EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER

This is an Agreement and Plan of Merger (this “Agreement”) dated as of December 12, 2005, among: (a) American Founders Bank, Inc., a Kentucky banking corporation (“American Bank”); (b) American Founders Bancorp, Inc., a Kentucky corporation (“AFB”); (c) American Founders Acquisition, Inc., a Kentucky corporation which is wholly owned by AFB (“Merger Subsidiary”); and (d) First Security Bancorp, Inc., a Kentucky corporation (“First Security”). First Security Bank of Lexington, Inc., Lexington, Kentucky, a Kentucky banking corporation (the “Bank”), joins in this Agreement for the limited purposes set forth in Sections 5.09, 5.12, 5.15 and 8.09.

The parties desire that Merger Subsidiary be merged into First Security, and subject to the terms and conditions of this Agreement, AFB will pay approximately $38,450,000 in the aggregate for all of the issued and outstanding shares of capital stock of First Security and all of the rights of holders of unexercised First Security stock options (said transaction being hereinafter referred to as the “Merger”).

In connection with the Merger, AFB, a newly formed Kentucky corporation, will acquire 100% of American Bank in a statutory share exchange prior to the closing of the Merger. Upon completion of the statutory share exchange, American Bank will become a wholly owned subsidiary of AFB and the current shareholders of American Bank will own all of the shares of AFB.

As a condition and inducement to AFB’s and American Bank’s willingness to enter into this Agreement, certain shareholders are entering into an agreement, concurrently with the execution of this Agreement, in the form of Annex A hereto (collectively, the “Voting Agreements”) pursuant to which such shareholders have agreed, among other things, to vote their shares of First Security Common Stock in favor of this Agreement.

The parties also desire to make certain representations, warranties, covenants and agreements in connection with the Merger as set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

Definitions

When used herein, the capitalized terms set forth below shall have the following meanings:

“Acquisition Proposal” means any inquiries or the making or implementation of any proposal or offer (including, without limitation, any proposal or offer to shareholders of First Security) with respect to a merger, share exchange, acquisition, consolidation or other similar transaction involving, or any purchase of all or at least 25% of the capital stock of, First Security or the Bank or more than

25% of the assets of First Security or the Bank in the ordinary course of business in a single or series of related transactions.

“AFB Entity” shall mean AFB or any Subsidiary of AFB.

“Articles of Merger” shall mean the Articles of Merger required to be filed with the office of the Secretary of State of the Commonwealth of Kentucky to consummate the Merger, as provided in the KBCA.

“Bank Holding Company Act” shall mean the Bank Holding Company Act of 1956, as amended.

“Business Day” shall mean all days other than Saturdays, Sundays and Federal Reserve Board holidays.

“CERCLA” shall mean the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq .

“Claims” shall mean all claims of any kind or actions, suits, proceedings, arbitrations or inves-tigations asserted by or against either First Security or the First Security Subsidiaries, whether actual or to the knowledge of First Security, threatened, against or affecting First Security Common Stock, the common capital stock of the First Security Subsidiaries or First Security’s or the First Security Subsidiaries’ business, prospects, conditions (financial or otherwise) or assets or against any officer, director or employee of First Security or the First Security Subsidiaries (where such Claims against any officer, director or employee of First Security or the First Security Subsidiaries arise or might arise in connection with actions taken or omitted or alleged to have been taken or omitted by such officer, director or employee in his or her capacity as an officer, direc-tor or employee of First Security or the First Security Subsidiaries).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Commission” shall mean the Securities and Exchange Commission.

“CRA” shall mean the Community Reinvestment Act of 1977, as amended.

“Disclosed” shall mean disclosed in the First Security Disclosure Memorandum, referencing the Section number herein pursuant to which such disclosure is being made.

“Dissenting Holders” shall mean shareholders who do not vote in favor of the Merger or consent thereto in writing and who have properly given notice and demanded in writing payment for their shares of First Security Common Stock in accordance with Subtitle 13 of the KBCA.

“Dissenting Shares” shall mean shares of First Security Common Stock held by Dissenting Holders.

“Employee Benefit Plan(s)” shall have the meaning ascribed to it in Section 3(3) of ERISA, and the regulations promulgated thereunder.

“Employee Pension Benefit Plan(s)” shall have the meaning ascribed to it in Section 3(2) of ERISA.

“Environmental Claim” means any notice from any governmental authority or third party alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup or remediation costs, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based upon, or resulting from a violation of the Environmental Laws or the presence or release into the environment of any Hazardous Substances.

“Environmental Laws” means all applicable federal, state and local laws and regulations, as amended, relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) and which are administered, interpreted, or enforced by the United States Environmental Protection Agency and state and local agencies with jurisdiction over and including common law in respect of, pollution or protection of the environment, including without limitation CERCLA, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq ., and other laws and regulations relating to emissions, discharges, releases, or threatened releases of any Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any Hazardous Substances.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“FDIC” shall mean the Federal Deposit Insurance Corporation.

“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve System.

“Financial Advisor” shall mean Investment Bank Services, Inc., a subsidiary of Professional Bank Services, Inc.

“First Security 401(k) Plan” shall mean the First Security Bank of Lexington 401(k) Profit Sharing Plan.

“First Security Board” shall mean the Board of Directors of First Security.

“First Security Common Stock” shall mean the shares of voting common stock, no par value, of First Security.

“First Security Disclosure Memorandum” shall mean the written memorandum (with attachments), dated as of the date of this Agreement and delivered not later than the date of execution of this Agreement by First Security to AFB, and describing in reasonable detail the matters contained therein. Each disclosure made therein shall specifically reference each Section of this Agreement

under which such disclosure is made. Information disclosed with respect to one Section shall not be deemed to be disclosed for purposes of any other Section of this Agreement in the First Security Disclosure Memorandum unless specifically so referenced.

“First Security Financial Statements” shall mean (i) the consolidated statements of financial condition (including related notes and schedules, if any) of First Security as of December 31, 2004, 2003 and 2002, with year-to-date information through September 30, 2005, and the related consolidated statements of income, shareholders’ equity and cash flows (including related notes and schedules, if any) for each of the three years ended December 31, 2004, 2003 and 2002, with year-to-date information through September 30, 2005, as filed by First Security in Securities Documents, and (ii) the consolidated statements of financial condition of First Security (including related notes and schedules, if any) and the related consolidated statements of income, shareholders’ equity and cash flows (including related notes and schedules, if any) included in Securities Documents filed by First Security with respect to periods ended subsequent to September 30, 2005.

“First Security Monthly Financial Statements” shall mean such monthly financial information as is customarily furnished to directors at First Security’s monthly board meetings.

“First Security Subsidiaries” shall mean the Bank and its Subsidiaries and any and all other Subsidiaries of First Security as of the date hereof.

“GAAP” shall mean generally accepted accounting principles in the United States as recognized by the American Institute of Certified Public Accountants, as in effect from time to time, consistently applied and maintained on a consistent basis.

“Hazardous Substances” means any substance or material (i) identified in CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any applicable federal, state or local statutes, law, ordinance, rule or regulation, including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v) poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste which are otherwise dangerous, hazardous, harmful to human health or the environment.

“IRS” shall mean the Internal Revenue Service.

“KBCA” shall mean the Kentucky Business Corporation Act.

“KOFI” shall mean the Kentucky Office of Financial Institutions.

“Material Adverse Effect” shall mean, with respect to any party, any change, circumstance, development, condition, or occurrence or effect which, individually or in the aggregate with all other changes, circumstances, developments, conditions, occurrences, and effects (including all breaches of a representation or warranty set forth in this Agreement), has, or would be reasonably capable to have, a material adverse effect on (a) the business, business prospects, results of operations or financial condition of such party and its Subsidiaries, taken as a whole, or (b) such party's ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred there shall be excluded any effect on the referenced party the primary cause of which is (i) any change in banking or similar laws, rules or regulations of general applicability or interpretations thereof by courts or

governmental authorities, (ii) any change in GAAP or regulatory accounting requirements applicable to financial institutions or their holding companies generally, (iii) any change, circumstance, development, condition or occurrence in economic, business or financial conditions generally or affecting the banking or bank holding company business to the extent not effecting a party to a materially greater extent than it affects other Persons in the bank or bank holding company business, and (iv) any action or omission of the referenced party or any of its Subsidiaries taken with the prior written consent of the other party to this Agreement in contemplation of the Merger.

“Merger Consideration” shall mean cash in the amount of $24.00 to be exchanged for each share of First Security Common Stock issued and outstanding as of the Effective Time; provided, however, that such Merger Consideration shall increase at an annual rate equal to five percent (5.0%) (computed on the basis of the actual number of days elapsed over an assumed year of 365 days), beginning on May 1, 2006 and ending on the date of Closing, if the Closing has not occurred by April 30, 2006, other than as a result of (i) a breach by First Security of any representation or warranty contained herein, which breach would constitute, if occurring or continuing on the Closing Date, the failure of the conditions set forth in Section 6.02, or (ii) a breach by First Security of any of the covenants or agreements contained herein.

“Person” shall mean any individual, bank, corporation, partnership, association, joint-stock company, business trust, limited liability company, unincorporated organization or other entity or group of any of the foregoing acting in concert.

“Proxy Statement” shall mean the proxy statement, together with any supplements thereto, to be sent to shareholders of First Security to solicit their votes in connection with a proposal to approve this Agreement.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Securities Documents” shall mean all reports, proxy statements, registration statements and all similar documents filed, or required to be filed, pursuant to the Securities Laws, including but not limited to periodic and other reports filed pursuant to Section 13 of the Exchange Act.

“Securities Laws” shall mean: the Securities Act; the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939 as amended; and, in each case, the rules and regulations of the Commission promulgated thereunder.

“Specified Shareholders” shall mean the Persons listed on Annex B to this Agreement.

“Stock Options” shall mean, collectively, outstanding and unexercised options granted under the Stock Option Plan to acquire shares of First Security Common Stock.

“Stock Option Agreement” shall mean the agreements between holders of Stock Options and First Security.

“Stock Option Plan” shall mean the First Security Bancorp, Inc. Stock Award Plan.

“Subsidiaries” shall mean all those corporations, associations, or other business entities of which the entity in question either owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its parent (in determining whether one entity owns or controls 50% or more of the outstanding equity securities of another, equity securities owned or controlled in a fiduciary capacity shall be deemed owned and controlled by the beneficial owner).

“Superior Proposal” means an Acquisition Proposal that is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the proposal, and if consummated, is reasonably likely to result in a transaction materially more favorable to the shareholders of First Security from a financial point of view than the Merger.

“TILA” shall mean the Truth in Lending Act, as amended.

2.01   Merger . Upon the terms and conditions set forth in this Agreement at the Effective Time (as defined in Section 2.03), Merger Subsidiary shall be merged with and into First Security in a statutory merger effected in accordance with the provisions of this Agreement and the KBCA. As provided by KRS 271B.11-060, when the Merger takes effect at the Effective Time, the separate corporate existence of Merger Subsidiary shall cease and First Security shall continue as the surviving corporation and shall succeed to and assume all the rights and obligations of Merger Subsidiary. In its capacity as the surviving corporation of the Merger, First Security is sometimes referred to herein as the “Surviving Corporation.”

2.02   The Closing . A “Closing” shall take place at the offices of Frost Brown Todd LLC, 250 West Main Street, Suite 2700, Lexington, Kentucky, 40507, at a time and on a date to be specified by AFB, which shall not be before the third Business Day nor after the fifteenth day AFB reasonably expects all of the conditions set forth in Section 6 to have been satisfied or, except in the case of receipt of the approvals of the First Security shareholders and regulatory authorities described in Section 6, waived (by the party entitled to the benefit thereof), or at such other time and date as First Security and AFB may agree in writing (the “Closing Date”). At the Closing, (a) AFB, American Bank, Merger Subsidiary and First Security shall each provide to the other such proof or indication of satisfaction of the conditions set forth in Section 6 as the other may have reasonably requested; (b) the certificates, letters, and opinions required by Section 6 shall be delivered; (c) AFB, Merger Subsidiary, and First Security shall cause the Articles of Merger to be filed with the Secretary of State of the Commonwealth of Kentucky; and (d) AFB, Merger Subsidiary, First Security, the Bank and American Bank shall execute and deliver to each other all other instruments and assurances, and do all things, reasonably necessary and proper to effect the Merger and other transactions contemplated hereby.

2.03   The Effective Time . As prompt as reasonably practicable after the satisfaction or, if permissible, the waiver of the conditions set forth in Section 6, the parties hereto shall cause the Merger to become effective. The Merger shall become effective at 5:00 p.m. on the date that the

Articles of Merger are filed with the Secretary of State of the Commonwealth of Kentucky, unless a later time is so specified in the Articles of Merger which shall be no later than one (1) Business Day after the Closing. The date and time at which the Merger shall become effective is referred to in this Agreement as the “Effective Time.”

(a)   From and after the Effective Time, the effect of the Merger shall be as provided in this Agreement and in the applicable provisions of the KBCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Merger Subsidiary shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of Merger Subsidiary shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

(b)   The Articles of Incorporation and Bylaws of Merger Subsidiary, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation and Bylaws of the Surviving Corporation at the Effective Time until changed or amended in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and with applicable law.

(c)   The members of the Board of Directors of Merger Subsidiary, as in effect immediately prior to the Effective Time, shall be the members of the Board of Directors of the Surviving Corporation at the Effective Time.

(d)   The officers of Merger Subsidiary, as in effect immediately prior to the Effective Time, shall be the officers of the Surviving Corporation at the Effective Time.

(a)   At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

(i)   each share of First Security Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares or as set forth in Section 2.05(a)(ii)) shall be converted into the right to receive the Merger Consideration. All such shares of First Security Common Stock, when so converted, shall no longer be outstanding and shall be deemed to have been automatically cancelled and each holder of a certificate or certificates which immediately prior to the Effective Time represented any such shares of First Security Common Stock shall cease to have any rights with respect thereto, except (i) the right to receive the applicable Merger Consideration, without interest, and (ii) such rights, if any, as such holder may have pursuant to the KBCA; and

(ii)   any shares of First Security Common Stock that are owned or held by any of the First Security Subsidiaries (except shares held in a fiduciary or agency capacity by a First Security Subsidiary), shall cease to exist, and the certificates for such shares shall as promptly as practicable be canceled and no Merger Consideration shall be delivered in exchange therefor.

(b)   At the Effective Time, each share of Merger Subsidiary Common Stock issued and outstanding immediately prior to the Effective Time shall, ipso facto , constitute the same number of shares of the Surviving Cor-poration, all of which shall be owned of record by AFB.

(c)   Each share of common stock of AFB issued and outstanding immediately before the Effective Time shall remain unchanged by the Merger.

(a)   At or prior to the Closing, AFB shall deposit, and American Bank shall cause to be deposited, with a payment agent selected by AFB and reasonably acceptable to First Security (the “Payment Agent”), the aggregate Merger Consideration to which holders of shares of First Security Common Stock shall be entitled at the Effective Time pursuant to Section 2.05 (the “Payment Fund”).

(b)   On the Closing Date, AFB shall have available for delivery to the shareholders of First Security, and as soon as reasonably practicable after the Effective Time and no later than five (5) Business Days thereafter, the Payment Agent shall mail to each holder of record of a certificate(s) that immediately prior to the Effective Time represented outstanding shares of First Security Common Stock (“First Security Certificates”) that were converted into the right to receive the Merger Consideration pursuant to Section 2.05, (i) a letter of transmittal which letter shall be in customary form, and (ii) instructions for use in effecting the surrender of the First Security Certificates in exchange for the Merger Consideration. Upon surrender of a First Security Certificate for cancellation to the Payment Agent together with such letter of transmittal, duly executed, and such other documents reasonably required by the Payment Agent in accordance with customary exchange practices, the holder of the First Security Certificate shall be entitled to receive in exchange therefor cash that such holder has the right to receive in respect of the First Security Certificates surrendered pursuant to Section 2.05 (after taking into account all shares of First Security Common Stock held by such holder immediately prior to the Effective Time). The Payment Agent shall make such payments as soon as commercially practical and in any event no later than three (3) Business Days following receipt of the documents referred to in the previous sentence in their proper form. In the event of a transfer of ownership of First Security Common Stock that is not registered in the transfer records of First Security, a check for the aggregate Merger Consideration due may be issued to a transferee if the First Security Certificate representing such First Security Common Stock is presented to the Payment Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 2.06, each First Security Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the aggregate Merger Consideration due.

(c)   In the event any First Security Certificates have been lost, stolen or destroyed, the Payment Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of the facts relating thereto by the holder(s) thereof, the consideration as may be required pursuant thereto; provided, however, that AFB may, in its discretion, and as a condition precedent to the issuance thereof, require the owners of such lost, stolen or destroyed First Security Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim

that may be made against AFB, First Security or the Payment Agent or any other party with respect to the First Security Certificates alleged to have been lost, stolen or destroyed.

(d)   Any portion of the Payment Fund that remains undistributed to the holders of First Security Certificates for one year after the Effective Time shall be delivered to the Surviving Corporation or otherwise on the instruction of AFB and any holders of the First Security Certificates who have not theretofore complied with this Section 2.06 shall thereafter look only to the Surviving Corporation and AFB for the Merger Consideration with respect to the shares of First Security Common Stock formerly represented thereby to which such holders are entitled pursuant to Section 2.05 and 2.06 of this Agreement. Any such portion of the Payment Fund remaining unclaimed by holders of First Security Common Stock five years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become subject to the abandoned property law of any jurisdiction) shall, to the extent permitted by law, become the property of AFB or the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

(e)   The Payment Agent shall invest any cash included in the Payment Fund as directed by AFB, provided that such investments shall be invested solely in (a) marketable obligations of, or obligations guaranteed by, the United States of America, and/or (b) interests in any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, the portfolio of which is limited to obligations of, or obligations guaranteed by, the United States or any agency thereof (“Federal Obligations”) and to agreements to repurchase Federal Obligations that are at least 100% collateralized by Federal Obligations marked to market on a daily basis. Any interest and other income resulting from such investments shall promptly be paid to AFB.

(f)   AFB shall deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any holder of shares of First Security Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of applicable law. To the extent that amounts are so deducted and withheld by AFB, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of First Security Common Stock in respect to which such deduction and withholding were made by AFB.

(g)   None of AFB, the Surviving Corporation, First Security or the Payment Agent shall be liable to any Person in respect of any Merger Consideration from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

2.07   First Security Stock Options . As soon as practicable following the date of this Agreement, First Security shall take such actions as are reasonably required, including amending the Stock Option Plan, and using its best efforts to obtain the consent of all option holders as provided in Section 6 of the Stock Option Agreement, to provide that, notwithstanding any other provision of the Stock Option Plan or the Stock Option Agreement to the contrary, at or prior to the Closing, each Stock Option shall be cancelled and each option holder shall be entitled to receive, in lieu of each share of First Security Common Stock that would otherwise have been issuable upon the exercise thereof, a cash payment equal to the Merger Consideration less the per share exercise price

applicable to such Stock Option. The outstanding Stock Options to be canceled in exchange for payment pursuant to the immediately preceding sentence shall not be deemed to be Stock Options issued and outstanding immediately prior to the Effective Time.

2.08   Dissenting Shares . Notwithstanding any other provisions of this Agreement to the contrary, Dissenting Shares that are outstanding immediately prior to the Effective Time and that are held by Dissenting Holders shall not be converted into or represent the right to receive the Merger Consideration provided in Section 2.05. Dissenting Holders shall be entitled to receive payment of the fair value of such First Security Common Stock in accordance with the provisions of KRS 271B.13-250 of the KBCA, except that all Dissenting Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to payment for such First Security Common Stock under Subtitle 13 of the KBCA shall thereupon be deemed to have been converted into, as of the Effective Time, the right to receive the aggregate Merger Consideration provided in Section 2.05, without any interest thereon, upon surrender of the certificate or certificates that formerly evidenced such First Security Common Stock in accordance with Section 2.06.

2.09   Bank Merger . If and as requested by AFB, First Security and the Bank agree to cooperate with AFB and take all action necessary and appropriate, including causing the entering into of an appropriate merger agreement (the “Bank Merger Agreement”), to cause the Bank to merge with and into American Bank (the “Bank Merger”), at or promptly after the Effective Time and in accordance with applicable laws and regulations and the terms of the Bank Merger Agreement, provided the same does not result in any delay of the Merger beyond April 30, 2006.

2.10   Stock Transfer Books . The stock transfer books of First Security shall be closed immediately upon the Effective Time and there shall be no further registration of transfers of shares of First Security Common Stock thereafter on the records of First Security. On or after the Effective Time, any First Security Certificates presented to the Payment Agent, AFB or Surviving Corporation for any reason (other than Dissenting Shares, if any) shall be converted into the Merger Consideration with respect to the shares of First Security Common Stock formerly represented thereby.

Representations and Warranties of First Security  

Except as Disclosed in the First Security Disclosure Memorandum delivered by First Security to AFB concurrently herewith, First Security represents and warrants to AFB, American Bank and Merger Subsidiary as follows:

3.01   Organization and Qualification . First Security is a Kentucky corporation, duly organized, validly existing and in good standing under the laws of the Commonwealth of Kentucky. The Bank is a Kentucky banking corporation, duly organized, validly existing and in good standing under the laws of the Commonwealth of Kentucky and is authorized to transact a banking business in Kentucky. First Security and the First Security Subsidiaries have all req-uisite corporate power and authority to own and lease their prop-erty and to conduct their businesses as they are now being conducted. Neither the character of the property owned or leased by First Security or the First Security Subsidiaries, nor the nature of the activities conducted by First Security or the First Security

Subsidiaries makes necessary quali-fication by First Security or the First Security Subsidiaries as a foreign corporation or entity in any jurisdiction. The Bank is a member in good standing of and all eligible accounts of deposit in the Bank are insured by the FDIC, to the fullest extent permitted by law.

3.02   Authorization . First Security and the Bank have the full right, corporate power and authority to enter into, execute, deliver and perform, subject to approval of the holders of a majority of the outstanding shares of First Security Common Stock (“First Security Requisite Vote”), their obligations under this Agreement. Except for the First Security Requisite Vote, the execution, delivery and performance of this Agreement by First Security and the transactions contemplated hereby have been duly authorized and approved by all requisite corporate action on the part of First Security. The Board of Directors of First Security and the Bank have unanimously adopted and/or approved this Agreement. This Agree-ment constitutes a valid and legally binding obligation of First Security and the Bank, subject to (i) applicable bankruptcy, insolvency and similar laws now or thereafter in effect concerning creditors’ rights and remedies generally and (ii) general principles of equity, whether applied in a court of law or a court of equity. Neither First Security nor any of the First Security Subsidiaries has a legal obligation, absolute or contingent, to any other Person (a) to sell any substantial part of its assets, or to sell any of its assets, except in the ordi-nary course of business; (b) to effect any merger, share exchange, consolidation or other reorganization; (c) to enter into any agreement with respect thereto, or (d) to take any other similar action inconsistent with the transactions contemplat-ed by this Agreement. Neither the execution, delivery, or performance of this Agreement by First Security or the Bank, nor the consummation of the transactions contemplated hereby by First Security or the Bank will: (a) violate, conflict with, or result in a breach of any provision of the articles of incorporation or the bylaws of First Security or any of the First Security Subsidiaries; or (b) (i)  violate, conflict with, or result in a breach of any provision of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would consti-tute a default) under, (iii) result in the termination of or accelerate the perfor-mance required by, or (iv) result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of First Security or any of the First Security Subsidiaries under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, lease, license, agreement or other instrument or obligation which binds First Security or any of the First Security Subsidiaries or any assets of First Security or any of the First Security Subsidiaries which violation, conflict, breach, default, termination or acceleration of performance, lien, security interest, charge or encumbrance would reasonably be expected to have a Material Adverse Effect on First Security; or (c) subject to receipt of governmental approvals required to consummate the transactions contemplated by this Agreement, violate any order, writ, injunction, decree, statute, rule or regulation of any governmental body applicable to First Security or the First Security Subsidiaries or any assets of First Security or the First Security Subsidiaries.

3.03   Subsidiaries . Other than First Security's interest in the Bank and other than security interests in collateral securing loans extended by the Bank in the ordinary course of business, neither First Security nor the First Security Subsidiaries has ever owned an interest greater than or equal to five percent (5%) of the equity or voting securities of any class of any Person.

3.04   Capital Stock .

(a) The authorized capital stock of First Security consists of (i) 5,000,000 shares of

First Security Common Stock, of which 1,560,290 shares are issued and outstanding as of the date hereof.   The authorized capital stock of the Bank consists of 1,000,000 shares of common stock, no par value per share, of which 500,000 are issued and outstanding as of the date hereof. All of the outstanding capital stock of First Security and the Bank has been validly issued, fully paid and is nonassessable. None of the outstanding shares of capital stock of First Security or the Bank has been issued in violation of the preemptive rights of any person. First Security owns, legally and beneficially, all issued and outstanding shares of capital stock of the Bank; such stock is registered in the name of First Security, and First Security has, and at the Effective Time shall have, good and marketable title to such stock, free and clear of all pledges, liens, charges, encumbrances, security interests, claims, undertakings, rights of first refusal, options or other restrictions of any nature whatsoever (other than pursuant to this Agreement).

(b) Item 3.04 of the First Security Disclosure Memorandum sets forth for each Stock Option, the name of the grantee, the date of the grant, the type of grant, the status of the option grant as qualified or non-qualified under Section 422 of the Code, the number of shares of First Security Common Stock subject to each option, and the number of shares of First Security Common Stock subject to options that are currently exercisable or which will be exercisable at or before the Effective Time and the exercise price per share. Except as set forth in the preceding sentence, there are no outstand-ing options, war-rants, contracts, or com-mitments to which First Security or the First Security Subsidiaries are parties entitling any Person to purchase or otherwise acquire from First Security or the First Security Subsidiaries any shares of capital stock of First Security or the First Security Subsidiaries or any securities convertible into or exchangeable for any of shares of the capital stock of First Security or the First Security Subsidiaries. Neither First Security nor the First Security Subsidiaries has any obligation of any nature whatsoever with respect to any unissued shares or shares which have been acquired, redeemed or converted. Neither First Security nor the First Security Subsidiaries has any outstanding contractual obligation to repur-chase, redeem or otherwise acquire any of their outstanding shares. A current, complete and accurate list of the shareholders of First Security as of December 8, 2005 indicating the name, address and number of shares held of record for each shareholder has been delivered to AFB. Since December 31, 2004, neither First Security nor the First Security Subsidiaries has:

(i)   directly or indirectly redeemed, purchased or otherwise acquired any of its shares;

(ii)   declared, set aside or paid any dividend or other distribution in respect of any of its shares; or

(iii)   issued or granted any right or option (other than this Agreement) to purchase or otherwise acquire any of their shares.

3.05   Corporate Documents, Books, Records and Permits . First Security has delivered to AFB true and complete copies of its Articles of Incorporation, the Articles of Incorporation of each of the First Security Subsidiaries, and of its Bylaws and the Bylaws of each of the First Security Subsidiaries, as amended. All of the foregoing are current, complete and cor-rect in all material respects. The minute books of First Security and each of the First Security Subsidiaries contain or will contain at Closing accurate records in all material respects of all meetings and other corporate actions of their respective shareholders and Boards of Directors (including committees of the Board

of Directors), and the signatures contained therein are the true signatures of the persons whose signatures they purport to be. Each of First Security and the First Security Subsidiaries possess all licenses, franchises, approvals, certificates, permits and other governmen-tal authorizations neces-sary for the continued conduct of their respective businesses without material interference or interruption.

3.06   Securities Filings; Financial Statements; Statements True  

(a)   First Security has timely filed all Securities Documents required by the Securities Laws. As of their respective dates of filing, such Securities Documents complied in all material respects with the Securities Laws as then in effect, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b)   The First Security Financial Statements fairly present or will fairly present in all material respects, as the case may be, the consolidated financial position of First Security and the First Security Subsidiaries as of the dates indicated and the consolidated statements of income, changes in shareholders’ equity and statements of cash flows for the periods then ended (subject, in the case of unaudited interim statements, to the absence of notes and to normal year-end audit adjustments that are not material in amount or effect) in conformity with GAAP applied on a consistent basis.

(c)   No written statement, certificate, instrument or other writing furnished or to be furnished hereunder by First Security or any First Security Subsidiary to AFB contains or will contain any untrue statement of a material fact or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.07   Regulatory Reports . Except to the extent prohibited by law, First Security has made available to AFB true and complete copies of (a) all financial and/or condition reports of First Security and/or the Bank as filed with the Federal Reserve Board, the FDIC, or the KOFI (i) for the years ended December 31, 2004, 2003 and 2002, and (ii) for each calendar quarter since December 31, 2004, and (b) any and all other reports, applications and documents which either the First Security Subsidiaries or First Security has filed with the Federal Reserve Board, the FDIC or the KOFI since January 1, 2002.

3.08   Absence of Certain Changes or Events . Since December 31, 2004, there have been no events or conditions of any character (whether actual or threat-ened) pertain-ing to the financial condition, businesses, prospects or assets of First Security or the First Security Subsidiaries, separately or in the aggregate, that have had, or would reasonably be expected to have, a Material Adverse Effect. Since December 31, 2004, neither First Security nor any of the First Security Subsidiaries has:

(a)   borrowed any money, incurred any liability or obli-gation, or lent any money or pledged any of its credit in connec-tion with any aspect of any of its business other than in the ordinary course of business consistent with past practice;

(b)   mortgaged or otherwise subjected to any liens, encum-brances or other liabilities any of its assets or business, other than in the ordinary course of business consistent with past practice;

(c)   sold, assigned or transferred any of its assets or business other than in the ordinary course of business consistent with past practice;

(d)   suffered any damage, destruction or loss, whether or not covered by insurance that has had, or would reasonably be expected to have, a Material Adverse Effect;

(e)   made or suffered any amendments, terminations of or defaults under any material contract, agreement, license or other instru-ment;

(f)   received notice or had knowledge that any of its credit or deposit customers has terminated or intends to terminate its relationship, a termination which either singly or in the aggregate that has had, or would reasonably be expected to have, a Material Adverse Effect;

(g)   received any notice from a regulatory authority asserting or threatening to assert that any of them is in violation of any statute, law, regulation or order applicable to the business or assets of any of them, which violation has had, or would reasonably be expected to have, a Material Adverse Effect, if any;

(h)   failed to operate its business in the ordinary course so as to preserve the business organization intact, and to preserve the goodwill of its customers and others with whom it has business relations;

(i)   incurred any extraordinary losses or, except in accordance with customary banking or mortgage servicing practices, waived any material rights in connection with any aspect of its business, whether or not in the ordinary course of business;

(j)   canceled any debts owed to any of them or any material claims, in each case, in excess of $25,000 or paid any noncurrent, material obliga-tions or liabilities;

(k)   made any capital expenditure or capital additions or betterments, including any such expenditure, addition or betterment effected through a capital lease, exceeding $50,000;

(l)   other than the Stock Option Plan allocations made in the ordinary course, paid or agreed to pay, conditionally or otherwise, any bonus, extra compensation, pension or severance pay to any of its present or former (i) directors, (ii) officers, or (iii) em-ployees who are being compensated on an annual basis at a rate exceeding $30,000 per year; or increased by an amount in excess of three percent (3%) any of their compensation (including sala-ries, fees, bonuses, profit sharing, incentive, pension, retire-ment or other similar payments);

(m)   renewed, amended, become bound by or entered into any material agreement, contract, commitment or transaction other than extensions of credit made in the ordinary course of business consistent with past practice;

(n)   changed any accounting practice followed or employed in preparing the Financial Statements other than on account of any change in GAAP;

(o)   made any loans, extended any credit, given any discounts or entered into any financing leases which have not been (i) made for good, valu-able and adequate consideration in the ordinary course of busi-ness consistent with past practice, (ii) evidenced by notes or other forms of indebtedness which are true, genuine and what they purport to be, and (iii) adequately reserved against in an aggregate amount sufficient in the opinion of management to provide for all charge-offs reasonably anticipated in the ordinary course of business in accordance with GAAP; or

(p)   entered into any agreement, contract or commitment applicable as of the date hereof to do any of the foregoing.

3.09   Taxes .

(a)   First Security and the First Security Subsidiaries (i) have timely filed all federal, state, foreign and local income, franchise, excise, sales, intangibles, real and personal property, employment and other tax returns, tax information returns and reports required to be filed by them or by their agents on behalf of First Security or any First Security Subsidiary; (ii) have paid, or made adequate provision in the opinion of management for the payment of, all taxes, interest payments and penalties (whether or not reflected in returns as filed) due and payable (and/or accruable for all periods ending on or before the date of this Agreement) by them to any city, county, state, foreign coun-try, the United States or any other taxing authority; and (iii) are not delinquent in the payment of any tax or govern-mental charge of any nature.

(b)   No audit, examination or investigation is presently being conducted or, to the knowledge of First Security, is threatened by any taxing authority with respect to First Security or any First Security Subsidiary. To the knowledge of First Security, no unpaid tax deficiencies or additional liabilities of any sort have been proposed by any governmental represen-tative with respect to First Security or any First Security Subsidiary. No agreements for the extension of time for the assessment of any amounts of tax have been entered into by or on behalf of First Security or the First Security Subsidiaries. First Security and the First Security Subsidiaries have withheld (and timely paid to the appropriate governmental entity) proper and accurate amounts from their employees for all periods in material compliance with all tax withholding provisions (includ-ing, without limitation, income, social security and employ-ment tax withholding for all forms of compensation) of applicable fed-eral, state, foreign and local laws. First Security and the First Security Subsidiaries have made available to AFB true and correct copies of all federal and state income tax returns filed by any of them for all tax periods commencing after December 31, 2001.

(c)   Neither First Security nor any of the First Security Subsidiaries has made any payments, is obligated to make any payments, or is a party to any contract that could obligate it to make any payments that would be disallowed as a deduction under Section 280G or 162(m) of the Code.

3.10   Title to Assets .

(a)   On December 31, 2004, First Security and the First Security Subsidiaries had and, except with respect to assets disposed of in the ordinary course of business since December 31, 2004, now have, good and marketable title to all properties and assets reflected on the Financial Statements as of December 31, 2004, free and clear of all mortgages, liens, pledges, easements, restrictions, encroachments, governmental regulations, security interests, charges or encumbrances of any nature, except as disclosed in the First Security Financial Statements as of December 31, 2004 and for:

(i)   the mortgages and encumbrances which secure indebtedness which is properly reflected on the Financial State-ments;

(ii)   liens for taxes accrued but not yet payable;

(iii)   liens arising as a matter of law in the ordinary course of business as to which there is no known default; and

(iv)   such imperfections of title and encumbrances, if any, as do not materially detract from the value or interfere with the present use or sale of any of their properties and assets.

(b) Item 3.10(b) of the First Security Disclosure Memorandum lists all leases, other than “financing leases” where First Security or any First Security Subsidiary is the lessor, of personal property to which First Security and/or the First Security Subsidiaries is a party. First Security has made available to AFB true and correct copies of all leases referred to in Item 3.10(b) of the First Security Disclosure Memorandum, together with all amendments and modifications thereof. With respect to each lease of personal property to which First Security and/or the First Security Subsidiaries is a party, except for leases in which either First Security or the First Security Subsidiaries as lessor entered into as a “financing lease”:

(i)   such lease is in full force and effect in accordance with its terms;

(ii)   all rents and additional rents due to date have been paid;

(iii)   the lessee under each of the leases has been in peaceable possession since the commencement of the original term of the lease; and

(iv)   no event of default, or event, occurrence, condition or act, which with the giving of notice, the lapse of time or the happening of any further event, occurrence, condition or act would become a default by First Security or the First Security Subsidiaries under such lease, exists.

(c) With respect to any real property owned in fee by First Security or the First Security Subsidiaries which real property is set forth on Item 3.10(c) of the First Security Disclosure Memorandum:

(i)   all work to be performed by or for First Security or the First Security Subsidiaries with respect to all improvements in excess of $25,000 to the property owned by any of them has been fully completed and paid for by them;

(ii)   all permits and certificates with respect to con-struction of improvements on the property owned by First Security or the First Security Subsidiaries have been obtained and the property has been properly zoned for use and occupancy as a banking or other business facility as currently used by First Security or the First Security Subsidiaries; and

(iii)   all material improvements to the property since First Security’s inception have been made in accordance with plans and specifications approved by First Security or the First Security Subsidiaries, as appropriate.

3.11   Environmental Hazards .

(a)   Neither First Security nor any of the First Security Subsidiaries has:

(i) used, stored, manufactured, or suf-fered to exist (collectively, “Utilized”) any Hazardous Substance on, in or under any of their property, whether currently or previously owned or leased by First Security or the First Security Subsidiaries, other than in accordance with all Environmental Laws, or

(ii) transported or dis-posed, or caused or permitted any Person to transport or dispose, of any Hazardous Substance, other than in accordance with all Environmental Laws.

(b)   To First Security’s knowledge, no Hazardous Sub-stances have been Utilized at any time on, in or under any of First Security 's or the First Security Subsidiaries’ property, whether currently or previously owned or leased by any of them, other than in accordance with all Environmental Laws.

(c)   Neither First Security nor any of the First Security Subsidiaries is subject to any Environmental Claim, nor are any of the properties of First Security or the First Security Subsidiaries, whether currently or previously owned or leased by First Security or the First Security Subsidiaries, sub-ject to any asserted or, to the knowledge of First Security, unasserted lien, under any of the Environ-mental Laws.

(d)   Neither First Security nor any of First Security Subsidiaries has ever violated any of the Environmental Laws in any material respect, and each of them is presently in compliance in all material respects with all Environmental Laws. Without limiting the generality of the foregoing, no asbes-tos, PCBs or other Hazardous Substance or any petroleum product or constituents thereof is present on, in or under any of the property of First Security or the First Security Subsidiaries, whether currently or previously owned or leased.

(e)   To First Security’s knowledge, no loans of First Security or any of the First Security Subsidiaries are secured by property where any Hazardous Sub-stances have ever been Utilized, other than in accordance with all Environmental Laws, and none of the borrowers of First Security or the First Security Subsidiaries have materially violated any of the Environmental Laws or

have any of their property securing a loan by First Security or any of the First Security Subsidiaries subject to a lien under any of the Environmental Laws.

(f)   Neither First Security nor any of the First Security Subsidiaries ever permit-ted any property currently or previously owned or leased by any of them to be used as a landfill or dump site.

(g)   There are no under-ground storage tanks or underground pipelines located on any property owned or leased by First Security or the First Security Subsidiaries. To First Security’s knowledge, no underground storage tanks have ever been located on any property currently or previously owned or leased by either of them.

3.12   Litigation, Pending Proceedings and Compliance with Laws . There are no Claims (a) which would prevent the performance of this Agreement or any of the transactions contemplated hereby or declare the same unlawful or cause the rescission there-of, or (b) which have had, or would reasonably be expected to have, a Material Adverse Effect on First Security. First Security and the First Security Subsidiaries have complied with and are not in any default in any material respect under (and have not been charged with, nor, to the knowledge of First Security, are threatened with or under investigation with respect to, any charge concerning any material violation of any provi-sion of) any material federal, state or local law, regulation, ordinance, rule or order (whether executive, judicial, legislative or administrative) or any order, writ, injunction or decree of any court, agency or instru-mentality. There are no material uncured viola-tions or violations with respect to which material refunds or restitution may be required concerning First Security or the First Security Subsidiaries as a result of examination by any regulatory authority.

3.13   Regulatory Compliance . Neither First Security nor any of the First Security Subsidiaries has ever been a party to (a) any enforcement action instituted by, or (b) any memorandum of understanding or cease and desist order with, any federal or state regulatory agency, and no such action, memo-randum or order has been threatened, and neither First Security nor any of the First Security Subsidiaries has received any report of examination from any federal or state regulatory agency which requires First Security or the First Security Subsidiaries to address any problem or take any action which has not already been addressed or taken in a manner satisfactory to the regulatory agency. First Security knows of no fact or condition relating to First Security or the First Security Subsidiaries (including, without limitation, noncompliance with the CRA and the Bank Secrecy Act) that would reasonably be expected to prevent First Security or AFB from obtaining all of the federal and state regulatory approvals contemplated herein.

3.14   Employee Relations . Neither First Security nor any of the First Security Subsidiaries (a) is a party to, or negotiating, and have any obligations under, any collective bargaining or similar agreement, with any party relating to the compensation or working condi-tions of any employees of First Security or the First Security Subsidiaries; (b)  is obligated under any agreement to recognize or bargain with any labor organization or union on behalf of their employees; or (c) has been charged or, to First Security’s knowledge, threatened with a charge of any unfair labor prac-tice. There are no existing or, to First Security’s knowledge, threatened labor strikes, slow-downs, disputes, grievances or disturbances affect-ing or which might affect operations at any facil-ity of First Security or any of the First Security Subsidiaries. No work stoppage against First Security or any of the First Security Subsidiaries or its business is pending or, to First Security’s knowledge, threatened, and no such

work stoppage has ever occurred. Neither First Security nor any of the First Security Subsidiaries has committed any act or failed to take any required action with respect to any of its employees which has resulted or which may result in a material violation of ERISA, or similar legisla-tion as it affects any employee benefit or welfare plan of First Security or the First Security Subsidiaries; the Immigration Reform and Control Act of 1986; the National Labor Relations Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Occupational Safety and Health Act; Executive Order 11246; the Fair Labor Standards Act; the Rehabilitation Act of 1973; and all regulations under such Acts, and all other fed-eral, state and local laws, regulations and executive orders relat-ing to the employment of labor, including any provisions thereof relating to wages, hours, col-lective bargaining, the payment of Social Security and similar taxes, unemployment and workmen’s' comp-ensation laws, any labor relations laws, or any governmental regu-lations promulgated thereunder, as the same affect relationships or obligations of First Security and the First Security Subsidiaries with respect to any of the their employees, and which will or reasonably could result in any mate-rial liability, penalty, fine or the like being imposed upon First Security or the First Security Subsidiaries. Neither First Security nor any of the First Security Subsidiaries is liable for any arrearage of wages or taxes or pen-alties for failure to comply with any of the foregoing, and there are no proceedings before any court, governmental agency, instr