optionee; provided, however, if the Plan is not approved at the aforementioned annual meeting of shareholders or any adjournment thereof, then any options theretofore granted shall be void and of no effect.

STOCK YARDS BANK & TRUST CO.
SENIOR OFFICERS SECURITY PLAN

PURPOSE

The purpose of the Stock Yards Bank & Trust Co. Senior Officers Security Plan is to provide specified benefits to a select group of management and highly compensated Employees who contribute materially to the continued growth, development and future business success of Stock Yards Bank & Trust Co.

STOCK YARDS BANK & TRUST CO.

SENIOR OFFICERS SECURITY PLAN

TABLE OF CONTENTS

                                                                                               PAGE
                                                                                               ----
ARTICLE I                           DEFINITIONS                                                  1
ARTICLE II                          ELIGIBILITY AND MEMBERSHIP                                   3
ARTICLE III                         DEATH BENEFIT                                                4
ARTICLE IV                          DISABILITY BENEFIT                                           5
ARTICLE V                           RETIREMENT BENEFIT                                           6
ARTICLE VI                          VESTING                                                      7
ARTICLE VII                         SOURCE OF BENEFITS                                           8
ARTICLE VIII                        TERMINATION OF PARTICIPATION                                10
ARTICLE IX                          TERMINATION, AMENDMENT,
                                    MODIFICATION OR SUPPLEMENT
                                    OF PLAN                                                     11
ARTICLE X                           RIGHT TO ACQUIRE INSURANCE                                  12
ARTICLE XI                          ADMINISTRATION OF THE PLAN                                  13
ARTICLE XII                         BENEFICIARY                                                 15
ARTICLE XIII                        LEAVE OF ABSENCE                                            16
ARTICLE XIV                         TERMINATION OF EMPLOYMENT                                   17
ARTICLE XV                          OTHER BENEFITS AND AGREEMENTS                               18
ARTICLE XVI                         RESTRICTIONS ON ALIENATION
                                    OF BENEFITS                                                 19
ARTICLE XVII                        MISCELLANEOUS                                               20

ARTICLE I

DEFINITIONS

For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the indicated meanings:

1.1 "Beneficiary" shall mean the person or persons or the estate of a Member entitled to receive any benefits under this Plan.

1.2 "Committee" shall mean the Administrative Committee appointed to manage and administer the Plan, in accordance with the provisions of Article XIV hereof.

1.3 "Bank" shall mean the Stock Yards Bank & Trust Co.

1.4 "Employee" shall mean any person who is in the regular full time employment of the Bank as determined by the personnel rules and practices of the Bank. The term does not include persons who are retained by the Bank as consultants only.

1.5 "Member" shall mean an Employee who is selected and elects to participate in the Plan as provided in Article II hereof.

1.6 "Plan" shall mean the Stock Yards Bank & Trust Co. Senior Officer Security Plan.

1.7 "Plan Agreement" shall mean the form of written agreement, attached hereto as Exhibit 1 and Exhibit 2 which is entered into by and between the Bank and an Employee selected to become a Member as a condition to membership in the Plan.

1.8 "Retirement" and "Retire" shall mean severance from employment with the Bank at or after the attainment of 65 years of age.

1.9 "Total Disability" of any Employee will mean that the Employee is unable, because of bodily injuries sustained or disease originating after becoming a Member of the Plan to perform any and every duty of the Employer's regular occupation. However, after a period of such Total Disability has continued for 60 months, the Employee will be deemed to be totally disabled only if unable, because of such bodily injury or sickness, to perform any and every duty of any occupation for which the Employee is reasonably fitted by education, training or experience. The total and irrecoverable loss of the sight of both eyes, or the use of both hands or both feet or of one hand and one foot, will be considered Total Disability.

ARTICLE II

ELIGIBILITY AND MEMBERSHIP

2.1 In order to be eligible for membership in the Plan, an Employee must be selected by the Committee which, in its sole discretion, shall determine eligibility for membership in accordance with the purposes of the Plan.

2.2 An Employee, having been selected for membership by the Committee, shall, as a condition to membership, complete and return to the Committee a duly executed Plan Agreement, in the forms attached as Exhibit 1 and Exhibit 2 hereof electing to participate in the Plan and agreeing to the terms thereof.

ARTICLE III

DEATH BENEFIT

3.1 n the event a Member dies before his 65th birthday and the Plan is in effect at the time, the Bank will pay or cause to be paid a Death Benefit to such Member's beneficiary in the amount or amounts set forth in his Plan Agreement and as therein specified, commencing on the first day of the month following the date of death of the Member, or as otherwise therein specified.

3.2 The Bank will pay or cause to be paid such Death Benefit only if
(a) at the time of such Member's death prior to age 65, (i) Member was an Employee and had not retired prior to age 65, or was then on authorized leave of absence; or (ii) Member was not an Employee but was fully vested pursuant to
Section 6.1 of his termination of employment; (b) such death was due to causes other than suicide within two (2) years after the date of his Plan Agreement; and, (c) Member's Plan Agreement had been kept in force until such time of death.

ARTICLE IV

DISABILITY BENEFIT

4.1 If an Employee becomes a member prior to attaining age 55 1/2 and becomes Totally Disabled before age 65, and if such Total Disability continues for more than six (6) months, such Member will be entitled to the disability benefit provided in the Employee Plan Agreement for so long as the Total Disability continues.

4.2 In the event a Member dies prior to attaining age 65 while receiving the disability benefit, the Death Benefit provided in Article III will be paid. If, while receiving disability benefit, a Member attains the age of 65, and he shall thereupon retire, or if he shall retire before age 65, the Retirement Benefit provided in Article V will be paid.

4.3 The determination of what constitutes Total Disability and the removal thereof for purposes of this Article, shall be made by the Committee, in its sole discretion in accordance with the definition of Total Disability found in Section 1.9, and such other information considered relevant by the Bank, and the Committee's determination shall be conclusive.

4.4 The Bank will not be obligated to provide a disability benefit for any reason in the case of an Employee who becomes a Member initially after age 55 1/2.

ARTICLE V

RETIREMENT BENEFIT

5.1 If (a) (i) a Member has remained an Employee until age 65 and shall then retire, or (ii) a Member is not an Employee at age 65, but was fully vested pursuant to Section 6.1 as of his termination of employment; and (b) if the Plan and his Plan Agreement have been kept in force, the Bank will pay or cause to be paid to such Member, as a Retirement Benefit, the amount per month set forth in his Plan Agreement, commencing on the first day of the month following such Member's retirement, or as his Plan Agreement shall otherwise specify.

5.2 A member who (i) is not an Employee but was " fully vested pursuant to Section 6.1 as of the termination of his employment and (ii) has attained age 55 and has not attained age 65 shall be entitled to a Retirement Benefit at an actuarially reduced amount determined by the Committee, commencing on the first day of the month following such retirement, or if so provided in the Plan Agreement, commencing at a later date which shall not be subsequent to the first day of the calendar month after the Member attained age 65.

5.3 If a Member shall die after becoming entitled to a Retirement Benefit (whether retirement is before "or after age 65), but before such entitlement is fully satisfied, the Retirement Benefit payments then remaining unpaid to such Member shall be paid to such Member's beneficiary, in accordance with the payment schedule pursuant to which payments are being made under Sections 5.1 and 5.2 "

5.4 If a Member shall die after attaining age 65 but before he retires, all Retirement Benefit payments which would have been paid had such Member retired on the date of his death shall be paid to such Member's beneficiary in accordance with his Plan Agreement, commencing on the first day of the month following the date of death of such Member.

5.5 If a Member shall die under the circumstances set forth in Sections 5.3 and 5.4 above, then no Death Benefit as provided for in Article III shall be payable to his beneficiary, but such beneficiary shall receive his Retirement Benefit payments as set forth in said Section; provided, however, a Member may irrevocably elect, by so indicating in his Plan Agreement, to have any Retirement Benefit to which he would have become entitled upon retirement to be accumulated by the Bank and paid to his beneficiary as a Death Benefit at the time of his death in the manner set forth in his Plan Agreement.

ARTICLE VI

VESTING

6.1 Notwithstanding any provision contained herein which may imply or specify to the contrary, a Member shall have no right to receive (i) a Retirement Benefit and (ii) in the case of a Member who is not an Employee, a Death Benefit or Disability Benefit all as defined herein, unless the member is fully vested. A member will be fully vested at the earlier of (i) the Member's attaining age 65 or (ii) the Member's completion of ten (10) years of service with the Bank.

6.2 If the employment of a Member is terminated for any reason other than death, disability or retirement as provided in Articles III, IV and V, respectively, and if the Member is fully vested as provided in 6.1 above, the Member may, at the Member's option, and without the consent of the Bank, continue the benefits of the Plan for the Member by making a contribution to the Bank in the amount and at the time shown in the Plan Agreement.

ARTICLE VII

SOURCE OF BENEFITS

7.1 Amounts payable hereunder shall be paid exclusively from the general assets of the Bank, and no person entitled to payment hereunder shall have any claim, right, security interest or other interest in any fund, trust, account, insurance contract, or asset of the Bank which may be looked to for such payment. The Bank's liability for the payment of benefits hereunder shall be evidenced only by this Plan and each Plan Agreement entered into between the Bank and a Member.

7.2 While the Bank shall not be obligated to invest in any specific asset or fund, or purchase any insurance policy in order to provide the means for payment of any liabilities under the Plan, the Bank may elect to do so and, in such event, no Member shall have any interest whatever in such asset, fund or insurance policy. In the event the Bank elects to purchase insurance contracts on the life of a Member as a means of making, offsetting or contributing to any payment, in full or in part, which may become due and payable by the Bank under the Plan or a Member's Plan Agreement, such Member agrees to cooperate in the securing of life insurance on his life by furnishing such information as the Bank and the insurance carrier may require, including the results and reports of previous Bank and other insurance carrier physical examinations, taking such additional physical examinations as may be requested, and taking any other action which may be requested by the Bank and the insurance carrier to obtain such insurance coverage. If a Member does not cooperate in the securing of such life insurance, or if the Bank for any reason is unable to obtain life insurance in the requested amount on the life of a Member, the Bank shall have no further obligation to such Member under the Plan and such Member's Plan Agreement shall terminate.

7.3 The Bank shall be the sole owner of any insurance policy or policies acquired on the life of a Member, with all incidents of ownership therein, including (but not limited to) the right to cash and loan values, dividends (if any), death benefits, and the right of terminations thereof, and a Member shall have no interest whatever in such policy or policies (if any), and shall exercise none of the incidents of ownership thereof.

7.4 The Bank shall have no obligation of any nature whatsoever to a Member under the Plan or Member's Plan Agreement, except as otherwise expressly provided in the Plan, if the Bank purchases life insurance on a Member's life pursuant to the Plan and the circumstances of the Member's death preclude payment of death proceeds under the contract.

ARTICLE VIII

TERMINATION OF PARTICIPATION

8.1 A Member reserves the right to terminate his participation in the Plan and his Plan Agreement at his election at any time by giving the Bank written notice of such termination not less than 30 days (i) prior to the anniversary date of any policy or policies of insurance on the life of such Member which may be in force and utilized by the Bank in connection with the Plan or (ii) prior to the date a Member selects for termination if no insurance contract or policy is in effect.

ARTICLE IX

TERMINATION, AMENDMENT, MODIFICATION OR SUPPLEMENT OF PLAN

9.1 The Bank reserves the right to terminate, amend, modify or supplement this Plan, wholly or partially, and from time to time, at any time. The Bank likewise reserves the right to terminate, amend, modify or supplement any Plan Agreement, wholly or partially, and from time to time. Such right to terminate, amend, modify or supplement the Plan or Plan Agreement shall be exercised for the Bank by the Committee; provided, however, that:

(a) No action to terminate the Plan shall be taken except upon written notice to each Member to be affected thereby, which notice shall be given not less than 30 days prior to such action;

(b) The Committee shall take no action to terminate the Plan or a Plan Agreement with respect to a Member or his Beneficiary after the payment of any benefits pursuant to Article III, Article IV or Article V of this Plan has commenced and has not been completed.

9.2 Upon the termination of this Plan or any Plan Agreement, respectively, by either the Committee or a Member in accordance with the provisions for such termination, neither the Plan nor the Plan Agreement shall be of any further force and effect, and no party shall have any further obligation under either this Plan or any Plan Agreement so terminated, except as may be provided for in Article X.

ARTICLE X

RIGHT TO ACQUIRE INSURANCE

10.1 If the Bank terminates the Plan, and if the Member's Plan Agreement has been kept in force until such time, and if the Bank, pursuant to the terms of the Plan, is then utilizing a policy or policies of insurance on the life of such Member, then the Member, within thirty (30) days after such termination or discontinuance, shall have the right to acquire ownership of any such insurance policy or policies, subject to all loans and other charges outstanding against such policy or policies, including loans made for the purpose of reimbursing the Bank for interest and other costs incurred as a result of maintenance of the policy.

ARTICLE XI

ADMINISTRATION OF THE PLAN

11.1 The general administration of this Plan, as well as construction and interpretation thereof, shall be vested in the Committee, the number and Members of which shall be designated and appointed from time to time by, and shall serve at the pleasure of the Executive Committee of the Board of Directors of the Bank. Any such Member of the Committee may resign by notice in writing filed with the Secretary of the Committee. Vacancies shall be filled promptly by the Executive Committee of the Board of Directors of the Bank. Each person appointed a Member of the Committee shall signify his acceptance by filing a written acceptance with the Secretary of the Committee.

11.2 The Executive Committee of the Board of Directors of the Bank may designate one of the Members of the Committee as Chairman and may appoint a Secretary who need not be a Member of the Committee. The Secretary shall keep minutes of the Committee's proceedings and all data, records and documents relating to the Committee's administration of the Plan. The Committee may appoint from its number such subcommittees with such powers as the Committee shall determine and may authorize one or more Members of the Committee or any agent to execute or deliver any instrument or make any payment on behalf of the Committee.

11.3 All resolutions or other actions taken by the Committee shall be by the vote of a majority of those present at a meeting at which a majority of the Members are present, or in writing by all the Members at the time of office if they act without a meeting.

11.4 Subject to the Plan, the Committee shall from time to time establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the exclusive right to interpret the Plan and to decide any and all matters arising thereunder or in connection with the administration of the Plan, and it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person. The Committee shall have the exclusive right to determine (i) disability in respect of a Member and

(ii) the degree thereof, either or both determinations to be made on he basis of such medical and/or other evidence as the Committee, in its sole judgment, may require. Such decisions, actions and records of the Committee shall be conclusive and binding upon the Bank and all persons having or claiming to have any right or interest in or under the Plan.

11.5 The Members of the Committee and the officers and directors of the Bank shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Bank.

11.6 No Member of the Committee shall be liable for any act or omission of any other Member of the Committee, nor for any act or omission on his own part, excepting only his own willful misconduct. The Bank shall indemnify and save harmless each Member of the Committee against any and all expenses and liabilities arising out of his membership on the Committee, excepting only expenses and liabilities arising out of his own willful misconduct. Expenses against which a Member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such Member of the Committee may be entitled as a matter of law.

11.7 In addition to the powers hereinabove specified, the Committee shall have the power to compute and certify under the Plan the amount and kind of benefits from time to time payable to Members and their Beneficiaries and to authorize all disbursements for such purposes.

11.8 To enable the Committee to perform its functions, the Bank shall supply full and timely information to the Committee on all matters relating to the compensation of all Members, their retirement, death or other cause for termination of employment, and such other pertinent facts as the Committee may require.

11.9 The Committee shall also have the power, in its sole discretion, to change the manner and time of payments to be made to a Member or his Beneficiary from that set forth in the Member's Plan Agreement, if requested to do so by such Member or Beneficiary.

ARTICLE XII

BENEFICIARY

12.1 A Member shall designate his Beneficiary to receive benefits under the Plan by completing the appropriate space in the Plan Agreement. If more than one Beneficiary is named, the shares and/or precedence of, each Beneficiary shall be indicated. A Member shall have the right to change the Beneficiary by submitting to the Committee a change of Beneficiary in the form attached as Exhibit 3 hereof; provided, however, no change of beneficiary shall be effective until acknowledged in writing by the Bank. If the Bank has any doubt as to the proper Beneficiary to receive payments hereunder, the Bank shall have the right to withhold such payments until the matter is finally adjudicated. Any payment made by the Bank, in good faith and in accordance with this Plan, shall fully discharge the Bank from all further obligations with respect to such payment.

ARTICLE XIII

LEAVE OF ABSENCE

13.1 If a Member is authorized by the Bank for any reason, including military, medical or other, to take a leave of absence from employment, the leave of absence shall not be counted as service with the Bank for purposes of
Section 6.1.

ARTICLE XIV

TERMINATION OF EMPLOYMENT

14.1 The Plan and Plan Agreement, either singly or collectively, do not in any way obligate the Bank or any subsidiary of the Bank to continue the employment of a Member with the Bank, nor does either limit the right of the Bank at any time and for any reason to terminate the Member's employment. Termination of a Member's employment with the Bank for any reason, whether by action of the Bank or member shall immediately terminate his participation in the Plan and his Plan Agreement, and all further obligations of either party thereunder, except as may be provided in Article VI and Article X. In no event shall the Plan or the Plan Agreement, either singly or collectively, by their terms or implications constitute an employment contract of any nature whatsoever between the Bank and a Member.

ARTICLE XV

OTHER BENEFITS AND AGREEMENTS

15.1 The benefits provided for a Member and Member's Beneficiary under the plan are in addition to any other benefits available to such Member under any other plan or program of the Bank for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Bank or a Member. Moreover, benefits under the Plan shall not be considered compensation for the purpose of computing contributions or benefits under any plan maintained by the Bank or any of its subsidiaries which is qualified under Sections 40l(a) and
501(a), Internal Revenue Code OF 1954, as amended.

ARTICLE XVI

RESTRICTIONS ON ALIENATION OF BENEFITS

16.1 No right or benefit under the Plan or a Plan Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Member or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the Committee, shall cease and determine, and in such event, the Committee may hold or apply the same or any part thereof for the benefit of such Member or Beneficiary, his or her spouse, children, or other dependents, or any of them, in such manner and in such portion as the Committee may deem proper.

ARTICLE XVII

MISCELLANEOUS

17.1 Any notice which shall be or may be given under the Plan or a Plan Agreement shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Bank, such notice shall be addressed to the Bank at Post Office Box 32890, Louisville, Kentucky 40232, marked for the attention of the Secretary Administrative Committee, Senior Officers Security Plan; or if notice to a Member, addressed to the address shown on such Member's Plan Agreement.

17.2 Any party may, from time to time, change the address to which notices shall be mailed by giving written notice of such new address.

17.3 The Plan shall be binding upon the Bank and its successors and assigns, and upon a Member, his Beneficiary, assigns, heirs, executors and administrators.

17.4 The Plan and Plan Agreement shall be governed and construed under the laws of the Commonwealth of Kentucky as in effect at the time of their adoption and execution, respectively.

17.5 Masculine pronouns wherever used shall include female pronouns and the singular shall include the plural.

17.6 Any corporation which is a subsidiary of the Bank may, with the approval of the Bank, adopt this Plan and thereby come within the definition of Bank in Article I hereof.

STOCK YARDS BANK & TRUST COMPANY

SENIOR OFFICERS SECURITY PLAN

ELECTION TO PARTICIPATE

EXHIBIT 1

I acknowledge that, as an Employee of Stock Yards Bank & Trust Co. (the "Bank"), I have been offered an opportunity to participate in the Senior Officers Security Plan (the "Plan") described in the attached documents, and that I have elected:

[ ] To participate in the Plan

[ ] Not to participate in the Plan.

I further acknowledge that neither the Bank nor any of its subsidiaries, affiliated companies, officers, employees or agents has any responsibility whatsoever for any changes which I may make in other personal plans or programs as a result of my decision regarding the Plan and they are fully released to such extent, and I understand that the Plan referred to in the attached Agreement may be terminated at any time, in the sole discretion of the Bank, without any obligation of any nature whatsoever to the Bank, except a Member shall have those rights provided for in Articles III, V and X of the Plan, to the extent that such may be applicable to him at the time of such termination.

Dated:, ________________________1980.

Employee

STOCK YARDS BANK & TRUST CO.

SENIOR OFFICERS SECURITY PLAN AGREEMENT

EMPLOYEE PLAN AGREEMENT

EXHIBIT 2

1. Employee's Total Covered Salary: $ _______________________ per month.

This represents (the full amount) (____________________ %) of Employee's base earnings eligible for coverage at the date of Employee's application for this coverage.

2. Total Death Benefit (death before age 65):

(a) $_________________ per month for first 12 months.
(b) $ _________________per month for next 108 months or until Employee would have attained age 65, whichever is later.

3. Total Disability Benefit {for Employee becoming a. Member prior to age 55:

(a) The Employee's Contribution shown as No.5 below would be eliminated.
(b) $ ____________________ per month until the earlier of
(i) Termination of the Employee's being Totally Disabled,
(ii) the Employee's death or (iii) the Employee's attaining age 65.

4. Total Retirement Benefit (after age 65):

$ This amount would be paid in installments as follows:
_________________________________________________________.

If an Employee is (i) no longer employed but was fully vested pursuant to Section 6.1 as of the termination of his employment and (ii) has attained age 55 and has not attained age 65, he shall be entitled to the Retirement Benefit, actuarially reduced to an amount determined by the Committee and which shall be payable commencing at a date no later than the Employee's age 65. If Employee retires after age 55 and prior to age 65, the retirement benefit shall be actuarially reduced to an amount determined by the Committee, and shall be payable commencing at a date no later than the Employee's age 65.

5. If the employment of an Employee is terminated for any reason other than death, disability or retirement, and if the Employee is fully vested as provided in Section 6.1 of Article VI, the Employee may, at the Employee's option and without the consent of the Bank, continue the benefit of the Plan for the Employee by making a contribution on ___________(date) each year in an amount equal to $__________________ , with said contributions to continue until Employee has attained age ______________.

6. Employee hereby designates as Primary Beneficiary under this Agreement:

and Employee hereby designates as Secondary Beneficiary under this Agreement:

The term Beneficiary, as used herein, shall mean the Primary Beneficiary if such Primary Beneficiary survives the Employee by at least 30 days, and shall mean the Secondary Beneficiary if Primary Beneficiary does not survive Employee by at least 30 days, and shall mean the estate of Employee if neither Primary Beneficiary nor Secondary Beneficiary survives the Employee by at least 30 days. Employee shall have the right to change Employee's designation of Primary Beneficiary and/or Secondary Beneficiary from time to time in such manner as shall be required by the Bank, it being agreed that no change in Beneficiary shall be effective until acknowledged in writing by the Bank. (If Beneficiary is to be irrevocable, strike and initial previous sentence.)

7. Notices to Employee (Member) shall be sent as follows:

Name

Street Address or
Post Office Box No.

City and State Zip Code

IN WITNESS WHEREOF, Stock Yards Bank & Trust Co. and Employee have executed this Exhibit 2 as of the_____________________________________________________day of _________________________, 19____________.

Employee:                                           STOCK YARDS BANK & TRUST CO.
By:

                                         By:
--------------------------------------       ----------------------------------
        (Signature)                                    President

-------------------------------------------
     (Type or print name under signature)

This Exhibit supercedes that Exhibit dated the ______________________________day

of _____________________________________,19_________________.

STOCK YARDS BANK & TRUST CO.

SENIOR OFFICERS SECURITY PLAN AGREEMENT

EMPLOYEE PLAN AGREEMENT

EXHIBIT 3

The undersigned, a Member of the Stock Yards Bank & Trust Co. Senior Officers Security Plan (the "Plan") of Stock Yards Bank & Trust Co. (the "Bank") hereby designates as primary beneficiary and secondary beneficiary under the Plan and my Plan Agreement the following:

Primary Beneficiary:
Secondary Beneficiary:

All previous beneficiary designations made by me in my Plan Agreement are revoked and any benefits due to be paid by the Bank shall be paid to the above designated beneficiary(ies) in accordance with the terms of the Plan and my Plan Agreement as though the above designated beneficiaries have been originally named in my Plan Agreement. The undersigned acknowledges that this beneficiary designation will not be effective until acknowledged in writing by the Bank in the space provided below.

MEMBER:

Signature

Beneficiary Designation herein
acknowledged and approved this
_____________day of _________, 19 _____.

STOCK YARDS BANK & TRUST CO.

By:

INDEMNIFICATION AGREEMENT

This is an Indemnification Agreement dated as of ________________, _________, among Stock Yards Bank & Trust Company (the "Bank"), S.Y. Bancorp, Inc. (the "Holding Company"), and ___________________________, (the "Indemnitee").

RECITALS

The Indemnitee is ____________________________________________of the Bank and of the Holding Company. In consideration of the Indemnitee's continuing services on the Bank's and the Holding Company's behalf, the Bank and the Holding Company desire to enter into this Agreement.

******

1. INDEMNITEE'S SERVICES. The Indemnitee shall administer diligently the affairs of the Bank and the Holding Company as a director, officer or employee of the Bank and the Holding Company (as appropriate) and shall not knowingly violate or permit the violation of any provision of the Articles of Incorporation, Charter or Bylaws of the Bank or the Holding Company or of any other applicable law, regulation, resolution or order.

2. INDEMNIFICATION BY THE BANK AND THE HOLDING COMPANY. The Bank shall indemnify the Indemnitee and hold the Indemnitee harmless against any loss or liability related to or arising from the Indemnitee's service as a director, officer or employee of the Bank. The Holding Company shall indemnify the Indemnitee and hold the Indemnitee harmless against any loss or liability related to or arising from the Indemnitee's services as a director, officer or employee of the Bank and the Holding Company. Each of the Holding Company and the Bank shall hereafter be described as an "Indemnitor," but only to the extent that the particular entity is responsible as described above in this paragraph. If both entities are responsible, then they shall be jointly and severally liable to the Indemnitee.

The indemnification provided for hereby shall be upon the following terms and conditions:

(a) The Indemnitors shall, to the fullest extent permitted by the rules and regulations of the Federal Deposit Insurance Corporation (the "FDIC") and by other applicable laws, hold the Indemnitee harmless and indemnify the Indemnitee against all judgments rendered, fines levied and other assessments (including amounts paid in settlement of any claims, if approved by an Indemnitor), plus all reasonable costs and expenses incurred in connection with the defense of an actual or threatened claim or claims (including attorneys' fees), whether civil, criminal, administrative, investigative or other (including any appeal relating thereto), and whether made or brought by or in the right of an Indemnitor or otherwise related to or arising from (1) any actual or alleged act or omission of the Indemnitee at any time as a director, officer or employee of an Indemnitor, or (2) the Indemnitee's past, present, or future status as a director, officer or employee of an Indemnitor.

(b) Upon presentation from time to time of such invoices, statements for services rendered, or other similar documentation as an Indemnitor may reasonably request, the Indemnitors shall reimburse the Indemnitee for all reasonable costs and expenses incurred in the defense of an actual or threatened claim or claims as and when such costs are incurred.

(c) An Indemnitor shall have no obligation to indemnify the Indemnitee with respect to any act or omission adjudged by a court of competent jurisdiction to have been related to or

arisen from the Indemnitee's bad faith, wanton or willful misconduct, reckless disregard for the best interests of the Indemnitor and its shareholders or knowing violation of law.

(d) The Indemnification provided by this Agreement shall apply only to (1) actual or alleged acts or omissions that occur during the Indemnitee's service as a director, officer or employee of an Indemnitor, and (2) actual or threatened claims or actions in which the Indemnitee is joined or named as a party, but which relate to or arise from alleged acts or omissions that occurred before the Indemnitee's service as a director, officer or employee or to acts or omissions alleged against any former directors, officers or employees.

(e) Nothing in this Agreement shall be deemed or construed to create any liability of the Indemnitors (1) to former directors, officers, employees, or their predecessors, or to any other person not a party to this Agreement, or (2) exceeding the liability that the Indemnitors may lawfully incur in accordance with applicable laws, rules and regulations.

3. CONDUCT OF LITIGATION.

(a) If any claim or action is made or brought against the Indemnitee for which the Indemnitee may be indemnified under this Agreement, the Indemnitee shall, to the extent not inconsistent with any private insurance coverage obtained by an Indemnitor:

(1) Permit an Indemnitor to conduct the Indemnitee's defense of the claim or action at the Indemnitor's expense and with the use of counsel selected by the Indemnitor; or

(2) Retain counsel acceptable to the Indemnitee and the Indemnitor to defend the claim or action, and permit the Indemnitor to monitor and direct the Indemnitee's defense.

(b) An Indemnitor shall at all times have the option to undertake the Indemnitee's defense of any claim or action for which the Indemnitee may be indemnified under this Agreement. If an Indemnitor elects to conduct the Indemnitee's defense, the Indemnitee shall cooperate fully with the Indemnitor in the defense of the claim or action. If the Indemnitor elects to conduct the Indemnitee's defense after the Indemnitee proceeds under Paragraph 3(a) (2), the Indemnitor shall reimburse the Indemnitee for the reasonable costs, including attorneys' fees, incurred by the Indemnitee in enabling the Indemnitor to undertake the Indemnitee's defense.

4. COOPERATION IN DEFENSE AND SETTLEMENT. The Indemnitee shall not make any admission or effect any settlement or compromise of any claim without the Indemnitors' prior written consent unless the Indemnitee shall have determined to undertake his or her own defense in such matter and has waived the benefits of this Agreement. The Indemnitors shall not settle or compromise any proceeding to which the Indemnitee is a party in any manner which would impose any liability, loss, damage, expense, penalty or restriction on the Indemnitee without his or her prior written consent; PROVIDED HOWEVER, that if the Indemnitee withholds his or her consent to any monetary settlement for which the Indemnitee is to be completely indemnified hereunder, the Indemnitee shall thereafter undertake, at his or her own expense, the defense of such matter and the Indemnitors shall have no continuing obligation to the Indemnitee under this Agreement with regard to such matter. Neither the Indemnitee nor the Indemnitors shall unreasonably withhold consent to any proposed settlement. The Indemnitee and the Indemnitors shall cooperate to the extent reasonably possible with each other and with the Indemnitors' insurers in connection with the defense or settlement of such proceeding.

5. REIMBURSEMENT OF EXPENSES. If an Indemnitor makes any payment to the Indemnitee under this Agreement, and if as a result of litigation or otherwise it is determined that the Indemnitee was not entitled to indemnification in the circumstances, the Indemnitee shall

promptly reimburse the Indemnitor for all payments made to the Indemnitee under this Agreement.

6. ADVANCEMENT OF EXPENSES. Costs and expenses (including attorneys' fees) incurred by the Indemnitee in defending or investigating any actual or threatened action, suit, proceeding or investigation shall be paid by the Indemnitors in advance of the final disposition of such matter, provided that such advancement of expenses complies with all applicable laws, rules and regulations. Before an Indemnitor advances payment of expenses under this section 5, the Indemnitee shall agree in writing that the Indemnitor shall be repaid such advanced amounts if the Indemnitee is later determined not to be entitled to such indemnification. The advances to be made hereunder shall be paid by the Indemnitor to the Indemnitee within twenty (20) days following delivery of a written request therefore by the Indemnitee to the Indemnitor. Notwithstanding the foregoing or any other provision of this Agreement, no advance shall be made by an Indemnitor if:

(a) a determination is reasonably and promptly made by the Indemnitor's Board of Directors (as appropriate), by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs) by independent legal counsel, that, based upon the facts known to such Board or counsel at the time such determination is made, the Indemnitee acted in bad faith or deliberately breached the Indemnitee's duty to the Indemnitor or its shareholders, and as a result of such actions by the Indemnitee, it is more likely than not that it will ultimately be determined that the Indemnitee is not entitled to indemnification under the terms of this Agreement; or

(b) the Indemnitee is the subject of an FDIC or other federal or state regulatory investigation or enforcement proceeding and the advancement is for expenses arising out of such investigation or enforcement proceeding.

7. Subrogation. In the event of payment under this Indemnification Agreement, the Indemnitors shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Indemnitors effectively to bring suit to enforce such rights.

8. EXCLUSIONS. An Indemnitor shall not be liable under this Agreement to make any payment in connection with any claim made against the Indemnitee:

(a) for which payment is actually made to the Indemnitee under a valid and collectible insurance policy or by the other Indemnitor, except in respect of any excess beyond the amount of payment under such insurance or by such other Indemnitor;

(b) for which the Indemnitee is indemnified by an Indemnitor otherwise than pursuant to this Agreement;

(c) if it is proved by final judgement in a court of law or other adjudication to have been based upon or attributable to the Indemnitee gaining in fact any personal profit or advantage to which the Indemnitee was not legally entitled;

(d) for an accounting of profits made from the purchase or sale by the Indemnitee of securities of an Indemnitor within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law or common law;

(e) brought about or contributed to by the dishonesty OF the Indemnitee seeking payment hereunder; however notwithstanding the foregoing, the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against the Indemnitee by reason of any alleged dishonesty of the Indemnitee, unless a judgement or other final adjudication thereof adverse to the Indemnitee shall establish that the Indemnitee committed (i) acts of active and deliberate dishonesty (ii) with actual dishonest purpose and intent and which acts were material to the cause of action so adjudicated;

(f) to the extent and only to the extent that a majority of the Board of Directors of the Indemnitor or a duly designated committee thereof, in either case consisting entirely of directors who are not at the time parties to the claim against the Indemnitee, determines that the amount of expenses or liabilities for which the indemnification is sought is unreasonable; or

(g) if a proper court holds that payment is prohibited by applicable law or is against public policy.

9. PARTIAL INDEMNITY. If the Indemnitee is entitled under any provision of this Indemnification Agreement to indemnification by an Indemnitor for a portion of any costs, charges, or expenses, but not, however to indemnification for all of the total amount thereof, the Indemnitor shall nevertheless indemnify the Indemnitee for the portion of such costs, charges, or expenses to which the Indemnitee is entitled.

10. FDIC NOTIFICATION. No indemnification shall be made under section 2 hereof by the Bank unless the Bank gives the FDIC at least 60 days' notice of its intention to make such Indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, any disposition thereof, and a certified copy of the resolution of the Bank's Board Directors authorizing the indemnification. No such indemnification shall be made if the FDIC advises the Bank in writing, within such period, of its objection thereto.

11. ARBITRATION. The Indemnitee may request a third party arbitrator, mutually satisfactory to the Indemnitors and the Indemnitee, to settle any disputes with respect to payments to the Indemnitee under this Agreement. Upon such a request, the Indemnitors shall employ the agreed upon arbitrator and pay his or her expenses.

12. ENFORCEMENT OF AGREEMENT. If the Indemnitee makes a claim for indemnification under this Agreement and an Indemnitor refuses to indemnify the Indemnitee, and if the Indemnitee then prevails in an action or proceeding brought to enforce this Agreement, the Indemnitor shall pay all reasonable costs and expenses (including attorneys' fees) incurred by the Indemnitee in connection with the action or proceeding in addition to any other indemnification required under this Agreement. In any action brought by the Indemnitee to enforce this Agreement the burden of proof shall be on the Indemnitor to establish that the Indemnitee is not entitled to the relief sought under this agreement.

13. NOTICE OF CLAIMS. If the Indemnitee receives a complaint, claim, or other notice of any loss, claim, damage or liability giving rise to a claim for indemnification under this Agreement, the Indemnitee shall promptly (but in no event more than 20 days following receipt thereof by the Indemnitee) notify the Indemnitors of the complaint, claim or other notice. Any failure to notify the Indemnitors, however, shall not relieve the Indemnitors from any liability under this Agreement unless the Indemnitors are materially prejudiced by the failure and had no actual knowledge of the complaint, claim or other notice.

14. TERMINATION.

(a) This Agreement shall terminate (1) upon termination of the Indemnitee's service as a director, officer or employee of an Indemnitor, or (2) upon an Indemnitor's written notice to the Indemnitee that, in the reasonable opinion of the Indemnitor, the Indemnitee has not complied with Paragraph 3 of this Agreement. The Indemnitor shall not issue any such notice merely because it disagrees with a business judgment or judgments of the Indemnitee.

(b) The termination of this Agreement shall not:

(1) Terminate the Indemnitors' liability to the Indemnitee for (A) claims or actions against the Indemnitee related to or arising from' acts or omissions occurring or alleged to have occurred before termination of this Agreement, or (B) claims or actions that name or join the Indemnitee as a party, but relate to or arise from acts or omissions alleged to have occurred before the Indemnitee's service as a director, officer or employee of an Indemnitor, or acts or omissions alleged against former directors, officers or employees of an Indemnitor.

(2) Render the terms and conditions of this Agreement inapplicable to any claims or actions subject to Paragraph 13(b)(1).

15. EMPLOYEE BENEFIT PLANS. For purposes of this Agreement, the Indemnitee's capacity as director, officer or employee of an Indemnitor shall include any service by the Indemnitee on behalf or at the request of an Indemnitor as a fiduciary with respect to any Indemnitor employee benefit plan, its participants, or beneficiaries, and shall include any service by the Indemnitors. References to "fines" shall include any excise taxes asserted on a person with respect to any employee benefit plan.

16. NON-EXCLUSIVITY. Nothing herein shall be deemed to diminish or otherwise restrict the Indemnitee's right to indemnification under any provision of the Indemnitors' Articles of Incorporation, Charter or Bylaws, any agreement, vote of shareholders or disinterested directors, resolution or under Kentucky or federal law or otherwise.

17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon all successors and assigns of each Indemnitor (including any transferee of all or substantially all of its assets and any successors by merger or operation of law) and shall inure to the benefit of the heirs, personal representatives and estate of the Indemnitee.

18. SEPARABILITY; INTERPRETATION OF AGREEMENT. If any provisions of this Agreement shall be held to be invalid, illegal, or unenforceable for any reason whatsoever, the remaining provisions of this Agreement, including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal or unenforceable to the fullest extent possible shall be construed so as to give effect to the intent of the parties that the Indemnitors provide indemnification to the Indemnitee to the fullest extent permissible.

19. SAVINGS CLAUSE. Whenever there, is a conflict between any provision of this Agreement and any applicable present or future statute, law or regulation contrary to which an Indemnitor and the Indemnitee have no legal right to contract, the latter shall prevail, but in such event the affected provisions of this Agreement shall be curtailed and restricted only to the extent necessary to bring them within applicable legal requirements.

20. WAIVER. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties with respect to its subject matter and supersedes any prior or contemporaneous agreements (whether written or oral) among the parties with respect to the subject matter hereof.

22. NOTICES. Any notice or other communication required or permitted under this Agreement shall be deemed given when hand- delivered or sent by registered mail, postage prepaid and return- receipt requested, to the intended recipient at the address set forth below or at such other address as the recipient shall hereafter furnish the sender in writing:

If to the Indemnitee:

If to the Bank:                     Stock Yards Bank & Trust Company
                                    1040 East Main Street
                                    Louisville, KY 40206

If to the Holding
Company:                            S.Y. Bancorp, Inc.
                                    1040 East Main Street
                                    Louisville, KY 40206

23. GOVERNING LAW. Except as preempted by applicable federal laws, rules or regulations, the laws of Kentucky shall govern the validity, interpretation and construction of this Agreement. Nothing in this Agreement shall require any unlawful action or inaction by any party.

24. MODIFICATION. No modification of this Agreement shall be binding unless executed in writing by the Indemnitee and the Indemnitors, or their successors.

25. HEADINGS. Paragraph headings are not part of this Agreement, but are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or any provision in it.

26. SOLE BENEFIT. Nothing expressed or referred to in this Agreement is intended or shall be construed to give any person other than the Indemnitors, their successors and assigns, and the Indemnitee and the Indemnitee's personal representative, heirs or devisees, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provisions contained herein. The assumption of obligations and statements of responsibilities and all conditions and provisions of this Agreement are for the sole benefit of the Indemnitors, their successors and assigns, and the Indemnitee and the Indemnitee's personal representatives, heirs or devisees.

IN WITNESS WHEREOF, the Indemnitee and the Indemnitors have executed several originals of this Agreement as of the date first set forth above, but actually on the dates set forth below.

THE "INDEMNITEE"                        STOCK YARDS BANK & TRUST COMPANY

Name:                                   By:
     -----------------------------         -------------------------------------
Date:                                   Title:
     -----------------------------            ----------------------------------
                                        Date:
                                              ----------------------------------

                                        S.Y. BANCORP, INC.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------
                                        Date:
                                              ----------------------------------

SENIOR EXECUTIVE SEVERANCE AGREEMENT

This Agreement is made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation with its principal office located in Louisville, Kentucky (the "Bank") and DAVID H. BROOKS, and with an address at 1040 East Main Street, Louisville, Kentucky 40206 (the "Executive").

W I T N E S S E T H:

The Bank is a wholly owned subsidiary of S.Y. Bancorp, Inc., a Kentucky corporation and bank holding company ("SY Bancorp").

SY Bancorp, as the sole shareholder of the Bank, considers the establishment and maintenance of a sound and vital management team to be essential to protecting and enhancing the best interests of the Bank, SY Bancorp, and SY Bancorp's shareholders.

SY Bancorp and the Bank recognize that, as is the case with many publicly held bank holding companies, the possibility exists that an unsolicited tender offer or takeover bid and a consequent change of control of SY Bancorp may occur, and thus, that as a practical matter, a change of control of the Bank, may occur, and that such a possibility is unsettling and distracting to key executives of the Bank.

SY Bancorp and the Bank have concluded that it is in the best interests of SY Bancorp, its shareholders and the Bank to take reasonable steps to help assure certain key executives of the Bank that, notwithstanding an unsolicited tender offer or takeover bid, or an actual change of control, they will be treated fairly and with concern for their welfare.

SY Bancorp and the Bank have also concluded that it is important that, should SY Bancorp receive takeover or acquisition proposals from third parties, that it be able to call upon the key executives of the Bank for their candid assessment and advice concerning whether such proposals are in the best interests of SY Bancorp, its shareholders and the Bank, free of the influences caused by the uncertainties and risks of their own personal employment situations.

For the foregoing reasons the Board of Directors of SY Bancorp and of the Bank have approved the Bank's entering into severance agreements with key executives of the Bank pursuant to the Bank's Senior Executive Severance Plan (the "Plan").

The Executive is a key executive of the Bank and has been selected by the Bank's board of directors and by the board of directors of the Bank's sole shareholder, SY Bancorp, as a key executive to participate in and under the Plan.

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NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the Bank and the Executive agree as follows:

1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

"TERM" shall mean the period commencing on the date first above written and ending on the last day of the month in which Executive attains the age of sixty-five (65) years.

A "CHANGE OF CONTROL" shall be deemed to have taken place if: (i) a third 'person" as defined in Sections 13(d) and 14(d) (2) of the Securities Exchange Act of 1934, including but not limited to a "group" as defined in Section 13(d)
(3) of such Act, becomes the beneficial owner, directly or indirectly, of securities of SY Bancorp or the Bank representing forty percent (40%) or more of the combined voting power of SY Bancorp's or the Bank's then outstanding securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of SY Bancorp cease for any reason to constitute at least a majority of such board of directors, unless the election, or the nomination or election by SY Bancorp's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

"CAUSE" for termination shall exist if the Executive (i) willfully and continually fails to substantially perform his duties (other than as a result of incapacity or temporary or Permanent Disability) for the Bank as described in the most recent written description of such duties maintained by the Bank's personnel department and communicated to the Executive after a written demand for substantial performance is delivered to the Executive by the Bank's board of directors specifically identifying the manner in which the board of directors believes that the Executive has not substantially performed his duties; or (ii) engages in gross misconduct constituting a violation of law or breach of fiduciary duty which misconduct is materially and demonstrably injurious to the Bank.

"CUSTOMER" shall mean any firm, individual, corporation or entity which used the facilities, products or services of the Bank during the twelve (12) month period immediately preceding the voluntary or involuntary termination of Executive's employment with the Bank; but Customer shall not include any firm, individual, corporation or entity with which Executive had a business relationship, either for Executive or for Executive's previous employer, prior to the date of Executive's employment with the Bank and which Executive specifically identifies in writing to the Bank within thirty (30) days following the date of Executive's employment with the Bank, except that following

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eighteen (18) months employment with the Bank, any such firm, individual, corporation or entity so identified by Executive shall be deemed to have become a Customer of the Bank if they otherwise meet the definition of "Customer" as set forth above.

"FORCED RESIGNATION" means a resignation by the Executive following a Change in Control and the occurrence of any of the following:

(i) without his express written consent, the Executive is assigned any duties inconsistent with the positions, duties, responsibilities and status he held with the Bank immediately prior to the Change in Control, or a change occurs in the Executive's reporting responsibilities, titles or offices as in effect immediately prior to the Change in Control, or the Executive is removed from, or there is a failure to re-elect the Executive to, any of such positions, except in connection with the termination of the Executive's employment for Cause, or Retirement, or as a result of his death or Permanent Disability;

(ii) a reduction by the Bank in the Executive's salary as in effect on the date hereof or as the same may have been increased from time to time prior to the Change in Control;

(iii) the Bank's requiring the Executive to work from an office anywhere other than at the Bank's principal executive offices, except for required travel on the Bank's business to an extent substantially consistent with his present business travel obligations or such obligations as are incident to a promotion;

(iv) the failure by the Bank to continue in effect any deferred benefit or compensation plan, pension plan, profit sharing plan, life insurance plan, major medical or hospitalization plan or disability plan in which the Executive is participating at the time of the Change in Control (or plans providing substantially similar benefits), or the taking of any action by the Bank which would adversely affect the Executive's participation in, or materially reduce his benefits under, any of such plans or deprive him of any material fringe benefits; or

(v) the failure by the Bank to provide the Executive with the number of paid vacation, illness, and personal leave days to which he is entitled at the time of a Change in Control in accordance with the Bank's normal personnel policy applicable to all employees.

"RETIREMENT" shall mean the Executive's retirement in accordance with the Bank's retirement policy applicable to all employees classified as "senior executives".

"BASE AMOUNT" shall have the meaning given to such term in Section 280G(b)(3) of the Internal Revenue Code of 1986.

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"PERMANENT DISABILITY" means any mental or physical condition or impairment which prevents the Executive from substantially performing his duties for a period of more than ninety (90) consecutive days.

2. SEVERANCE PAYMENT UPON TERMINATION FOLLOWING CHANGE IN CONTROL. During the Term, in the event of (i) the Executive's Forced Resignation following a Change in Control or (ii) the termination (whether voluntary or involuntary) of the Executive's employment with the Bank following a Change in Control other than for Cause or as a result of the Executive's death, Retirement, or Permanent Disability, the Bank shall pay the Executive his full salary through the date of such termination or resignation, which termination shall not be effective until the later of two (2) weeks following written notice thereof to the Executive or the effective date set forth in the notice of termination. On the effective date of such termination or resignation, the Bank shall also pay to the Executive a severance payment equal to 299 percent of the Executive's Base Amount (the "Severance Payment"); provided, however, such Severance Payment shall only be payable in the event of voluntary termination or resignation, occurring within thirty-six (36) months of a Change in Control. In the event such voluntary termination or resignation occurs less than two (2) years following a Change in Control, the Executive shall receive the full Severance Payment. In the event such voluntary termination or resignation occurs more than two (2) years but up to three (3) years following a Change in control, the Executive shall receive only ___ of the Severance Payment. Thereafter, Severance Payment shall be made hereunder only following Forced Resignation or involuntary termination other than for cause. The Severance Payment shall be payable to the Executive in a lump SUM,, in immediately available funds, on the date the Executive's termination is effective, and shall be subject to any applicable payroll or other taxes required to be withheld. The Severance Payment shall be in lieu of the severance payment provided for by the Bank in accordance with its standard of practice and operations for Executive at the time of payment of the Severance Payment.

3. OTHER PAYMENTS AND BENEFITS. Upon termination of the Executive's employment, the Executive shall have the following rights with respect to certain fringe benefits provided by the Bank:

(a) ACCRUED VACATION AND SICK PAY. The Executive shall be entitled to receive, in accordance with the Bank's standard employment policies in effect as of the date of this Agreement (or such more favorable policies as exist on the date of such termination), payment for all accrued and unpaid vacation and sick days.

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(b) INSURANCE. The Executive shall be entitled to continue, at his sole cost and expense, his participation in all life, disability, major medical and hospitalization insurance plans maintained by the Bank for his benefit or, in the event that such continuation is not permitted under the terms of such plans, the Bank shall, at the Executive's request, arrange for comparable individual plans for the benefit of, but at the sole expense of, the Executive, or shall provide the Executive with such other and greater rights as are required by applicable law.

(c) PROFIT SHARING AND PENSION PLANS. The Executive's participation in all profit sharing, pension, deferred benefit and retirement plans shall continue through the last day of the Executive's employment, with any terminating distributions and/or vested rights under such plans being governed by the terms of such plans.

(d) LOAN PROGRAM. All loans to the Executive under the Bank's loan program that are outstanding as of the time the Executive's employment ceases hereunder shall be treated in the same manner as loans are treated upon Retirement under the Bank's personnel policies in effect on the date hereof.

(e) EDUCATION PROGRAM. The Executive shall be entitled to complete, at the Bank's expense, all courses in which the Executive is enrolled under the Bank's Education Program on the date of his termination.

4. CALCULATION METHOD; ADJUSTMENTS TO SEVERANCE PAYMENT.

(a) MISCELLANEOUS REDUCTION. The Bank shall have the responsibility for calculating the Base Amount which shall serve as the basis for calculating the Severance Payments and shall provide such calculations and the support therefor to the Executive on the date of his termination, Voluntary Resignation or Forced Resignation. (Should the Bank determine that the payment of (a) a Severance Payment equal to 299 percent of the Base Amount, plus (b) the payments provided for in Section 3 hereof, plus (c) any other payments under this Agreement, plus (d) any other payments payable to the Executive as a result of his severance, cause the total of all such payments to constitute a "parachute payment" under Section 280G of the Internal Revenue Code of 1986, then the Bank shall have the right to reduce the Severance Payment to the highest amount payable to the Executive which does not cause the total of all such payments to constitute a "parachute payment." The Executive shall have a right to cause an audit to be made of the Bank's calculation of the Base Amount, the Severance Payment and the other amounts payable hereunder by a certified public accountant, benefits consultant or similar expert chosen by the Executive. If such audit reveals that the calculations performed by the Bank were in error or have resulted in the payment to the Executive of an amount less than that to which he is entitled hereunder, the Bank shall immediately

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rectify such underpayment and, in addition, reimburse the Executive for the cost of performing such audit.

(b) TRANSITION TO RETIREMENT. The Bank and Executive each acknowledge and agree that the purpose of this Agreement is not to provide unjust enrichment to Executive, but rather to provide funds or employment security, as the case may be, during any potential transition as a result of Change of Control. Accordingly, the parties hereto agree that as Executive approaches retirement age, the need for providing such support in the event of a Change of Control decreases proportionately, in part due to retirement and related benefits and their imminent availability to Executive. Based upon such rationale, the Severance Payment payable to Executive shall decrease as follows:

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AGE OF EXECUTIVE AT DATE               PERCENTAGE OF EXECUTIVE'S
  OF SEVERANCE PAYMENT                    BASE AMOUNT PAYABLE
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          58                                     250%
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          59                                     225%
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          60                                     200%
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          61                                     175%
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          62                                     150%
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          63                                     125%
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          64                                     100%
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          65                                       0%
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5. BANK REGULATORY PROVISION. Notwithstanding any other provision of this Agreement, the parties agree as follows:

(a) The Bank's board of directors may terminate the Executive's employment at any time, but any termination by the Bank's board of directors other than termination for Cause, shall not prejudice the Executive's right to compensation or other benefits under the Agreement. The Executive shall have no right to receive compensation or other benefits for any period after termination for Cause.

(b) If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)) the Bank's obligations under the Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may, in its discretion, (i) pay the Executive all or part of the compensation

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withheld while its contract obligations were suspended or (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(c) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and
(g)(1)), all obligations of the Bank under the Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under the Agreement shall terminate as of the date of default, but this paragraph 5(d) shall not affect any vested rights of the contracting parties.

(e) All obligations under the Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:

(i) by the Director or his or her designee, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in section 13(c) of the Federal Deposit Insurance Act; or

(ii) by the Director or his or her designee, at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition.

6. FEES AND COSTS. The Bank agrees to advance to Executive all legal fees, costs, and expenses arising out of or in any way related to or incurred by the Executive in connection with enforcing any right or benefit provided in this Agreement, or in interpreting this Agreement, or in contesting or disputing any termination of the Executive's employment hereunder purportedly for Cause or other action taken by the Bank hereunder;

-7-

to, or as a result of the operation of, this indemnification provision, it being the intent of this Section 6 to "gross up" the amount paid to the Executive so that he is in the same economic position he would have been but for certain payments hereunder being deemed excess parachute payments.

8. MITIGATION. The Executive shall not be required to mitigate the amount of any payment provided for in its Agreement, whether by seeking other employment or otherwise, nor shall the amount of any payment provided for herein be reduced by any compensation earned or received by the Executive as a result of his employment by another employer following his termination hereunder.

9. COVENANT NOT TO COMPETE. Notwithstanding the terms and provisions of any other "Officer Non-Solicitation and Confidentiality Agreement" by and between the Bank and the Executive, which may provide for negation of covenants not to compete from the Executive to the Bank in the event of a Change in Control as defined herein, in the event of the receipt by the Executive of Severance Payments hereunder, the Executive hereby covenants to the Bank, for a period of eighteen (18) months following the receipt of the Severance Payment as contemplated herein, Executive will not, directly or indirectly, either for the Executive or for any other person, entity or company, (i) solicit Customers, or business patronage, of the Bank for the purpose of providing services which are identical or similar to services then provided by the Bank either within the Commonwealth of Kentucky, or within a radius of fifty (50) miles from the Bank's offices in Louisville, Kentucky, (ii) divert or attempt to divert from the Bank any Customer of the Bank, or (iii) solicit for employment any employee of the Bank. It is understood that breach of this provision by Executive will result in irreparable injury to the Bank and, by reason thereof, Executive consents and agrees that, for any violation of this provision, the rights of the Bank under the terms of this Agreement may be specifically enforced with injunctive relief and Executive hereby waives any claim or defense that the Bank has an adequate remedy at law. This remedy of injunctive relief shall be in addition to the right of the Bank to pursue any other remedies at law or in equity available to it, including the recovery of damages and reasonable attorney fees.

10. NOTICES. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Bank or, in the case of the Bank, at its principal executive offices.

11. GOVERNING LAW. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky.

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12. AMENDMENT. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Bank and its successors and assigns; including but not limited to any successor to the Bank, direct or indirect, resulting from purchase, merger, consolidation or otherwise. This Agreement shall also be binding upon the Executive and shall inure to the benefit of the Executive, his personal or legal representatives, successors, heirs and assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    ------------------------------------

Title: Vice Chairman
       ---------------------------------

/s/David H. Brooks
----------------------------------------
Executive

December 31, 1994

-9-

SENIOR EXECUTIVE SEVERANCE AGREEMENT

This Agreement is made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation with its principal office located in Louisville, Kentucky (the "Bank") and DAVID P. HEINTZMAN, and with an address at 1040 East Main Street, Louisville, Kentucky 40206 (the "Executive").

W I T N E S S E T H:

The Bank is a wholly owned subsidiary of S.Y. Bancorp, Inc., a Kentucky corporation and bank holding company ("SY Bancorp").

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NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the Bank and the Executive agree as follows:

1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

"TERM" shall mean the period commencing on the date first above written and ending on the last day of the month in which Executive attains the age of sixty-five (65) years.

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"FORCED RESIGNATION" means a resignation by the Executive following a Change in Control and the occurrence of any of the following:

(ii) a reduction by the Bank in the Executive's salary as in effect on the date hereof or as the same may have been increased from time to time prior to the Change in Control;

"RETIREMENT" shall mean the Executive's retirement in accordance with the Bank's retirement policy applicable to all employees classified as "senior executives".

"BASE AMOUNT" shall have the meaning given to such term in Section 280G(b)(3) of the Internal Revenue Code of 1986.

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3. OTHER PAYMENTS AND BENEFITS. Upon termination of the Executive's employment, the Executive shall have the following rights with respect to certain fringe benefits provided by the Bank:

-4-

4. CALCULATION METHOD; ADJUSTMENTS TO SEVERANCE PAYMENT.

(f) MISCELLANEOUS REDUCTION. The Bank shall have the responsibility for calculating the Base Amount which shall serve as the basis for calculating the Severance Payments and shall provide such calculations and the support therefor to the Executive on the date of his termination, Voluntary Resignation or Forced Resignation. (Should the Bank determine that the payment of (a) a Severance Payment equal to 299 percent of the Base Amount, plus (b) the payments provided for in Section 3 hereof, plus (c) any other payments under this Agreement, plus (d) any other payments payable to the Executive as a result of his severance, cause the total of all such payments to constitute a "parachute payment" under Section 280G of the Internal Revenue Code of 1986, then the Bank shall have the right to reduce the Severance Payment to the highest amount payable to the Executive which does not cause the total of all such payments to constitute a "parachute payment." The Executive shall have a right to cause an audit to be made of the Bank's calculation of the Base Amount, the Severance Payment and the other amounts payable hereunder by a certified public accountant, benefits consultant or similar expert chosen by the Executive. If such audit reveals that the calculations performed by the Bank were in error or have resulted in the payment to the Executive of an amount less than that to which he is entitled hereunder, the Bank shall immediately

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rectify such underpayment and, in addition, reimburse the Executive for the cost of performing such audit.

(g) TRANSITION TO RETIREMENT. The Bank and Executive each acknowledge and agree that the purpose of this Agreement is not to provide unjust enrichment to Executive, but rather to provide funds or employment security, as the case may be, during any potential transition as a result of Change of Control. Accordingly, the parties hereto agree that as Executive approaches retirement age, the need for providing such support in the event of a Change of Control decreases proportionately, in part due to retirement and related benefits and their imminent availability to Executive. Based upon such rationale, the Severance Payment payable to Executive shall decrease as follows:

==================================================================
 AGE OF EXECUTIVE AT DATE            PERCENTAGE OF EXECUTIVE'S
   OF SEVERANCE PAYMENT                 BASE AMOUNT PAYABLE
------------------------------------------------------------------
           58                                  250%
------------------------------------------------------------------
           59                                  225%
------------------------------------------------------------------
           60                                  200%
------------------------------------------------------------------
           61                                  175%
------------------------------------------------------------------
           62                                  150%
------------------------------------------------------------------
           63                                  125%
------------------------------------------------------------------
           64                                  100%
------------------------------------------------------------------
           65                                    0%
------------------------------------------------------------------

5. BANK REGULATORY PROVISION. Notwithstanding any other provision of this Agreement, the parties agree as follows:

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withheld while its contract obligations were suspended or (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(e) All obligations under the Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:

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11. GOVERNING LAW. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    ------------------------------------

Title: Vice Chairman
       ---------------------------------

/s/David D. Heintzman
----------------------------------------
Executive

December 31, 1994

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SENIOR EXECUTIVE SEVERANCE AGREEMENT

This Agreement is made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation with its principal office located in Louisville, Kentucky (the "Bank") and KATHLEEN C.THOMPSON, and with an address at 1040 East Main Street, Louisville, Kentucky 40206 (the "Executive").

W I T N E S S E T H:

The Bank is a wholly owned subsidiary of S.Y. Bancorp, Inc., a Kentucky corporation and bank holding company ("SY Bancorp").

-1-

NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the Bank and the Executive agree as follows:

1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

"TERM" shall mean the period commencing on the date first above written and ending on the last day of the month in which Executive attains the age of sixty-five (65) years.

A "CHANGE OF CONTROL" shall be deemed to have taken place if: (i) a third 'person" as defined in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, including but not limited to a "group" as defined in Section 13(d)
(3) of such Act, becomes the beneficial owner, directly or indirectly, of securities of SY Bancorp or the Bank representing forty percent (40%) or more of the combined voting power of SY Bancorp's or the Bank's then outstanding securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of SY Bancorp cease for any reason to constitute at least a majority of such board of directors, unless the election, or the nomination or election by SY Bancorp's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

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"FORCED RESIGNATION" means a resignation by the Executive following a Change in Control and the occurrence of any of the following:

(ii) a reduction by the Bank in the Executive's salary as in effect on the date hereof or as the same may have been increased from time to time prior to the Change in Control;

"RETIREMENT" shall mean the Executive's retirement in accordance with the Bank's retirement policy applicable to all employees classified as "senior executives".

"BASE AMOUNT" shall have the meaning given to such term in
Section 280G(b)(3) of the Internal Revenue Code of 1986.

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3. OTHER PAYMENTS AND BENEFITS. Upon termination of the Executive's employment, the Executive shall have the following rights with respect to certain fringe benefits provided by the Bank:

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4. CALCULATION METHOD; ADJUSTMENTS TO SEVERANCE PAYMENT.

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rectify such underpayment and, in addition, reimburse the Executive for the cost of performing such audit.

=======================================================
  AGE OF EXECUTIVE AT DATE  PERCENTAGE OF EXECUTIVE'S
    OF SEVERANCE PAYMENT       BASE AMOUNT PAYABLE
-------------------------------------------------------
             58                       250%
-------------------------------------------------------
             59                       225%
-------------------------------------------------------
             60                       200%
-------------------------------------------------------
             61                       175%
-------------------------------------------------------
             62                       150%
-------------------------------------------------------
             63                       125%
-------------------------------------------------------
             64                       100%
-------------------------------------------------------
             65                         0%
=======================================================

5. BANK REGULATORY PROVISION. Notwithstanding any other provision of this Agreement, the parties agree as follows:

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withheld while its contract obligations were suspended or (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(e) All obligations under the Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:

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11. GOVERNING LAW. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    ------------------------------

Title: Vice Chairman
       ---------------------------

/s/Kathy C. Thompson
----------------------------------
Executive

December 31, 1994

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S.Y. BANCORP, INC.
1995 STOCK INCENTIVE PLAN

1. PURPOSE. The name of this plan is the S.Y. Bancorp, Inc. 1995 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to further the best interests of S.Y. Bancorp, Inc. (the "Company") by (a) assisting the Company and its Subsidiaries (as hereinafter defined) in attracting and retaining key employees and nonemployee directors and (b) providing such persons with an additional incentive to work to increase the value of the Company's stock by granting them a stake in the future of the Company, which corresponds to the stake of each of the Company's shareholders.

2. DEFINITIONS.

As used in this Plan, the following terms shall have the meanings set forth below:

(a) "Award" shall mean any grant under the Plan in the form of Stock Options, Stock Appreciation Rights or any combination thereof.

(b) "Board" shall mean the Board of Directors of the Company.

(d) "Committee" shall mean the Compensation Committee of the Board, or any other committee the Board may subsequently appoint to administer the Plan. The Committee shall be composed of not less than three directors, each of whom is a Disinterested Person.

(e) "Disabled" or "Disability" shall have the meaning assigned thereto in section 22(e)(3) of the Code.

(f) "Disinterested Person" shall mean any person who is not and has not within the prior one year been eligible for selection as a person to whom Stock may be allocated or to whom Stock Options or Stock Appreciation Rights may be granted pursuant to this Plan or any other plan of the Company or any of its affiliates, entitling the participants therein to acquire Stock, stock options, or stock appreciation rights of the Company or any of its affiliates. For purposes of this definition, the terms contained herein shall have the same meaning as they have in Rule 16b-3(d)(3) promulgated under the Securities Exchange Act of 1934.

(g) "Eligible Employee" shall mean an employee of the Company, its Parent, if any, or any Subsidiary who is described in Section 5 of the Plan.

(h) "Exercise Price" shall have the meaning set forth in Section 6(c) of the Plan.

(i) "Fair Market Value" shall mean, as of any given date, with respect to any Awards granted hereunder, the mean of the high and low trading price of the stock on such date as reported on the National Association of Securities Dealers Automated Quotation System or, if the stock is admitted to trade on a national securities exchange, on such exchange; provided, however, that if any such quotation system or exchange is closed on any day on which Fair

Market Value is to be determined, Fair Market Value shall be determined as of the first day immediately preceding such day on which such exchange or quotation system was open for trading.

(j) "Incentive Stock Option" shall mean any stock option intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

(k) "Insider" shall mean any individual who is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended.

(1) "Nonemployee Director" shall mean any person who is not an employee of the Company or any Subsidiary or affiliate (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) of the Company and who on or after April 26, 1995 serves as a member of the Board.

(m) "Nonqualified Stock Option" means any stock option granted under the Plan that is not designated as an Incentive Stock Option.

(n) "Parent" shall have the meaning assigned thereto in section 424 of the Code and the regulations promulgated there under.

(o) "Rule 16b-3" shall mean Rule 16b-3, as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor regulation.

(p) "Stock" shall mean the common stock, no par value, of the Company.

(q) "Stock Appreciation Right" shall mean the right pursuant to an Award granted under Section 7 of the Plan, (i) in the case of a Related Stock Appreciation Right (as defined in Section 7 of the Plan), to surrender to the Company all or a portion of the related Stock Option and receive an amount equal to the excess of the Fair Market Value of one share of Stock as of the date such Stock Option or portion thereof is surrendered over the Exercise Price per share specified in such Stock Option, multiplied by the number of shares of Stock in respect of which such Stock Option is being surrendered, and (ii) in the case of a Freestanding Stock Appreciation Right (as defined in Section 7 of the Plan, to exercise such Freestanding Stock Appreciation Right and receive an amount equal to the excess of the Fair Market Value of one share of Stock as of the date of exercise over the price per share specified in such Freestanding Stock Appreciation Right, multiplied by the number of shares of Stock in respect of which such Freestanding Stock Appreciation Right is being exercised.

(r) "Stock Option" shall mean any option to purchase shares of Stock granted pursuant to Section 6 of the Plan.

(s) "Stock Ownership," whenever necessary to determine a person's stock ownership in the Company, its Parent or any Subsidiary, shall include stock actually owned and stock indirectly owned by application of the rules of attribution contained in section 424(d) of the Code.

(t) "Subsidiary" shall have the meaning assigned thereto in section 424 of the Code and the regulations promulgated thereunder. A "Subsidiary" shall include any entity which becomes a Subsidiary after the date of adoption of this Plan.

(u) "Surrendered Shares" shall mean the shares of Stock described in
Section 7 of the Plan which (in lieu of being purchased) are surrendered for cash or Stock, or for a combination of cash and Stock, in accordance with
Section 7.

3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee.

The Company, by action of the Committee, and subject to other provisions and limitations of this Plan, may from time to time grant Awards to such Eligible Employees as the Committee may in its sole discretion determine, for such number of shares of the Company's Stock and on such terms and conditions as the Committee may determine in its sole discretion.

The Committee may make, publish, amend, and rescind such rules and practices as it may in its sole discretion deem necessary or helpful to the administration of the Plan and the issuance and exercise of Awards granted pursuant to the Plan.

All decisions made by the Committee pursuant to the provisions of the Plan and as to the terms and conditions of any Award (and any agreements relating thereto) shall be final and binding on all persons.

4. AVAILABLE SHARES. The aggregate maximum number of shares of Stock reserved and available for issuance under this Plan shall be eighty thousand (80,000). All such shares shall be reserved to the extent the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. Any shares of Stock subject to a Stock Option which remain unissued after the cancellation, expiration or exchange of such Stock Option shall again become available for use under the Plan, but any Surrendered Shares which remain unissued after the surrender of a Stock Option under Section 7 of the Plan and any shares of Stock used to satisfy a withholding obligation under Section 6(g) of the Plan shall not again become available for use under the Plan.

5. EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE PLAN. An Eligible Employee shall mean a salaried employee of the Company, its Parent, if any, or its Subsidiaries who is designated by the Committee, in its sole discretion, as eligible to receive Awards pursuant to this Plan.

6. STOCK OPTIONS.

(a) FORM. The Stock Options granted pursuant to this Plan shall be in such form as the committee may from time to time approve. Each grant of a Stock Option pursuant to this Plan shall be made in writing upon such terms and conditions as may be determined by the Committee at the time of grant, subject to the terms, conditions, and limitations set forth in this Plan. The grant of an option shall be evidenced by a written agreement executed by the Secretary of the Company and the Eligible Employee.

(b) NATURE OF OPTIONS. The Committee shall have the right to grant any Eligible Employee either Incentive Stock Options or Nonqualified Stock Options, or both, and shall have the right to grant new Stock Options in exchange for outstanding Stock Options, which have a higher or lower Exercise Price. Whether an option is to be an Incentive Stock Option or a Nonqualified Stock Option shall be determined by the Committee in its sole discretion. Each option that the Committee intends to constitute an Incentive Stock Option shall be specifically designated as such and each option that is not intended to constitute an Incentive Stock Option shall specifically state "This option is not an incentive stock option." If any option is issued without a specific designation, it shall be deemed to constitute a Nonqualified Stock Option. The Committee may, however, specifically provide that a Stock Option shall constitute an Incentive Stock Option to the extent of its exercise as to any particular number of shares and a Nonqualified Stock Option to the extent of the remainder of the shares, provided the Committee specifically provides that the Stock Option shall be deemed an Incentive Stock Option to the extent of the first shares exercised up to the number of shares as to which the option is intended to constitute an Incentive Stock Option, and that the option shall be considered a Nonqualified Stock Option as to the remainder of the shares as to which it is exercised.

(c) EXERCISE PRICE. The Stock Options granted pursuant to this Plan shall provide a specified price at which the shares subject to the Stock Option may be purchased (hereinafter called the "Exercise Price"). If any Stock Option issued pursuant to this Plan is designated as an Incentive Stock Option, the Exercise Price for each share of Stock subject to the Incentive Stock Option shall, except as hereinafter provided, be an amount at least equal to the Fair Market Value of one share of Stock of the Company as of the date of grant of the Incentive Stock Option. Notwithstanding the above, in the event that on the date of grant of the Incentive Stock Option, an Eligible Employee owns stock (taking into account all classes of stock which are then outstanding) in the Company which possesses more than 10% of the total combined voting power of all classes of stock of the Company or owns stock of a Parent or a Subsidiary of the Company which possesses more than 10% of the total combined voting power of all classes of stock of the Company's Parent or its Subsidiary, the Exercise Price for each share of Stock subject to the Incentive Stock Option (to the extent required by the Code at the time of grant) shall be an amount equal to at least 110% of the Fair Market Value of one share of Stock of the Company as determined as of the date of grant of the Incentive Stock Option. (For purposes of this paragraph, the rules of attribution contained in section 424(d) of the Code (relating to the attribution of Stock Ownership) shall be applied to determine Stock Ownership.)

under this Plan shall provide that, in the event of the retirement of an Eligible Employee, to the extent such option is then exercisable, such option may be exercised by the Eligible Employee within three months after the date of retirement. Each Incentive Stock Option issued pursuant to this Plan shall provide that, in the event' of the Disability of an Eligible Employee while employed by the Company, its Parent or any Subsidiary, such option may thereafter be exercised by the Eligible Employee in accordance with all the terms and conditions of its original grant, including without limitation any applicable vesting requirements. In the event of the Disability of an Eligible Employee, all then outstanding Incentive Stock Options held by such Eligible Employee may be exercised at any time within twelve months after the date of determination of Disability as Incentive Stock Options, or thereafter until the stated expiration dates of the options as Nonqualified Stock Options. In the event of the death of an Eligible Employee while employed by the Company, its Parent or any Subsidiary, all then outstanding Stock Options held by such Eligible Employee shall become fully vested and immediately exercisable. Further, each Incentive Stock Option issued pursuant to this Plan shall provide that in the case of termination of employment by reason of the Eligible Employee's death, the Incentive Stock Option may be exercised by the Eligible Employee's estate or other person who receives the Stock Option by bequest or the laws of descent and distribution for a period of twelve months after the Eligible Employee's death. In no event shall the exercise period be extended beyond the time which the Eligible Employee would have been required to exercise the Incentive Stock Option had he not terminated employment, become disabled or died. The Committee shall, except as specifically restricted herein, in its own discretion, determine the term of Nonqualified Stock Options that are issued pursuant to this Plan and the circumstances in which such Nonqualified Stock Options shall be exercisable beyond the termination of employment, disability or death of the Eligible Employee; provided, that if the Nonqualified Stock Option does not specifically state when it may be exercised after the termination of the grantee's employment, death or disability, the Stock Option shall be governed by the provisions stated above for Incentive Stock Options. Except as otherwise provided in this Section 6 or Section 16 of the Plan, or as determined by the Committee in its sole discretion, if an Eligible Employee's employment with the Company, any Subsidiary or any Parent terminates (including termination for cause, voluntary resignation or other termination under mutually agreeable circumstances), all Stock Options held by the Eligible Employee will terminate immediately upon the effective date and time of the Eligible Employee's termination of employment.

(e) TRANSFERABILITY OF OPTIONS. Each Stock Option granted under this Plan shall provide that such option shall be exercisable during the grantee's lifetime only by the grantee and that such option shall not be transferable by the grantee other than by will or the laws of descent and distribution. Stock Options granted pursuant to this Plan may, but need not, provide for exercise by the grantee's estate or other person who obtains the right to exercise the option by bequest or pursuant to the laws of descent and distribution.

to pay such Exercise Price (in whole or in part) by electing that the Company withhold shares of Stock (that otherwise would be transferred to such Eligible Employee as a result of the exercise of such Stock Option) to the extent necessary to pay such Exercise Price. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date that a properly endorsed certificate for such Stock is delivered to the Committee or the date that Stock is treated by the Committee as withheld from the exercise of the Stock Option. Each Stock Option shall provide that the Exercise Price shall be payable upon or before the issuance of the Stock of the Company to be received pursuant to the exercise of the Stock Option.

(g) STATEMENT AS TO WITHHOLDING OF FEDERAL INCOME OR OTHER TAXES. The exercise or surrender of any Stock Option granted under the Plan or the exercise of a Freestanding Stock Appreciation Right shall constitute an Eligible Employee's full and complete consent to whatever action the Committee deems necessary to satisfy the federal and state tax withholding requirements, if any, which the Committee in its discretion deems applicable to such exercise or surrender. The Committee shall also have the right to provide in an option agreement that an Eligible Employee may elect to satisfy federal and state tax withholding requirements through a reduction in the number of shares of Stock actually transferred to him or her under the Plan, and if the Eligible Employee is an Insider, any such election and any such reduction shall be effected so as to satisfy the conditions to the exemption under Rule 16b-3.

(h) ADDITIONAL INCENTIVE STOCK OPTION LIMITATION. No Stock Option that is designated an Incentive Stock Option shall be issued pursuant to terms under which the right to exercise the Incentive Stock Option is affected by the exercise of another Stock Option or the right to exercise another Stock Option is affected by exercise of the Incentive Stock Option.

(i) ANNUAL LIMIT ON INCENTIVE STOCK OPTION. To the extent that the aggregate Fair Market Value of Stock (determined as of the date an Incentive Stock Option is granted) with respect to which Incentive Stock Options first become exercisable in any calendar year exceeds $100,000, such Stock Options shall be treated as Nonqualified Stock Options. The Fair Market Value of Stock subject to any other option (determined as of the date such option is granted) which (1) satisfies the requirements of Section 422 of the Code and (2) is granted to an Eligible Employee under a plan maintained by the Company, a Subsidiary or a Parent shall be treated (for purposes of this $100,000 limitation) as if granted under the Plan. The Committee shall interpret and administer the limitations set forth in this Section 6(i) in accordance with
Section 422(d) of the Code.

7. STOCK APPRECIATION RIGHTS.

(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted either in conjunction with all or part of any Stock Option granted under the Plan ("Related Stock Appreciation Rights") or alone ("Freestanding Stock Appreciation Rights") and, in either case, in addition to other Awards granted under the Plan. Eligible Employees shall enter into a Stock Appreciation Rights agreement with the Company if requested by the Committee, in such form as the Committee shall determine.

(i) TIME OF GRANT. Related Stock Appreciation Rights related to a Nonqualified Stock Option may be granted either at or after the time of the grant of such Nonqualified Stock Option. Related Stock Appreciation Rights related to an Incentive Stock Option may be granted only at

the time of the grant of such Incentive Stock Option. Freestanding Stock Appreciation Rights may be granted at any time.

(ii) EXERCISABILITY. Related Stock Appreciation Rights shall be exercisable only at such time or times and only to the extent that the Stock Options to which they relate shall be exercisable in accordance with their terms and Freestanding Stock Appreciation Rights shall be exercisable from time to time in accordance with such terms and conditions as shall be determined by the Committee in its sole discretion at or after the time of grant; provided, however, that any Stock Appreciation Right granted to an Insider shall not be exercisable during the first six months from the date of grant of such Stock Appreciation Right, except that this additional limitation shall not apply in the event of death or Disability of the Insider prior to the expiration of the six-month period. A Related Stock Appreciation Right granted in connection with an Incentive Stock Option may be exercised only if and when the Fair Market Value of the Stock subject to the Incentive Stock Option exceeds the Exercise Price of such Stock Option.

(iii) METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by an Eligible Employee by giving written notice of exercise delivered in person or by mail as required by the terms of any agreement evidencing the Stock Appreciation Right at the Company's principal executive office, specifying the number of shares of Stock in respect of which the Stock Appreciation Right is being exercised. If requested by the Committee, the Eligible Employee shall deliver to the Company the agreement evidencing the Stock Appreciation Right being exercised and, in the case of a Related Stock Appreciation Right, the Stock Option agreement evidencing any related Stock Option, for notation thereon of such exercise and return thereafter of such agreements to the Eligible Employee.

(iv) AMOUNT PAYABLE. Upon the exercise of a Related Stock Appreciation Right, an Eligible Employee shall be entitled to receive an amount in cash or shares of Stock equal in value to the excess of the Fair Market Value of one share of Stock on the date of exercise over the Exercise Price per share specified in the related Stock Option, multiplied by the number of shares of Stock in respect of which the Related Stock Appreciation Right shall have been exercised, with the Committee having in its sole discretion the right to determine the form of payment.

Upon the exercise of a Freestanding Stock Appreciation Right, an Eligible Employee shall be entitled to receive an amount in cash or shares of Stock equal in value to the excess of the Fair Market Value of one share of Stock on the date of exercise over the price per share specified in the Freestanding Stock Appreciation Right, which shall be not less than 100% of the Fair Market Value of the Stock on the date of grant, multiplied by the number of shares of Stock in respect of which the Freestanding Stock Appreciation Right shall have been exercised, with the Committee having in its sole discretion the right to determine the form of payment.

(b) TERMS AND CONDITIONS. Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.

(i) TERM OF STOCK APPRECIATION RIGHTS. The term of a Related Stock Appreciation Right shall be the same as the term of the related Stock Option. A Related Stock Appreciation Right or

applicable portion thereof shall terminate and no longer be exercisable upon the exercise, termination, cancellation or surrender of the related Stock Option, except that, unless otherwise provided by the Committee in its sole discretion at or after the time of grant, a Related Stock Appreciation Right granted with respect to less than the full number of shares of Stock covered by a related Stock Option shall terminate and no longer be exercisable if and to the extent that the number of shares of Stock covered by the exercise, termination, cancellation or surrender of the related Stock Option exceeds the number of shares of Stock not covered by the Related Stock Appreciation Right.

The term of each Freestanding Stock Appreciation Right shall be fixed by the Committee, but no Freestanding Stock Appreciation Right shall be exercisable more than ten years after the date such right is granted.

(ii) TRANSFERABILITY OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be transferable only when and to the extent that a Stock Option would be transferable under Section 6(e) of the Plan.

(iii) TERMINATION OF EMPLOYMENT. In the event of the termination of employment of an Eligible Employee holding a Related Stock Appreciation Right, such right shall be exercisable to the same extent that the related Stock Option is exercisable after such termination.

In the event of the termination of employment of the holder of a Freestanding Stock Appreciation Right, such right shall be exercisable to the same extent that a Stock Option with the same terms and conditions as such Freestanding Stock Appreciation Right would have been exercisable in the event of the termination of employment of the holder of such Stock Option.

8. GRANT OF OPTIONS TO NONEMPLOYEE DIRECTORS. Each Nonemployee Director who is serving as such on April 26, 1995, shall as of such date automatically (without any action by the Committee) be granted a Nonqualified Stock Option to purchase one thousand (1,000) shares of Stock for an Exercise Price equal to 100% of the Fair Market Value of the Stock on such date. Each Nonemployee Director who is first elected to serve as such after April 26, 1995 at any annual or special meeting of shareholders of the Company shall as of the date of such election automatically (without any action by the Committee) be granted a Nonqualified Stock Option to purchase one thousand (1,000) shares of Stock for an Exercise Price equal to 100% of the Fair Market Value of the Stock on such date. Subject to Section 16 of the Plan, a Nonemployee Director must serve continuously as a Nonemployee Director of the Company for a period of twelve consecutive months after the date such Stock Option is granted before he or she can exercise any part of such Stock Option. Thereafter, on and after the first anniversary of the date of granting the Stock Option and before the second anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 20% of the number of shares of Stock covered thereby; on and after the second anniversary and before the third anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 40% of the number of shares of Stock covered thereby; on and after the third anniversary and before the fourth anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 60% of the number of shares of Stock covered thereby; on and after the fourth anniversary and before the fifth anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 80% of the number of shares of Stock

covered thereby; and on and after the fifth anniversary and before the expiration of the stated term of the Stock Option, which shall be ten years from the date of its granting, the Nonemployee Director may at any time or from time to time exercise the Stock Option with respect to all or any portion of the shares of Stock covered thereby. If a Nonemployee Director's service with the Company terminates by reason of permanent or total disability, death or retirement or resignation from active service as a director of the Company, any Stock Option held by such Nonemployee Director may be exercised for a period of twelve months from the date of such termination or until the expiration of the Stock Option, whichever is shorter, to the extent to which the individual would on the date of exercise have been entitled to exercise the Stock Option if such individual had continued to serve as a Nonemployee Director; provided, however, if a Nonemployee Director's service with the Company terminates by reason of his or her attainment of the Company's mandatory retirement age for directors, all outstanding Stock Options granted under the Plan shall become fully vested and immediately exercisable. All applicable provisions of the Plan not inconsistent with this Section 8 shall apply to Nonqualified Stock Options granted to Nonemployee Directors; provided, however, that the Committee may not exercise discretion under any provision of the Plan with respect to Stock Options granted under this Section 8 to the extent that such discretion is inconsistent with Rule 16b-3. The maximum number of shares of Stock as to which Stock Options may be granted to any Nonemployee Director under the Plan, as in effect through April 25, 2005, shall be one thousand (1,000) shares of Stock. A grant of a Nonqualified Stock Option to a Nonemployee Director under this Section 8 is intended to allow such Nonemployee Director to be a Disinterested Person and all Nonqualified Stock Options granted to Nonemployee Directors as well as this
Section 8 shall be construed to effect such intent.

9. TERMINATION OF EMPLOYMENT. The employment of an Eligible Employee by the Company shall not be deemed to have terminated for purposes of this Plan if the Eligible Employee is transferred to and becomes an employee of a Subsidiary or Parent of the Company. Further, the Eligible Employee's employment by the Company shall not be considered terminated if he becomes an employee of another corporation (the "Other Company") which assumes the Stock Options issued pursuant to this Plan or issues its own stock option in substitution of an option issued under this Plan in a transaction to which section 424(a) of the Code applies, provided he becomes an employee of the Other Company, its Subsidiary or its Parent at the time of the transaction. Absence on leave, whether paid or unpaid, approved by the management of the Company shall not constitute the termination of employment for any purpose of this Plan, provided the leave does not exceed ninety (90) days. To the extent required under Section 421 of the Code for favorable tax treatment for Incentive Stock Options, if the period of leave of absence exceeds ninety (90) days, the leave of absence shall be considered a termination of employment unless the Eligible Employee's right to return is guaranteed by statute or contract. If the Eligible Employee's right to return is not so guaranteed, the Eligible Employee shall be considered to have terminated his employment, for purposes of this Plan, as of the end of the ninetieth (90th) day of such absence. The immediately preceding two sentences shall apply solely for tax treatment purposes and not for any other purpose under the Plan.

10. REQUIREMENTS OF LAW. If any law, any regulation of the Securities and Exchange Commission, or any regulation of any other commission or agency having jurisdiction shall require the Company or the exercising optionee to take any action with respect to the shares of Stock to be acquired upon exercise of a Stock Option, then the date upon which the Company shall deliver or cause to be delivered the certificate or certificates for the shares of Stock shall be

postponed until full compliance has been made with all such requirements of law or regulations. Further, if the Company shall so require at or before the time of the delivery of the shares with respect to which the exercise of a Stock Option has been made, the exercising optionee shall deliver to the Company his written statement that he intends to hold the shares so acquired by him on exercise of the Stock Option for investment only and not with a view to resale or other distribution thereof to the public. Further, in the event the Company shall have determined that in compliance with the Securities Act of 1933 or other applicable statute or regulation, it is necessary to register any of the shares of Stock with respect to which the exercise of a Stock Option has been made, or qualify such shares for exemption from any requirements of the Securities, Act of 1933 or other applicable statutes or regulations, then the Company shall take such action at its own expense, but not until such action has been completed shall the shares subject to the Stock Option be delivered to the exercising optionee. Further, in the event at the time of exercise of the Stock Option shares of Stock of the Company shall be listed on any stock exchange, then if required to do so, the Company shall register the shares with respect to which exercise is so made in accordance with the provisions of the Securities Act of 1933 or any other applicable law or regulations, and the Company shall make prompt application for the listing of option shares on such stock exchange, again at the expense of the Company.

11. ADJUSTMENT. The number, kind or class (or any combination thereof) of shares of Stock reserved under Section 4 of the Plan, the number, kind or class (or any combination thereof) of shares of Stock subject to Awards granted under the Plan, the Exercise Price of any outstanding Stock Options and the price per share specified in a Freestanding Stock Appreciation Right shall be adjusted by the Board in an equitable manner to reflect any change in the capitalization of the Company, including, but not limited to, such changes as stock dividends or stock splits. Furthermore, the Board shall have the right to adjust (in a manner which satisfies the requirements of Section 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock reserved under Section 4 of the Plan, the number, kind or class (or any combination thereof) of shares of Stock subject to Awards granted under the Plan, the Exercise Price of any outstanding Stock Options and the price per share specified in a Freestanding Stock Appreciation Right in the event of any corporate transaction described in
Section 424(a) of the Code which provides for the substitution or assumption of such Awards in order to take into account on an equitable basis the effect of such transaction. If any adjustment under this Section 11 would create a fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share shall be disregarded and the number of shares of Stock reserved under the Plan and the number subject to any Awards granted under the Plan shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this Section 11 by the Board shall be conclusive and binding on all affected persons and, further, shall not constitute an increase in "the number of shares reserved under Section 4" within the meaning of Section 12 of the Plan.

12. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however,

(1) no such amendment shall be made absent the approval of the shareholders of the Company required under Section 422 of the Code (a) to increase the number of shares of Stock reserved for issuance under Section 4, or (b) to change the class of employees eligible to receive Awards under Section 5,

(2) to the extent shareholder approval is required in order for the exemption set forth in Rule 16b-3 to be available in respect of Awards granted pursuant to the Plan, the Board shall not amend the Plan absent the approval of the shareholders of the Company in accordance with Rule 16b-3, (a) to increase materially (within the meaning of Rule 16b-3) the benefits accruing to any Insider under the Plan, (b) to increase materially (within the meaning of Rule 16b-3) the number of securities which may be issued under the Plan to Insiders, or (c) otherwise modify materially (within the meaning of Rule 16b-3) the requirements as to eligibility by Insiders for participation in the Plan,

(3) no amendment shall be made to change the terms and conditions of a Stock Option which can be granted to a Nonemployee Director absent the approval of the shareholders of the Company, and

(4) no provision of the Plan (including Section 8) shall be amended more than once every six months if amending such provision would result in the loss of an exemption under Rule 16b-3.

Any amendment which specifically applies to Nonqualified Stock Options or Stock Appreciation Rights shall not require shareholder approval unless such approval is necessary to comply with Section 16 of the Securities Exchange Act of 1934, as amended, or Section 15 of the Plan. The Board also may suspend the granting of Awards under the Plan at any time and may terminate the Plan at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Award granted before such suspension or termination or otherwise impair any outstanding Award granted under the Plan unless (1) the Eligible Employee or Nonemployee Director consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in Section 11, Section 14 or Section 16 of the Plan. The Board may also vest the administration of the Plan in persons other than the Committee provided one member of any body that is vested with the power to administer the Plan shall be a member of the Board and all members of such body shall be Disinterested Persons. In the event that the authority to administer the plan is vested in any body other than the Committee, the references herein to the Committee shall be considered to be references to that body.

13. COMPANY'S RIGHT TO TERMINATE EMPLOYEES NOT IMPAIRED. Notwithstanding the provisions of this Plan or the provisions of Awards granted pursuant to this Plan, the right of the Company (or its Parent or any Subsidiary) to terminate any employee shall not be in any manner affected or impaired by the adoption of this Plan or by the grant of Awards pursuant to the Plan.

14. LIQUIDATION OF THE COMPANY. In the event of the complete liquidation or dissolution of the Company, any Awards granted pursuant to the Plan remaining unexercised shall be deemed cancelled, without regard to or limitation by any other provisions of the Plan.

15. SHAREHOLDER APPROVAL. The Plan shall be submitted to a meeting of the shareholders of the Company, either at the regular annual meeting thereof or at a special meeting

called for the purpose of the consideration of the Plan, and the Plan shall not become effective unless its adoption is approved by the shareholders of the Company within twelve (12) months of its adoption by the Board. Upon approval by the shareholders, this Plan shall take effect without further action by the Company, provided such approval is obtained within twelve (12) months of the adoption of this Plan by the Board. Any Awards granted under the Plan prior to the Plan's approval by the shareholders of the Company shall be granted subject to such approval, and absent timely approval of the Plan by such shareholders, such Awards shall be null and void.

16. SALE OR MERGER: CHANGE IN CONTROL.

(a) SALE OR MERGER. If the Company agrees to sell all or substantially all of its assets for cash or property or for a combination of cash and property or agrees to any merger, consolidation, reorganization, division or other corporate transaction in which Stock is converted into another security or into the right to receive securities or property and such agreement does not provide for the assumption or substitution of the Awards granted under the Plan in accordance with Section 11 on a basis that is fair and equitable to holders of such Awards as determined by the Board, (1) each Award granted to an Eligible Employee at the direction and discretion of the Board (A) may (subject to such conditions, if any, as the Board deems appropriate under the circumstances) be cancelled unilaterally by the Company (i) in exchange for (x) a transfer to such Eligible Employee of the number of whole shares of Stock, if any, which he or she would have received if he or she had the right to surrender his or her outstanding Stock Option or Freestanding Stock Appreciation Right in full under Section 7 of the Plan and he or she exercised that right on the date set by the Board exclusively for Stock or (y) the right to exercise his or her outstanding Stock Option or Freestanding Stock Appreciation Right in full on any date before the date as of which the Board unilaterally cancels such Award in full or, if the exchange described in this Section 16(a)(1)(A)(i) would result in a violation of Section 16 of the Securities Exchange Act of 1934, as amended, for an Eligible Employee, (ii) may be cancelled unilaterally by the Company after advance written notice to such Eligible Employee or (B) may be cancelled unilaterally by the Company if the Exercise Price or price set forth in the Freestanding Stock Appreciation Right equals or exceeds the Fair Market Value of a share of Stock on a date set by the Board and (2) each Stock Option granted to a Nonemployee Director shall be cancelled unilaterally by the Company on a date set by the Board to the extent unexercised on such date after advance written notice to each affected Nonemployee Director.

(b) CHANGE IN CONTROL. If there is a Change in Control of the Company or a tender or exchange offer is made for Stock other than by the Company, the Board thereafter shall have the right (1) to take such action with respect to any unexercised Awards granted to Eligible Employees or all such Awards as the Board deems appropriate under the circumstances to protect the interest of the Company in maintaining the integrity of such grants under the Plan, including following the procedure set forth in Section 16(a) for a sale or merger of the Company with respect to such Awards and (2) to follow the procedures for Nonemployee Directors set forth in Section 16(a) with respect to any and all unexercised Nonqualified Stock Options granted to Nonemployee Directors. The Board shall have the right to take different action under this Section 16(b) with respect to different Eligible Employees or different groups of Eligible Employees, as the Board deems appropriate under the circumstances. For purposes of the Plan, a "Change in Control" of the Company shall be deemed to have occurred if:

(i) any Person (as defined in this Section 16) is or becomes the Beneficial Owner (as defined in this Section 16) of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (unless (A) such Person is the Beneficial Owner of 20% or more of such securities as of April 26, 1995 or (B) the event causing the 20% threshold to be crossed is an acquisition of securities directly from the Company);

(ii) during any period of two consecutive years beginning after April 26, 1995, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board;

(iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation (other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation), in combination with voting securities of the Company or such surviving entity held by a trustee or other fiduciary pursuant to any employee benefit plan of the Company or such surviving entity or of any Subsidiary of the Company or such surviving entity, at least 80% of the combined voting power of the securities of the Company or such surviving entity outstanding immediately after such merger or consolidation); or

(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets.

(c) For purposes of the definition of Change in Control, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act as supplemented by Section 13(d)(3) of the Exchange Act; provided, however, that Person shall not include (i) the Company, any Subsidiary or any other Person controlled by the Company, (ii) any trustee or other fiduciary holding securities under any employee benefit plan of the Company or of any Subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of securities of the Company.

(d) For purposes of the definition of Change of Control, a Person shall be deemed the "Beneficial Owner" of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to and in accordance with, the Exchange Act and the applicable rules and regulations thereunder or (y) made in connection with, or to otherwise

participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Exchange Act and the applicable rules and regulations thereunder; in either case described in clause (x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

17. QUALIFICATION OF OPTIONS ISSUED UNDER THE PLAN AS INCENTIVE STOCK OPTIONS. It is the intention of the Company that those Stock Options that are issued pursuant to the Plan that are designated as Incentive Stock Options shall constitute "incentive stock options" within the meaning of section 422 of the Code. However, in the event that any Stock Option so designated does not constitute an "incentive stock option" within the meaning of section 422 of the Code for any reason whatsoever, none of the Company, a Parent or Subsidiary or their shareholders, directors, officers or employees, shall be liable to any person for such failure to constitute an "incentive stock option." If the characterization of any Stock Option as an "incentive stock option" within the meaning of section 422 of the Code is challenged by the Internal Revenue Service, the Company may, but shall not be required to, pay the reasonable legal and accounting expenses incurred in an attempt to establish the characterization of the Stock Options issued under the Plan as "incentive stock options" within the meaning of section 422 of the Code. In all events, however, the Company shall make available to any Eligible Employee such factual information, which is reasonably necessary to establish the characterization of the Stock Options for federal income tax purposes.

It is intended that any Stock Option granted under the Plan that is not specifically designated as an Incentive Stock Option shall not constitute an Incentive Stock Option.

l8. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective on the date it is approved by the shareholders of the Company.

19. TERM OF THE PLAN. No Stock Option may be issued pursuant to the Plan on or after the earlier of (i) its termination by action of the Board; (ii) ten years from the earlier of the date of adoption of this Plan by the Board or its approval by the shareholders of the Company; or (iii) the date on which all of the Stock reserved under Section 4 of the Plan has (as a result of the surrender or exercise of Stock Options granted under the Plan) been issued or is no longer available for use under the Plan.

20. SHAREHOLDER RIGHTS. No Eligible Employee or Nonemployee Director shall have any rights as a shareholder of the Company as a result of the grant of an Award under, the Plan or his or her exercise or surrender of such Award pending the actual delivery of any Stock subject to such Award to such Eligible Employee or Nonemployee Director.

21. CONSTRUCTION. The Plan shall be construed under the laws of the state of Kentucky.

22. OTHER CONDITIONS. Each agreement evidencing an Award may require that an Eligible Employee or Nonemployee Director (as a condition to the exercise of such Award) enter into any agreement or make such representations prepared by the Company, including any agreement which restricts the transfer of Stock acquired pursuant to the exercise of an Award or provides for the purchase of such Stock by the Company under certain circumstances.

38769:Lou2

AMENDMENT NUMBER ONE TO THE
SENIOR EXECUTIVE SEVERANCE AGREEMENT

Pursuant to the power reserved in Section 12 of the Senior Executive Severance Agreement ("Agreement") made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation ("Bank"), AND DAVID H. BROOKS ("Executive"), the Bank and the Executive hereby amend the Agreement, effective this 27TH day of February, 1997, as follows:

Section 1

By amending Section 1, DEFINITIONS, to revise the definition of "CHANGE OF CONTROL" to read as follows:

A "CHANGE IN CONTROL" of SY Bancorp shall be deemed to have occurred if:

(i) any Person (as defined in this definition) is or becomes the Beneficial Owner (as defined in this definition) of securities of SY Bancorp representing 20% or more of the combined voting power of SY Bancorp's then outstanding securities (unless (A) such Person is the Beneficial Owner of 20% or more of such securities as of April 26, 1995 or (B) the event causing the 20% threshold to be crossed is an acquisition of securities directly from SY Bancorp);

(ii) during any period of two consecutive years beginning after April 26, 1995, individuals who at the beginning of such period constitute the Board of Directors of SY Bancorp and any new director (other than a director designated by a person who has entered into an agreement with SY Bancorp to effect a transaction described in clause (i), (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board of Directors of SY Bancorp;

(iii) the shareholders of SY Bancorp approve a merger or consolidation of SY Bancorp with any other corporation (other than a merger or consolidation which would result in the voting securities of SY Bancorp outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation), in combination

with voting securities of SY Bancorp or such surviving entity held by a trustee or other fiduciary pursuant to any employee benefit plan of SY Bancorp or such surviving entity or of any subsidiary of SY Bancorp or such surviving entity, at least 80% of the combined voting power of the securities of SY Bancorp or such surviving entity outstanding immediately after such merger or consolidation); or

(iv) the shareholders of SY Bancorp approve a plan of complete liquidation or dissolution of SY Bancorp or an agreement for the sale or disposition by SY Bancorp of all or substantially all of SY Bancorp's assets.

(v) For purposes of the definition of Change in Control, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended, as supplemented by Section 13(d)(3) of such Act; provided, however, that Person shall not include (i) SY Bancorp, any subsidiary or any other Person controlled by SY Bancorp, (ii) any trustee or other fiduciary holding securities under any employee benefit plan of SY Bancorp or of any subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of SY Bancorp in substantially the same proportions as their ownership of securities of SY Bancorp.

(vi) For purposes of the definition of Change in Control, a Person shall be deemed the "Beneficial Owner" of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder or (y) made in connection with, or to otherwise participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder; in either case described in clause (x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Securities Exchange Act of 1934,

as amended (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

Section 2

By amending Section 1, DEFINITIONS, to revise the preamble to definition of "FORCED RESIGNATION" to read as follows:

"FORCED RESIGNATION" means a resignation at the Executive's initiative following a Change in Control and the occurrence of any of the following triggering events, provided such resignation occurs within twelve (12) months after a triggering event or, if earlier, within thirty-six (36) months after a Change in Control:

Section 3

By amending Section 1, DEFINITIONS, to add a definition of the term "Acquisition Transaction" to read as follows:

"ACQUISITION TRANSACTION" shall be deemed to have taken place if the shareholders of SY Bancorp approve (a) a merger or consolidation of SY Bancorp with any other corporation, other than a merger or consolidation which would result in the voting securities of SY Bancorp which are outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation) at least 80% of the voting securities of SY Bancorp or such surviving entity outstanding immediately after such merger or consolidation or (b) a plan of complete liquidation or dissolution of SY Bancorp or an agreement for the sale or disposition by SY Bancorp of all or substantially all of SY Bancorp's assets.

Section 4

By amending Section 2 to renumber the existing language in Section 2 as
Section 2(b) and to add a new Section 2(a) to read as follows:

(a)(i) SEVERANCE PAYMENT UPON INVOLUNTARY TERMINATION PRIOR TO ACQUISITION TRANSACTION. Except as set forth in Section 2(a)(ii), if the Executive's employment with the Bank is involuntarily terminated by the Board of Directors of the Bank during the Term and within a twelve month period beginning on the later of

the date the Board of Directors approves the going forward of discussions with a potential buyer or buyers for SY Bancorp or the Bank or the date the Executive has expressed the Executive's written opposition to such sale or potential sale of SY Bancorp or the Bank to the Board of Directors, the Bank shall pay the Executive (A) his full salary through the date of such termination, which termination shall not be effective until the later of the effective date set forth in the Notice of Termination or two weeks following written notice to the Executive, and (B) the Severance Payment described in this Section
2(a)(i). On the effective date of an Acquisition Transaction which results from such discussions, the Bank shall pay to the Executive a severance payment equal to 299 percent of the Executive's Base Amount (the "Severance Payment"). The Severance Payment under this Section 2(a)(i) shall be payable to the Executive in a lump sum, in immediately available funds, and shall be subject to any applicable payroll or other taxes required to be withheld. Such Severance Payment shall be in lieu of any other severance payment provided for by the Bank in accordance with its standard of practice and operations for Executive at the time of payment of this Severance Payment.

(a)(ii) FORFEITURE OF SEVERANCE PAYMENT. No payment shall be made under Section 2(a)(i) to the Executive if (A) the Executive voluntarily divulges or otherwise discloses, directly or indirectly, any trade secrets or other confidential information concerning the business, policies, or sale or potential sale of SY Bancorp or the Bank which is not lawfully attainable from public sources, unless such disclosure is required by law or authorized by the Bank, (B) the Executive is involuntarily terminated by the Bank for Cause, (C) the Executive is terminated due to death, Retirement or Permanent Disability, or (D) the Executive fails to fulfill the Executive's responsibilities as an officer and/or director of the Bank and SY Bancorp during the period after the above-mentioned Board of Director's approval and while the Executive remains employed by the Bank; provided, however, following public announcement by the Bank or SY Bancorp of an Acquisition Transaction or proposed Acquisition Transaction, the Executive shall not be deemed to have breached his responsibilities as an officer or director of the Bank and SY Bancorp and thereby to have forfeited his entitlement to the severance payment described in Section 2(a)(i) above if he expresses publicly his opposition to such transaction or proposed transaction, solicits votes or proxies from shareholders of SY Bancorp against the transaction or

otherwise solicits or encourages others to oppose such transaction.

Section 5

By amending the new Section 2(b) to read as follows:

(b) SEVERANCE PAYMENT UPON TERMINATION FOLLOWING CHANGE IN CONTROL. During the Term, if the Executive's employment with the Bank terminates (either at the initiative of the Bank or the Executive) within thirty-six (36) months after a Change in Control for any reason whatsoever other than for Cause or as a result of the Executive's death, Retirement, or Permanent Disability, the Bank shall pay the Executive his full salary through the date of such termination, which termination shall not be effective until the later of two (2) weeks following written notice thereof to the Executive or the effective date set forth in the notice of termination. In addition, for a termination at the initiative of the Executive (other than a Forced Resignation) that occurs within twenty-four (24) months after a Change in Control, the Bank shall pay the Severance Payment to the Executive as of the effective date of such termination. For a termination at the initiative of the Executive (other than a Forced Resignation) that occurs more than twenty-four (24) months but less than thirty-six (36) months after a Change in Control, the Bank shall pay the Executive as of the effective date of such termination 2/3 of the Severance Payment. For a termination at the Bank's initiative (other than for Cause) that occurs within thirty-six (36) months after a Change in Control or for a Forced Resignation, the Bank shall pay the Severance Payment to the Executive as of the effective date of such termination. Notwithstanding any provision to the contrary, in no event shall any Severance Payment (or portion thereof) be paid to the Executive if the Executive's employment is terminated for Cause or as a result of the Executive's death, Retirement, or Permanent Disability. Further, the Severance Payment (or portion thereof) shall be payable to the Executive in a lump sum, in immediately available funds, on the date the Executive's termination is effective, and shall be subject to any applicable payroll or other taxes required to be withheld. The Severance Payment shall be in lieu of any other severance payment provided for by the Bank in accordance with its standard of practice and operations for Executive at the time of payment of the Severance Payment.

Section 6

By amending Section 2 to add a new Section 2(c) to read as follows:

(c) NON-DUPLICATION OF PAYMENTS. In no event shall the Executive receive a payment under both Sections 2(a) and 2(b), and to the extent the Executive satisfies the conditions for payment under both such sections, the Bank shall pay to the Executive the payment computed under whichever section results in the largest payment to the Executive.

Section 7

By amending Section 3(a), ACCRUED VACATION AND SICK PAY, to read as follows:

The Executive shall be entitled to receive, in accordance with the Bank's standard employment policies in effect as of the date of this Agreement (or such more favorable policies as exist on the date of such termination), payment for any vacation and sick days which have accrued for the year in which the termination occurs but have not yet been paid to the Executive.

Section 8

By amending Section 4(a) to delete the second sentence of such section, which prior to its deletion read as follows:

(Should the Bank determine that the payment of (a) a Severance Payment equal to 299% of the Base Amount, plus (b) the payments provided for in Section 3 hereof, plus (c) any other payments under this Agreement, plus (d) any other payments payable to the Executive as a result of his severance, cause the total of all such payments to constitute a "parachute payment" under Section 280G of the Internal Revenue Code of 1986, then the Bank shall have the right to reduce the Severance Payment to the highest amount payable to the Executive which does not cause the total of all such payments to constitute a "parachute payment".

Section 9

By amending Section 7 to replace the phrase "Section 6" with "Section 7" wherever such phrase appears in such section, to add the words "as amended" after the phrase "Internal Revenue Code of 1986" each time such phrase appears in such section, and to add the following sentence at the end of Section 7:

For purposes of the preceding sentence, to the extent the payments made under this Agreement, together with other payments made by SY Bancorp or the Bank to the Executive, cause the total of all such payments to result in an "excess parachute payment" under Section

280G of the Internal Revenue Code of 1986, as amended, an ordering rule shall apply whereby the payments under this Agreement shall be deemed the "excess parachute payment"; provided, however, in no event shall the amount which is deemed to be the "excess parachute payment" for purposes of the indemnification under this Section 7 exceed the actual "excess parachute payment" under Section 280G of the Internal Revenue Code of 1986, as amended, resulting from payments made to the Executive by SY Bancorp or the Bank.

IN WITNESS WHEREOF, the parties have executed this Amendment Number One as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    -----------------

Title: Vice Chairman
       -------------

/s/David H. Brooks
------------------
Executive

AMENDMENT NUMBER ONE TO THE
SENIOR EXECUTIVE SEVERANCE AGREEMENT

Pursuant to the power reserved in Section 12 of the Senior Executive Severance Agreement ("Agreement") made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation ("Bank"), AND DAVID P. HEINTZMAN ("Executive"), the Bank and the Executive hereby amend the Agreement, effective this 27TH day of February, 1997, as follows:

Section 1

By amending Section 1, DEFINITIONS, to revise the definition of "CHANGE OF CONTROL" to read as follows:

A "CHANGE IN CONTROL" of SY Bancorp shall be deemed to have occurred if:

Section 2

By amending Section 1, DEFINITIONS, to revise the preamble to definition of "FORCED RESIGNATION" to read as follows:

Section 3

By amending Section 1, DEFINITIONS, to add a definition of the term "Acquisition Transaction" to read as follows:

Section 4

By amending Section 2 to renumber the existing language in Section 2 as
Section 2(b) and to add a new Section 2(a) to read as follows:

otherwise solicits or encourages others to oppose such transaction.

Section 5

By amending the new Section 2(b) to read as follows:

Section 6

By amending Section 2 to add a new Section 2(c) to read as follows:

Section 7

By amending Section 3(a), ACCRUED VACATION AND SICK PAY, to read as follows:

Section 8

By amending Section 4(a) to delete the second sentence of such section, which prior to its deletion read as follows:

Section 9

IN WITNESS WHEREOF, the parties have executed this Amendment Number One as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    -----------------

Title: Vice Chairman
       -------------

/s/David D. Heintzman
---------------------
Executive

AMENDMENT NUMBER ONE TO THE
SENIOR EXECUTIVE SEVERANCE AGREEMENT

Pursuant to the power reserved in Section 12 of the Senior Executive Severance Agreement ("Agreement") made and entered into between Stock Yards Bank and Trust Company, a Kentucky banking corporation ("Bank"), AND KATHLEEN C. THOMPSON ("Executive"), the Bank and the Executive hereby amend the Agreement, effective this 27TH day of February, 1997, as follows:

Section 1

By amending Section 1, DEFINITIONS, to revise the definition of "CHANGE OF CONTROL" to read as follows:

A "CHANGE IN CONTROL" of SY Bancorp shall be deemed to have occurred if:

Section 2

By amending Section 1, DEFINITIONS, to revise the preamble to definition of "FORCED RESIGNATION" to read as follows:

Section 3

By amending Section 1, DEFINITIONS, to add a definition of the term "Acquisition Transaction" to read as follows:

Section 4

By amending Section 2 to renumber the existing language in Section 2 as
Section 2(b) and to add a new Section 2(a) to read as follows:

otherwise solicits or encourages others to oppose such transaction.

Section 5

By amending the new Section 2(b) to read as follows:

Section 6

By amending Section 2 to add a new Section 2(c) to read as follows:

Section 7

By amending Section 3(a), ACCRUED VACATION AND SICK PAY, to read as follows:

Section 8

By amending Section 4(a) to delete the second sentence of such section, which prior to its deletion read as follows:

Section 9

IN WITNESS WHEREOF, the parties have executed this Amendment Number One as of the day and year first above written.

STOCK YARDS BANK AND TRUST COMPANY

By: /s/Henry A. Meyer
    -----------------

Title: Vice Chairman
       -------------

/s/Kathy C. Thompson
---------------------
Executive

SENIOR EXECUTIVE SEVERANCE AGREEMENT
INCLUDING AMENDMENT NUMBER ONE

This Agreement is made and entered into between Stock Yards Bank & Trust Company, a Kentucky banking corporation with its principal office located in Louisville, Kentucky (the "Bank") and NANCY B. DAVIS, and with an address at 1040 East Main Street, Louisville, Kentucky 40206 (the "Executive").

W I T N E S S E T H:

The Bank is a wholly owned subsidiary of S.Y. Bancorp, Inc., a Kentucky corporation and bank holding company ("S.Y. Bancorp").

S.Y. Bancorp, as the sole shareholder of the Bank, considers the establishment and maintenance of a sound and vital management team to be essential to protecting and enhancing the best interests of the Bank, S.Y. Bancorp, and S.Y. Bancorp's shareholders.

S.Y. Bancorp and the Bank recognize that, as is the case with many publicly held bank holding companies, the possibility exists that an unsolicited tender offer or takeover bid and a consequent change of control of S.Y. Bancorp may occur, and thus, that as a practical matter, a change of control of the Bank, may occur, and that such a possibility is unsettling and distracting to key executives of the Bank.

S.Y. Bancorp and the Bank have concluded that it is in the best interests of S.Y. Bancorp, its shareholders and the Bank to take reasonable steps to help assure certain key executives of the Bank that, notwithstanding an unsolicited tender offer or takeover bid, or an actual change of control, they will be treated fairly and with concern for their welfare.

S.Y. Bancorp and the Bank have also concluded that it is important that, should S.Y. Bancorp receive takeover or acquisition proposals from third parties, that it be able to call upon the key executives of the Bank for their candid assessment and advice concerning whether such proposals are in the best interests of S.Y. Bancorp, its shareholders and the Bank, free of the influences caused by the uncertainties and risks of their own personal employment situations.

For the foregoing reasons the Board of Directors of S.Y. Bancorp and of the Bank have approved the Bank's entering into severance agreements with key executives of the Bank pursuant to the Bank's Senior Executive Severance Plan (the "Plan").

The Executive is a key executive of the Bank and has been selected by the Bank's board of directors and by the board of

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directors of the Bank's sole shareholder, S.Y. Bancorp, as a key executive to participate in and under the Plan.

NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the Bank and the Executive agree as follows:

1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

"TERM" shall mean the period commencing on the date first above written and ending on the last day of the month in which Executive attains the age of sixty-five (65) years.

A "CHANGE IN CONTROL" of S.Y. Bancorp shall be deemed to have occurred if:

(i) any Person (as defined in this definition) is or becomes the Beneficial Owner (as defined in this definition) of securities of S.Y. Bancorp representing 20% or more of the combined voting power of S.Y. Bancorp's then outstanding securities (unless (A) such Person is the Beneficial Owner of 20% or more of such securities as of April 26, 1995 or (B) the event causing the 20% threshold to be crossed is an acquisition of securities directly from S.Y. Bancorp);

(ii) during any period of two consecutive years beginning after April 26, 1995, individuals who at the beginning of such period constitute the Board of Directors of S.Y. Bancorp and any new director (other than a director designated by a person who has entered into an agreement with S.Y. Bancorp to effect a transaction described in clause (i), (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board of Directors of S.Y. Bancorp;

(iii) the shareholders of S.Y. Bancorp approve a merger or consolidation of S.Y. Bancorp with any other corporation (other than a merger or consolidation which would result in the voting securities of S.Y. Bancorp outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation), in combination with voting securities of S.Y. Bancorp or such surviving entity held by a trustee or other fiduciary pursuant to any employee benefit plan of S.Y. Bancorp or such surviving entity or of any subsidiary of S.Y. Bancorp or such surviving entity, at least 80% of

-2-

the combined voting power of the securities of S.Y. Bancorp or such surviving entity outstanding immediately after such merger or consolidation); or

(iv) the shareholders of S.Y. Bancorp approve a plan of complete liquidation or dissolution of S.Y. Bancorp or an agreement for the sale or disposition by S.Y. Bancorp of all or substantially all of S.Y. Bancorp's assets.

(v) For purposes of the definition of Change in Control, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended, as supplemented by Section 13(d)(3) of such Act; provided, however, that Person shall not include (i) S.Y. Bancorp, any subsidiary or any other Person controlled by S.Y. Bancorp, (ii) any trustee or other fiduciary holding securities under any employee benefit plan of S.Y. Bancorp or of any subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of S.Y. Bancorp in substantially the same proportions as their ownership of securities of S.Y. Bancorp.

(vi) For purposes of the definition of Change in Control, a Person shall be deemed the "Beneficial Owner" of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder or
(y) made in connection with, or to otherwise participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder; in either case described in clause (x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Securities Exchange Act of 1934, as amended (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

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(ii) a reduction by the Bank in the Executive's salary as in effect on the date hereof or as the same may have been increased from time to time prior to the Change in Control;

(iii) the Bank's requiring the Executive to work from an office anywhere other than at the Bank's principal executive

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offices, except for required travel on the Bank's business to an extent substantially consistent with his present business travel obligations or such obligations as are incident to a promotion;

"RETIREMENT" shall mean the Executive's retirement in accordance with the Bank's retirement policy applicable to all employees classified as "senior executives".

"BASE AMOUNT" shall have the meaning given to such term in Section 280G(b)(3) of the Internal Revenue Code of 1986.

2(a)(i) SEVERANCE PAYMENT UPON INVOLUNTARY TERMINATION PRIOR TO ACQUISITION TRANSACTION. Except as set forth in Section 2(a)(ii), if the Executive's employment with the Bank is involuntarily terminated by the Board of Directors of the Bank during the Term and within a twelve month period beginning on the

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later of the date the Board of Directors approves the going forward of discussions with a potential buyer or buyers for SY Bancorp or the Bank or the date the Executive has expressed the Executive's written opposition to such sale or potential sale of SY Bancorp or the Bank to the Board of Directors, the Bank shall pay the Executive (A) his full salary through the date of such termination, which termination shall not be effective until the later of the effective date set forth in the Notice of Termination or two weeks following written notice to the Executive, and (B) the Severance Payment described in this
Section 2(a)(i). On the effective date of an Acquisition Transaction which results from such discussions, the Bank shall pay to the Executive a severance payment equal to 299 percent of the Executive's Base Amount (the "Severance Payment"). The Severance Payment under this Section 2(a)(i) shall be payable to the Executive in a lump sum, in immediately available funds, and shall be subject to any applicable payroll or other taxes required to be withheld. Such Severance Payment shall be in lieu of any other severance payment provided for by the Bank in accordance with its standard of practice and operations for Executive at the time of payment of this Severance Payment.

(ii) FORFEITURE OF SEVERANCE PAYMENT. No payment shall be made under
Section 2(a)(i) to the Executive if (A) the Executive voluntarily divulges or otherwise discloses, directly or indirectly, any trade secrets or other confidential information concerning the business, policies, or sale or potential sale of SY Bancorp or the Bank which is not lawfully attainable from public sources, unless such disclosure is required by law or authorized by the Bank, (B) the Executive is involuntarily terminated by the Bank for Cause, (C) the Executive is terminated due to death, Retirement or Permanent Disability, or (D) the Executive fails to fulfill the Executive's responsibilities as an officer and/or director of the Bank and SY Bancorp during the period after the above-mentioned Board of Director's approval and while the Executive remains employed by the Bank; provided, however, following public announcement by the Bank or SY Bancorp of an Acquisition Transaction or proposed Acquisition Transaction, the Executive shall not be deemed to have breached his responsibilities as an officer or director of the Bank and SY Bancorp and thereby to have forfeited his entitlement to the severance payment described in
Section 2(a)(i) above if he expresses publicly his opposition to such transaction or proposed transaction, solicits votes or proxies from shareholders of SY Bancorp against the transaction or otherwise solicits or encourages others to oppose such transaction.

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Disability, the Bank shall pay the Executive his full salary through the date of such termination, which termination shall not be effective until the later of two (2) weeks following written notice thereof to the Executive or the effective date set forth in the notice of termination. In addition, for a termination at the initiative of the Executive (other than a Forced Resignation) that occurs within twenty-four (24) months after a Change in Control, the Bank shall pay the Severance Payment to the Executive as of the effective date of such termination. For a termination at the initiative of the Executive (other than a Forced Resignation) that occurs more than twenty-four (24) months but less than thirty-six (36) months after a Change in Control, the Bank shall pay the Executive as of the effective date of such termination 2/3 of the Severance Payment. For a termination at the Bank's initiative (other than for Cause) that occurs within thirty-six (36) months after a Change in Control or for a Forced Resignation, the Bank shall pay the Severance Payment to the Executive as of the effective date of such termination. Notwithstanding any provision to the contrary, in no event shall any Severance Payment (or portion thereof) be paid to the Executive if the Executive's employment is terminated for Cause or as a result of the Executive's death, Retirement, or Permanent Disability. Further, the Severance Payment (or portion thereof) shall be payable to the Executive in a lump sum, in immediately available funds, on the date the Executive's termination is effective, and shall be subject to any applicable payroll or other taxes required to be withheld. The Severance Payment shall be in lieu of any other severance payment provided for by the Bank in accordance with its standard of practice and operations for Executive at the time of payment of the Severance Payment.

3. OTHER PAYMENTS AND BENEFITS. Upon termination of the Executive's employment, the Executive shall have the following rights with respect to certain fringe benefits provided by the Bank:

(b) INSURANCE. The Executive shall be entitled to continue, at his sole cost and expense, his participation in all

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life, disability, major medical and hospitalization insurance plans maintained by the Bank for his benefit or, in the event that such continuation is not permitted under the terms of such plans, the Bank shall, at the Executive's request, arrange for comparable individual plans for the benefit of, but at the sole expense of, the Executive, or shall provide the Executive with such other and greater rights as are required by applicable law.

4. CALCULATION METHOD; ADJUSTMENTS TO SEVERANCE PAYMENT

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availability to Executive. Based upon such rationale, the Severance Payment payable to Executive shall decrease as follows:

=================================================================
 AGE OF EXECUTIVE AT DATE            PERCENTAGE OF EXECUTIVE'S
  OF SEVERANCE PAYMENT                  BASE AMOUNT PAYABLE
-----------------------------------------------------------------
          58                                   250%
-----------------------------------------------------------------
          59                                   225%
-----------------------------------------------------------------
          60                                   200%
-----------------------------------------------------------------
          61                                   175%
-----------------------------------------------------------------
          62                                   150%
-----------------------------------------------------------------
          63                                   125%
-----------------------------------------------------------------
          64                                   100%
-----------------------------------------------------------------
          65                                     0%
=================================================================

5. BANK REGULATORY PROVISION. Notwithstanding any other provision of this Agreement, the parties agree as follows:

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(e) All obligations under the Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:

7. INDEMNITY. The Bank agrees to and does hereby indemnify and hold Executive harmless from and against any and all excise taxes payable by the Executive pursuant to section 4999 of the Internal Revenue Code of 1986, as amended, as a result of any payment hereunder being deemed an "excess parachute payment" under Section 280(G) of the Internal Revenue Code of 1986, as amended, and all further excise taxes and federal and state income taxes (together with interest and penalty, if any) payable with respect to, or as a result of the operation of, this indemnification provision, it being the intent of this
Section 7 to "gross up" the amount paid to the Executive so that he is in the same economic position he would have been but for certain payments hereunder being deemed excess parachute payments. For purposes of the preceding sentence, to the extent the payments made under this Agreement, together with other payments made by SY Bancorp or the Bank to the Executive, cause the total of all such payments to result in an "excess parachute payment" under Section 280G of the Internal Revenue Code of 1986, as amended, an ordering rule shall apply whereby the payments under this Agreement shall be deemed the "excess parachute payment"; provided, however, in no event shall the amount which is deemed to be the "excess parachute payment" for purposes of the

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indemnification under this Section 7 exceed the actual "excess parachute payment" under Section 280G of the Internal Revenue Code of 1986, as amended, resulting from payments made to the Executive by SY Bancorp or the Bank.

11. GOVERNING LAW. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

STOCK YARDS BANK & TRUST COMPANY

By: /s/ Henry A. Meyer
    ------------------

Title: Vice Chairman

/s/ Nancy B. Davis
------------------
Executive

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S.Y. BANCORP, INC.

AMENDED AND RESTATED 1995 STOCK INCENTIVE PLAN

1. PURPOSE. The name of this plan is the S.Y. Bancorp, Inc. 1995 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to further the best interests of S.Y. Bancorp, Inc. (the "Company") by (a) assisting the Company and its Subsidiaries (as hereinafter defined) in attracting and retaining key employees and nonemployee directors and (b) providing such persons with an additional incentive to work to increase the value of the Company's stock by granting them a stake in the future of the Company which corresponds to the stake of each of the Company's shareholders.

2. DEFINITIONS.

As used in this Plan, the following terms shall have the meanings set forth below:

(a) "1999 Amendments" shall mean the amendments to the Plan approved by the shareholders of the Company at the Annual Meeting of Shareholders held on April 20, 1999.

(b) "Award" shall mean any grant under the Plan in the form of Stock Options, Stock Appreciation Rights or any combination thereof.

(d) "Business Combination" shall mean any business combination between the Company or a

Subsidiary and any entity other than the Company or Subsidiary that does not constitute in change in control but which the Company intends to reflect as a pooling of interests for accounting purposes.

(e) "Change in Control" shall be deemed to have occurred if:

(i) any Person (as defined in this Section 2(e) is or becomes the Beneficial Owner (as defined in this Section 2(e) of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (unless (A) such Person is the Beneficial Owner of 20% or more of such securities as of April 26, 1995 or (B) the event causing the 20% threshold to be crossed is an acquisition of securities directly from the Company);

(ii) during any period of two consecutive years beginning after April 26, 1995, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause
(i) (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board;

at least 80% of the combined voting power of the securities of the Company or such surviving entity outstanding immediately after such merger or consolidation); or

For purposes of the definition of Change in Control, "Person" shall have the meaning ascribed to such tern) in Section 3(a)(9) of the Exchange Act as supplemented by Section 13(d)(3) of the Exchange Act; provided, however, that Person shall not include (i) the Company, any Subsidiary or any other Person controlled by the Company, (ii) any trustee or other fiduciary holding securities under any employee benefit plan of the Company or of any Subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of securities of the Company.

For purposes of the definition of Change of Control, a Person shall be deemed the "Beneficial Owner" of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the Exchange Act and the applicable rules and regulations thereunder or (y) made in connection with, or to otherwise participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Exchange Act and the applicable rules and regulations thereunder; in either case described in clause
(x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(g) "Committee" shall mean the Compensation Committee of the Board, or any other committee the -Board may subsequently appoint to administer the Plan. The Committee shall be composed of not less than three -directors each of whom is a Disinterested Person.

(h) "Disabled" or "Disability" shall have the meaning assigned thereto in
Section 22(e)(3) of the Code.

(i) "Disinterested Person" shall mean any person who is not and has not within the prior one year been eligible for selection as a person to whom Stock may be allocated or to whom Stock Options or Stock. Appreciation Rights may be granted pursuant to this Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire Stock, Stock Options, or stock appreciation rights of the Company or any of its affiliates. For purposes of this definition, the terms contained herein shall have the same meaning as they have in Rule 16b-3 (d) (3) promulgated under the Securities Exchange Act of 1934.

(j) "Eligible Employee, shall mean an employee of the Company, its Parent, if any, or any Subsidiary described in Section 5 of the Plan.

(k) "Exercise Price" shall have the meaning set forth in Section 6(c) of the Plan.

(l) "Fair Market Value" shall mean, as of any given date, with respect to any Awards granted hereunder, the mean of the high and low trading price of the stock on such date as reported on the National Association of Securities Dealers Automated Quotation System or, if the stock is admitted to trade on a national securities exchange, on such exchange; provided, however, that if any such quotation system or exchange is closed on any day on which Fair Market Value is to be determined, Fair Market Value shall be determined as of the first day immediately preceding such day on which such exchange or quotation system was open for trading.

(m) "Incentive Stock Option" shall mean any Stock Option intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

(n) "Insider" shall mean any individual who is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended.

(O) "Nonemployee Director" shall mean any person who is not an employee of the Company or any Subsidiary or affiliate (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) of the Company and who on or after April 26, 1995 serves as a member of the Board.

(p) "Nonqualified Stock Option" means any stock option granted under the Plan that is not designated as an Incentive Stock Option.

(q) "Parent" shall have the meaning assigned thereto in Section 424 of the Code and the regulations promulgated thereunder.

(r) "Rule 16b-3" shall mean Rule 16b-3, as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor regulation.

(s) "Stock" shall mean the common stock, no par value, of the Company.

(t) "Stock Appreciation Right" shall mean the right pursuant to an Award granted under Section 7 of the Plan, (i) in the case of a Related Stock Appreciation Right (as defined in Section 7 of the Plan), to surrender to the Company all or a portion of the related Stock Option and receive an amount equal to the excess of the Fair Market Value of one share of Stock as of the date such Stock Option or portion thereof is surrendered over the Exercise Price per share specified in such Stock Option, multiplied by the number of shares of Stock in respect of which such Stock Option is being surrendered, and (ii) in the case of a Freestanding Stock Appreciation Right (as defined in Section 7 of the Plan), to exercise such Freestanding Stock Appreciation Right and receive an amount equal to the excess of the Fair Market Value of one share of Stock as of the date of exercise over the price per share specified in such Freestanding Stock Appreciation Right, multiplied by the number of shares of Stock in respect of which such Freestanding Stock Appreciation Right is being exercised.

(u) "Stock Option" shall mean any option to purchase shares of Stock granted pursuant to Section 6 of the Plan.

(v) "Stock Ownership," whenever necessary to determine a person's stock ownership in the Company, its Parent or any Subsidiary, shall include stock actually owned and stock indirectly owned by application of the rules of attribution contained in Section 424(d) of the Code.

(w) "Subsidiary" shall have the meaning assigned thereto in Section 424 of the Code and the regulations promulgated thereunder. A "Subsidiary" shall include any entity, which becomes a Subsidiary after the date of adoption of this Plan.

(x) "Surrendered Shares" shall mean the shares of Stock described in
Section 7 of the Plan, which (in lieu of being purchased) are surrendered for cash or Stock, or for a combination of cash and Stock, in accordance with
Section 7.

3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee.

4. AVAILABLE SHARES. Subject to the provisions of Section II of this Plan, the aggregate maximum number of shares of Stock reserved and available for issuance under this Plan shall be seven hundred twenty thousand (720,000). All such shares shall be reserved to the extent the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. Any shares of Stock subject to a Stock Option which remain unissued after the cancellation, expiration or exchange of such Stock Option shall again become available for use under the Plan, but any Surrendered Shares which remain unissued after the surrender of a Stock Option under Section 7 of the Plan and any shares of Stock used to satisfy a withholding obligation under Section 6(g) of the Plan shall not again become available for use under the Plan.

5. EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE PLAN. An Eligible Employee shall mean a salaried employee of the Company, its Parent, if any, or its Subsidiaries who is designated by the Committee, m its sole discretion, as eligible to receive Awards pursuant to this Plan.

6. STOCK OPTIONS.

(a) FORM. The Stock Options granted pursuant to this Plan shall be in such form as the Committee may from time to time approve. Each grant of a Stock Option pursuant to this Plan shall be made in writing upon such terms and conditions as may be determined by the Committee at the time of grant, subject to the terms, conditions, and limitations set forth in this Plan. The grant of an option shall be evidenced by a written agreement executed by the Secretary of the Company and the Eligible Employee.

Committee may, however, specifically provide that a Stock Option shall constitute an Incentive Stock Option to the extent of its exercise as to any particular number of shares and a Nonqualified Stock Option to the extent of the remainder of the shares, provided the Committee specifically provides that the Stock Option shall be deemed an Incentive Stock Option to the extent of the first shares exercised up to the number of shares as to which the option is intended to constitute an Incentive Stock Option, and that the option shall be considered a Nonqualified Stock Option as to the remainder of the shares as to which it is exercised.

(c) EXERCISE PRICE. The Stock Options granted pursuant to this Plan shall provide a specified price at which the shares subject to the Stock Option maybe purchased (hereinafter called the "Exercise Price"). If any Stock Option issued pursuant to this Plan is designated as an Incentive Stock Option, the Exercise Price for each share of Stock subject to the Incentive Stock Option shall, except as hereinafter provided, be an amount at least equal to the Fair Market Value of one share of Stock of the Company as of the date of grant of the Incentive Stock Option. Notwithstanding the above, in tile event that on the date of grant of the Incentive Stock Option, an Eligible Employee owns stock (taking into account all classes of stock which are then outstanding) in the Company which possesses more than 10% of the total combined voting power of all classes of stock of the Company or owns stock of a Parent or a Subsidiary of the Company which possesses more than 10% of the total combined voting power of all classes of stock of the Company's Parent or its Subsidiary, the Exercise Price for each share of Stock subject to the Incentive Stock Option (to the extent required by the Code at the time of grant) shall be an amount equal to at least 110% of the Fair Market Value of one share of Stock of the Company as determined as of the date of grant of the Incentive Stock Option. (For purposes of this paragraph, the rules of attribution contained in Section 424(d) of the Code (relating to the attribution of Stock ownership) shall be applied to determine Stock Ownership.)

(d) EXERCISE PERIOD. Each Stock Option by its terms shall provide the period during which it is exercisable, provided, however, no Stock Option shall be exercisable until the expiration of at least six months from the date the Stock Option is granted. Each Stock Option granted under this Plan shall provide an expiration date which date shall be set by the Committee but in no event shall the expiration date of any Stock Option that is designated an Incentive Stock Option be a date later than ten years from the date of grant of the Incentive Stock Option or, if the grantee of the Incentive Stock Option, at the time of grant, owns stock (taking into account all classes of stock then outstanding) possessing more than 10% of the total combined voting power of all classes of stock of the Company, its Parent, or any Subsidiary, the expiration date of each such Incentive Stock Option (to the extent required by the Code at the time of grant) shall not be more than five years from the date of grant. (For purposes of this paragraph, the rules of attribution contained in Section 424(d) of the Code (relating to the attribution of Stock ownership) shall be applied to determine Stock Ownership.) Each Incentive Stock Option issued under this Plan shall provide for expiration within three months after the termination of the Eligible Employee's employment with the Company due to retirement. Each Incentive Stock Option issued pursuant to this Plan may provide that it shall be exercisable within twelve months after termination of employment if the Eligible Employee is disabled. Further, each Incentive Stock Option issued pursuant to this Plan may provide that in the case of termination of employment by reason of the Eligible Employee's death, the Incentive Stock Option may be exercised by the Eligible Employee's estate or other person who receives the Stock Option by bequest or the laws of -descent and distribution for a period of twelve months after the Eligible Employee's death. In no event shall the -exercise period be extended beyond the time which the Eligible Employee would have been required to exercise the Incentive Stock Option had he not terminated employment, become disabled or died. The Committee shall, except

as specifically restricted herein, in its own discretion, determine the term of Non qualified Stock Options that are - issued pursuant to this Plan and the circumstances in which such Nonqualified Stock Options shall be exercisable beyond the termination of employment, disability or death of the Eligible Employee; provided, that if the Nonqualified Stock Option does not specifically state when it may be exercised after the termination of the grantee's employment, death or disability, the Stock Option shall be governed by the provisions stated above for Incentive Stock Options. Except as otherwise provided in this Section 6 or Section 16 of the Plan, or as determined by the Committee in its sole discretion, if an Eligible Employee's employment with the Company, any Subsidiary or any Parent terminates (including termination for cause, voluntary resignation or other termination under mutually agreeable circumstances), all Stock Options held by the Eligible Employee will terminate immediately upon the effective date and time of the Eligible Employee's termination of employment.

(e) TRANSFERABILITY OF OPTIONS. Each Stock Option granted under this Plan shall provide that such option shall be exercisable during the grantee's lifetime only by the grantee and that such option shall not be transferable by the grantee other than by will or the laws of descent and distribution. Stock Options granted pursuant to this Plan may, but need not, provide for exercise by the grantee's estate or other person who obtains tile right to exercise the option by bequest or pursuant to the laws of descent and distribution.

(f) METHOD OF EXERCISE. Stock Options may be exercised by giving written notice of exercise delivered in person or by mail at the Company's principal executive office, specifying the number of shares of Stock with respect to which the Stock Option is being exercised, accompanied by payment in full of the Exercise Price. Each Stock Option shall provide that payment of the Exercise Price may be made either in cash, by check acceptable to the Committee or, at the discretion of the Committee, in a number of shares of Stock of the Company having an aggregate Fair Market Value equal to the Exercise Price, or by a combination of the foregoing forms of consideration. The Committee may also (in its discretion) allow an Eligible Employee to pay such Exercise Price (in whole or in part) by electing that the Company withhold shares of Stock (that otherwise would be transferred to such Eligible Employee as a result of the exercise of such Stock Option) to the extent necessary to pay such Exercise Price. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date that a properly endorsed certificate for such Stock is delivered to the Committee or the date that Stock is treated by the Committee as withheld from the exercise of the Stock Option. Each Stock Option shall provide that the Exercise Price shall be payable upon or before the issuance of the Stock of the Company to be received pursuant to the exercise of the Stock Option.

(g) STATEMENT AS TO WITHHOLDING OF FEDERAL INCOME OR OTHER TAXES. The exercise or surrender of any Stock Option granted under the Plan or the exercise of a Freestanding Stock Appreciation Right shall constitute an Eligible Employee's full and complete consent to whatever action the Committee deems necessary to satisfy the federal and state tax withholding requirements, if any, which the committee in its discretion deems applicable to such exercise or surrender. The Committee shall also have the right to provide in an option agreement that an Eligible Employee may elect to satisfy federal and state tax withholding requirements through a reduction in the number of shares of Stock actually transferred to him or her under the Plan, and if the Eligible Employee is an Insider, any such election and any such reduction shall be effected so as to satisfy the conditions to the exemption under Rule 16b-3.

(i) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent that the aggregate Fair Market Value of Stock (determined as of the date an Incentive Stock Option is granted) with respect to which Incentive Stock Options first become exercisable in any calendar year exceeds $100,000, such Stock Options shall be treated as Nonqualified Stock Options. The Fair Market Value of Stock subject to any other option (determined as of the date such option is granted) which (1) satisfies the requirements of Section 422 of the Code and (2) is granted to an Eligible Employee under a plan maintained by the Company, a Subsidiary or a Parent shall be treated (for purposes of this $100,000 limitation) as if granted under the Plan. The Committee shall interpret and administer the limitations set forth in this Section 6(i) in accordance with
Section 422(d) of the Code.

7. STOCK APPRECIATION RIGHTS.

(i) TIME OF GRANT. Related Stock Appreciation Rights related to Nonqualified. Stock Option may be granted either at or after the time of the grant of such Nonqualified Stock Option. Related Stock Appreciation Rights related to an Incentive Stock Option may be granted only at the time of the grant of such Incentive Stock Option. Freestanding Stock Appreciation Rights may be granted at any time.

multiplied by the number of shares of Stock in respect of which the Related Stock Appreciation Right shall have been exercised, with the Committee having in its sole discretion the right to determine the form of payment.

(i) TERM OF STOCK APPRECIATION RIGHTS. The term of a Related Stock Appreciation Right shall be the same as the term of the related Stock Option. A Related Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the exercise, termination, cancellation or surrender of the related Stock Option, except that, unless otherwise provided by the Committee in its sole discretion at or after the time of grant, a Related Stock Appreciation Right granted with respect to less than the full number of shares of Stock covered by a related Stock Option shall terminate and no longer be exercisable if and to the extent that the number of shares of Stock covered by the exercise, termination, cancellation or surrender of the related Stock Option exceeds the number of shares of stock not covered by the Related Stock Appreciation Right.

Director must serve continuously as a Nonemployee Director of the Company for a period of twelve consecutive months after the date such Stock Option is granted before he or she can exercise any part of SUCH Stock Option. Thereafter, on and after the first anniversary of the date of granting the Stock Option and before the second anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 20% of the number of shares of Stock covered thereby; on and after the second anniversary and before the third anniversary, the Nonemployee Director may exercise the Stock Option with respect TO not more than 40% of the number of shares of Stock covered thereby; on and after the third anniversary and before the fourth anniversary, the Nonemployee Director may exercise the Stock Option with respect TO not more than 60% of the number of shares of Stock covered thereby; on and after the fourth anniversary and before the fifth anniversary, the Nonemployee Director may exercise the Stock Option with respect to not more than 80% of the number of shares of Stock covered thereby; and on and after the fifth anniversary and before the expiration of the stated term of the Stock Option, which shall be ten years from the date of its granting, the Nonemployee Director may at any time or from time to time exercise the Stock Option with respect to all or any portion of the shares of Stock covered thereby. If a Nonemployee Director's service with the Company terminates by reason of permanent or total disability, death or retirement or resignation from active service as a director of the Company, any Stock Option held by such Nonemployee Director may be exercised for a period of twelve months from the date of such termination or until the expiration of the Stock Option, whichever is shorter, to the extent to which the individual would on the date of exercise have been entitled to exercise the Stock Option if such individual had continued to serve as a Nonemployee Director; provided, however, if a Nonemployee Director's service with the Company terminates by reason of his or her attainment of the Company's mandatory retirement age for directors, all outstanding Stock Options granted under the Plan shall become fully vested and immediately exercisable. All applicable provisions of the Plan not inconsistent with this Section 8 shall apply to Nonqualified Stock Options granted to Nonemployee Directors; provided, however, that the Committee may not exercise discretion under any provision of the Plan with respect to Stock Options granted under this Section 8 to the extent that such discretion is inconsistent with Rule 16b-3. The maximum number of shares of Stock as to which Stock Options may be granted to any Nonemployee Director under the Plan, as in effect through April 25, 2005, shall be one thousand (1,000) shares of Stock. A grant of a Nonqualified Stock Option to a Nonemployee Director under this Section 8 is intended to allow such Nonemployee Director to be a Disinterested Person and all Nonqualified Stock Options granted to Nonemployee Directors as well as this
Section 8 shall be construed to effect such intent.

9. TERMINATION OF EMPLOYMENT. The employment of an Eligible Employee by the Company shall not be deemed to have terminated for purposes of this Plan if the Eligible Employee is transferred to and becomes an employee of a Subsidiary or Parent of the Company. Further, the Eligible Employee's employment by the Company shall not be considered terminated if he becomes an employee of another corporation (the "Other Company") which assumes the Stock Options issued pursuant to this Plan or issues its own stock option in substitution of an option issued under this Plan in a transaction to which Section 424(a) of the Code applies, provided he becomes an employee of the other Company, its Subsidiary or its Parent at the time of the transaction. Absence on leave, whether paid or unpaid, approved by the management of the Company shall not constitute the termination of employment for any purpose of this Plan, provided the leave does not exceed ninety (90) days. To the extent required under Section 421 of the Code for favorable tax treatment for Incentive Stock Options, if the period of leave of absence exceeds ninety (90) days, the leave of absence shall be considered a termination of employment unless the Eligible Employee's right to return is guaranteed by statute or contract. If the Eligible Employee's right to return is not so guaranteed, the Eligible Employee shall be considered to have tem1inated his employment, for purposes of this Plan, as of the end of the ninetieth (90th) day of such absence. The immediately preceding two sentences shall apply solely for tax treatment purposes and not for any other purpose under the Plan.

10. REQUIREMENTS OF LAW. If any law, any regulation of the Securities and Exchange Commission, or any regulation of any other commission or agency having jurisdiction shall

require the Company or the exercising optionee to take any action with respect to the shares of Stock to be acquired upon exercise of a Stock Option, then the date upon which the Company shall deliver or cause to be delivered the certificate or certificates for the shares of Stock shall be postponed until full compliance has been made with all such requirements of law or regulations. Further, if the Company shall so require at or before the time of the delivery of the shares with respect to which the exercise of a Stock Option has been made, the exercising optionee shall deliver to the Company his written statement that he intends to hold the shares so acquired by him on exercise of the Stock Option for investment only and not with a view to resale or other distribution thereof to the public. Further, in the event the Company shall have determined that in compliance with the Securities Act of 1933 or other applicable statute or regulation, it is necessary to register any of the shares of Stock with respect to which the exercise of a Stock Option has been made or qualify such shares for exemption from any requirements of the Securities Act of 1933 or other applicable statutes or regulations, then the Company shall take such action at its own expense, but not until such action has been completed shall the shares subject to the Stock Option be delivered to the exercising optionee. Further, in the event at the time of exercise of the Stock Option shares of Stock of the Company shall be listed on any stock exchange, then if required to do so, the Company shall register the shares with respect to which exercise is so made in accordance with the provisions of the Securities Act of 1933 or any other applicable law or regulations, and the Company shall make prompt application for the listing of option shares on such stock exchange, again at the expense of the Company.

11. ADJUSTMENT. The number, kind or class (or any combination thereof) of shares of stock reserved under Section 4 of the Plan, the number, kind or class (or any combination thereof) of shares of Stock subject to Awards granted under the Plan, the Exercise Price of any outstanding Stock Options and the price per share specified in a Freestanding Stock Appreciation Right shall be adjusted by the Board in an equitable manner to reflect any change in the capitalization of the Company, including, but not limited to, such changes as stock dividends or stock splits. Furthermore, the Board shall have the right to adjust (in a manner which satisfies the requirements of Section 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock reserved under
Section 4 of the Plan, the number, kind or class (or any combination thereof) of shares of Stock subject to Awards granted under the Plan, the Exercise Price of any outstanding Stock Options and the price per share specified in a Freestanding Stock Appreciation Right in the event of any corporate transaction described in Section 424(a) of the Code which provides for the substitution or assumption of such A wards in order to take into account on an equitable basis the effect of such transaction. If any adjustment under this Section 11 would create a fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share shall be disregarded and the number of shares of Stock reserved under the Plan and the number subject to any Awards granted under the Plan shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this Section 11 by the Board shall be conclusive and binding on all affected persons and, further, shall not constitute an increase in "the number of shares reserved under Section 41, within the meaning of Section 12 of the Plan.

12. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however,

(2) to the extent shareholder approval is required in order for the exemption set forth in Rule 16b-3 to be available in respect of Awards granted pursuant to the Plan, the Board shall not amend the Plan absent the approval of the shareholders of the Company in accordance with Rule 16b-3, (a) to increase materially (within the meaning of Rule 16b- 3) the benefits accruing to any insider under the Plan, (b) to increase materially (within the meaning of Rule 16b-3) the number of securities which may be issued under the Plan to Insiders, or (c) otherwise modify materially (within the meaning of Rule 16b-3) the requirements as to eligibility by Insiders for participation in the Plan,

(3) no amendment shall be made to change the terms and conditions of a Stock Option which can be granted to a Nonemployee Director absent the approval of the shareholders of the Company, and

(4) no provision of the Plan (including Section 8) shall be amended more than once every six months if amending such provision would result in the loss of an exemption under Rule 16b-3.

Any amendment which specifically applies to Nonqualified Stock Options or Stock Appreciation Rights shall not require shareholder approval unless such approval is necessary to comply with Section 16 of the Securities Exchange Act of 1934, as amended, or Section 15 of the Plan. The Board also may suspend the granting of Awards --under the Plan at any time and may terminate the Plan at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Award granted before such suspension or termination or otherwise impair any outstanding Award granted under the Plan unless (1) the Eligible Employee or Nonemployee Director consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in Section 11, Section 14 or Section 16 of the Plan. The Board may also vest the administration of the Plan in persons other than the Committee provided one member of any body that is vested with the power to administer the Plan shall be a member of the Board and all members of such body shall be Disinterested Persons. In the event that the authority to administer the Plan is vested in any body other than the Committee, the references herein to the Committee shall be considered to be references to that body.

13. COMPANY'S RIGHT TO TERMINATE EMPLOYEES NOT IMPAIRED. Notwithstanding the provisions of this Plan or the provisions of Awards granted pursuant to this, Plan, the right of the company (or its Parent or any Subsidiary) to terminate any employee shall not be in any manner affected or impaired by the adoption of this Plan or by the grant of Awards pursuant to the Plan.

14. LIQUIDATION OF THE COMPANY. In the event of the complete liquidation or dissolution of the Company, any Awards granted pursuant to the Plan remaining unexercised shall be deemed cancelled, without, regard to or limitation by any other provisions of the Plan.

15. SHAREHOLDER APPROVAL. The Plan shall be submitted to a meeting of the shareholders of the Company, either at the regular annual meeting thereof or at a special meeting called for the purpose of the consideration of the Plan, and the Plan shall not become effective unless its adoption is approved by the shareholders of the Company within twelve (12) months of its adoption by the Board. Upon approval by the shareholders, this Plan shall take effect without further action by the Company, provided such approval is obtained within twelve
(12) months of the adoption of this Plan by the Board. Any Awards granted under the Plan prior to 'the Plan's approval by the shareholders of the Company shall be granted subject to such approval, and, absent timely approval of the Plan by such shareholders, such Awards shall be null and void.

16. CHANGE IN CONTROL.

(a) Change in Control. If there is a Change in Control and as a result of the transactions contemplated by the Change in Control, a successor will acquire all or a substantial portion of the assets or outstanding capital stock of the Company, then the kind of shares of Common Stock which shall be subject to the Plan and to each outstanding Stock Option shall automatically be converted into and replaced by shares of Common Stock, or such other class of equity securities having rights and preferences no less favorable than Common Stock of the successor and the number of shares subject to the Stock Options and the purchase price per share upon exercise of the Stock Options shall be correspondingly adjusted, so that, by virtue of such Change in Control of the Company, each optionee shall have the right to purchase (i) that number of shares of the successor which, as of the date of the Change in Control, have a fair market value equal to the fair market value of the shares of the Company theretofore subject to an option, (ii) for a purchase price per share which, when multiplied by the number of shares of the successor subject to the Stock Option, shall equal the aggregate exercise price at which the optionee could have acquired shares of the Company under such Stock Option.

(b) Acceleration. Notwithstanding the provisions of Section 6(d), if there is a Change in Control, then the right to exercise all Stock Options shall be accelerated (i) immediately upon the Change in Control if it occurs more than two years following the adoption of the Plan by the stockholders of the Company;
(ii) immediately upon the Change in Control if the transaction in which it occurs is not intended to be reflected as a pooling of interests for accounting purposes; or (iii) if the Change in Control occurs within two years following approval of the 1999 Amendments to this Plan by stockholders of the Company and the transaction with respect to which the Change in Control occurs is intended to be reflected as a pooling of interests for accounting purposes, on earlier to occur of (x) the date which is three months after the occurrence of the Change in Control or (y) the date of consummation of such transaction, unless prior to that date the Board of Directors finds that the acceleration of the right to exercise Stock Options would prevent the transaction being reflected as a pooling of interests for accounting purposes. If the Company or a Subsidiary engages in a Business Combination within two years following approval of the 1999 Amendments to this Plan by stockholders of the Company, and if the Board of Directors finds that a future acceleration of the right to exercise Stock Options upon the occurrence of a Change in Control would prevent the Business Combination being reflected as a pooling of interests for accounting purposes, the Board of Directors may, at any time prior to a Change in Control, revoke the provisions of this Section 16(b) regarding acceleration of the right to exercise with respect to any Stock Options granted prior the earlier of (i) the date of the finding by the Board of Directors, or (ii) two years following the approval of the 1999 Amendments to this Plan by stockholders of the Company.

17. QUALIFICATION OF OPTIONS ISSUED UNDER THE PLAN AS INCENTIVE STOCK OPTIONS. It is the intention of the Company that those Stock Options that are issued pursuant to the Plan that are designated as Incentive Stock Options shall constitute "incentive stock options" within the meaning of Section 422 of the Code. However, in the event that any Stock Option so designated does not constitute an "incentive stock option" within the meaning of Section 422 of the Code for any reason whatsoever, none of the Company, a Parent or Subsidiary or their shareholders, directors, officers or employees, shall be liable to any person for such failure to constitute an "incentive stock option." If the characterization of any Stock Option as an "incentive stock option" within the meaning of Section 422 of the Code is challenged by the Internal Revenue Service, the Company may, but shall not be required to, pay the reasonable legal and accounting expenses incurred in an attempt to establish the characterization of the Stock Options issued under the Plan as "incentive stock options" within the meaning of Section 422 of the Code. In all events, however, the Company shall make available to any Eligible Employee such factual information, which is reasonably necessary to establish the characterization of the Stock Options for federal income tax purposes.

It is intended that any Stock Option granted under the Plan that is not specifically designated as an Incentive Stock Option shall not constitute an Incentive Stock Option.

18. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective on the date it is approved by the shareholders of the Company.

20. SHAREHOLDER RIGHTS. No Eligible Employee or Nonemployee Director shall have any rights as a shareholder of the Company as a result of the grant of an Award under the Plan or his or her exercise or surrender of such Award pending the actual delivery of any Stock subject to such Award to such Eligible Employee or Nonemployee Director.

21. CONSTRUCTION. The Plan shall be construed under the laws of the state of Kentucky.

S.Y. Bancorp, Inc. Subsidiaries

Stock Yard Bank and Trust Company, a Kentucky Banking Corporation 1040 East Main Street
Louisville, KY 40206

S.Y. Bancorp Capital Trust I
1040 East Main Street
Louisville, KY 40206

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
S.Y. Bancorp, Inc.:

We consent to incorporation by reference in the registration statement numbers 33-22885, 33-96740, 33-96742 and 333-30530 on Form S-8 and 33-96744 on Form S-3 of S.Y. Bancorp, Inc. of our report dated January 23, 2002, relating to the consolidated balance sheets of S.Y. Bancorp, Inc. and subsidiary as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders' equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2001, which report appears in the 2001 annual report on Form 10-K of S.Y. Bancorp, Inc.

Louisville, Kentucky
March 22, 2002