EXHIBIT 99.2
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PURCHASE AGREEMENT
among
THE BANK OF KENTUCKY FINANCIAL CORPORATION,
THE BANK OF KENTUCKY CAPITAL TRUST I
and
TRAPEZA CDO I, LLC
________________
Dated as of November 14, 2002
________________
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PURCHASE AGREEMENT
($17,000,000 Trust Preferred Securities)
THIS PURCHASE AGREEMENT, dated as of November 14, 2002, is entered into
among The Bank of Kentucky Financial Corporation, a Kentucky corporation (the
"Company"), and The Bank of Kentucky Capital Trust I, a Delaware statutory trust
(the "Trust", and together with the Company, the "Sellers"), and Trapeza CDO I,
LLC or its assignee. (the "Purchaser").
WITNESSETH:
WHEREAS, the Sellers propose to issue and sell 17,000 Floating Rate
Preferred Securities of the Trust, having a stated liquidation amount of $1,000
per security, bearing a variable rate, reset quarterly, equal to LIBOR (as
defined in the Indenture (as defined below)) plus 3.35%; provided, that the
applicable interest rate may not exceed 12% through the interest payment date in
November 2007 (the "Preferred Securities");
WHEREAS, the Preferred Securities will be guaranteed by the Company (the
"Guarantee") pursuant to the Guarantee Agreement (the "Guarantee Agreement"),
dated as of the Closing Date (defined below), and executed and delivered by the
Company and The Bank of New York, a New York banking corporation, as trustee (in
such capacity, the "Guarantee Trustee"), for the benefit of the holders from
time to time of the Preferred Securities;
WHEREAS, the entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), and will be used by
the Trust to purchase Seventeen Million Five Hundred Twenty Six Thousand Dollars
($17,526,000) in principal amount of the unsecured junior subordinated
deferrable interest notes of the Company (the "Junior Subordinated Notes");
WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of the Closing Date, among the Company, as depositor, The
Bank of New York, a New York banking corporation, as property trustee (in such
capacity, the "Property Trustee"), The Bank of New York (Delaware), a Delaware
banking corporation, as Delaware trustee (in such capacity, the "Delaware
Trustee"), and the Administrative Trustees named therein (in such capacities,
the "Administrative Trustees"); and
WHEREAS, the Junior Subordinated Notes will be issued pursuant to a
Junior Subordinated Indenture, dated as of the Closing Date (the "Indenture"),
between the Company and The Bank of New York, a New York banking corporation, as
indenture trustee (in such capacity, the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
1. Definitions. The Preferred Securities, the Common
Securities and the Junior Subordinated Notes are collectively referred to herein
as the "Securities." This Purchase Agreement, the Indenture, the Trust
Agreement, the Guarantee and the Securities are collectively referred to herein
as the "Operative Documents." All other capitalized terms used but not defined
in this Purchase Agreement shall have the meanings ascribed thereto in the
Indenture.
2. Purchase and Sale of the Preferred Securities.
(a) The Sellers agree to sell to the Purchaser, and the
Purchaser agrees to purchase from the Sellers the Preferred Securities for an
amount (the "Purchase Price") equal to Seventeen Million Dollars ($17,000,000)
less an amount equal to three percent (3%) thereof (the "Discount"). In view of
the fact that the proceeds of the sale of the Preferred Securities and the
Common Securities will be used to purchase the Junior Subordinated Notes of the
Company, the Discount will be netted from the payment made by the Purchaser to
the Trust for the sale of the Preferred Securities and will be netted by the
Trust from the amount paid to the Company for the sale of the Junior
Subordinated Notes. The Purchaser shall be responsible for the following
expenses: (i) rating agency costs and expenses and (ii) any fee payable to the
Company's introducing agent, Friedman, Billings, Xxxxxx Group, Inc.; but
excluding the fees and expenses set forth in Section 7 hereof. The Sellers shall
use the Purchase Price, together with the proceeds from the sale of the Common
Securities, to purchase the Junior Subordinated Notes.
(b) Delivery or transfer of, and payment for, the Preferred
Securities shall be made at 10:00 A.M. Chicago time (11:00 A.M. New York time),
on November 14, 2002 or such later date (not later than December 14, 2002 (30
days later)) as the parties may designate (such date and time of delivery and
payment for the Preferred Securities being herein called the "Closing Date").
The Preferred Securities shall be transferred and delivered to the Purchaser
against the payment of the Purchase Price to the Sellers made by wire transfer
in immediately available funds on the Closing Date to a U.S. account designated
in writing by the Company at least two business days prior to the Closing Date.
(c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two business days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser in Chicago, Illinois, not later than 1:00 P.M.,
Chicago time (2:00 P.M. New York time), on the business day prior to the Closing
Date. The closing for the purchase and sale of the Preferred Securities shall
occur at the offices of Mayer, Brown, Xxxx & Maw, 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, or such other place as the parties hereto shall agree.
3. Conditions. The obligations of the parties under this
Purchase Agreement are subject to the following conditions:
(a) the representations and warranties contained herein shall
be accurate as of the date of delivery of the Preferred Securities.
(b) [Reserved.]
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(c) (i) Mayer, Brown, Xxxx & Maw, special counsel for the
Purchaser, shall have delivered an opinion, dated the Closing Date, addressed to
the Purchaser, in substantially the form set out in Annex A-1 hereto and (ii)
the Company shall have furnished to the Purchaser the opinion of the Company's
General Counsel or a certificate signed by the Company's Chief Executive
Officer, President or an Executive Vice President and its Chief Financial
Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to
the Purchaser, in substantially the form set out in Annex A-II hereto.
(d) The Purchaser shall have been furnished the opinion of
Mayer, Brown, Xxxx & Maw, special tax counsel for the Purchaser, dated the
Closing Date, addressed to the Purchaser, in substantially the form set out in
Annex B hereto.
(e) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Purchaser, dated the
Closing Date, addressed to the Purchaser and the Company, in substantially the
form set out in Annex C hereto.
(f) The Purchaser shall have received the opinion of White &
Case, special counsel for the Guarantee Trustee, the Property Trustee, the
Indenture Trustee and the Delaware Trustee, dated the Closing Date, addressed to
the Purchaser, in substantially the form set out in Annex D hereto.
(g) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Purchaser, dated the
Closing Date, addressed to the Purchaser, in substantially the form set out in
Annex E hereto.
(h) The Company shall have furnished to the Purchaser a
certificate of the Company, signed by the Chief Executive Officer, President or
an Executive Vice President and by the Chief Financial Officer, Treasurer or
Assistant Treasurer of the Company, and the Trust shall have furnished to the
Purchaser a certificate of the Trust, signed by an Administrative Trustee of the
Trust, in each case dated the Closing Date, and, in the case of the Company, as
to (i) and (ii) below and, in the case of the Trust, as to (i) below.
(i) the representations and warranties in this Purchase
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date, and the Company and the Trust
have complied with all the agreements and satisfied all the conditions on
either of their part to be performed or satisfied at or prior to the
Closing Date; and
(ii) since the date of the Interim Financial Statements
(as defined below), there has been no material adverse change in the
condition (financial or other), earnings, business or assets of the
Company and its subsidiaries, whether or not arising from transactions
occurring in the ordinary course of business.
(i) Subsequent to the execution of this Purchase Agreement,
there shall not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings, business
or assets of the Company and its subsidiaries, whether or not occurring in the
ordinary course of business, the effect of which is, in the
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Purchaser's judgment, so material and adverse as to make it impractical or
inadvisable to proceed with the purchase of the Preferred Securities.
(j) Prior to the Closing Date, the Company and the Trust shall
have furnished to the Purchaser and its counsel such further information,
certificates and documents as the Purchaser or its counsel may reasonably
request.
If any of the conditions specified in this Section 3 shall not have
been fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser's
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
and the Trust in writing or by telephone or facsimile confirmed in writing.
Each certificate signed by any trustee of the Trust or any officer of
the Company and delivered to the Purchaser or the Purchaser's counsel in
connection with the Operative Documents and the transactions contemplated hereby
and thereby shall be deemed to be a representation and warranty of the Trust
and/or the Company, as the case may be, and not by such trustee or officer in
any individual capacity.
4. Representations and Warranties of the Company and the
Trust. The Company and the Trust jointly and severally represent and warrant to,
and agree with the Purchaser, as follows:
(a) Neither the Company nor the Trust, nor any of their
"Affiliates" (as defined in Rule 501(b) of Regulation D ("Regulation D") under
the Securities Act (as defined below)), nor any person acting on its or their
behalf, has, directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act of 1933, as
amended (the "Securities Act").
(b) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the Securities.
(c) The Securities (i) are not and have not been listed on a
national securities exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of an open-end
investment company, unit investment trust or face-amount certificate company
that are, or are required to be, registered under section 8 of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and the
Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act ("Rule 144A(d)(3)").
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(d) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf, has engaged, or will
engage, in any "directed selling efforts" within the meaning of Regulation S
under the Securities Act with respect to the Securities.
(e) Neither the Company nor the Trust is, and, immediately
following consummation of the transactions contemplated hereby and the
application of the net proceeds therefrom, will not be, an "investment company"
or an entity "controlled" by an "investment company," in each case within the
meaning of section 3(a) of the Investment Company Act.
(f) Neither the Company nor the Trust has paid or agreed to pay
to any person any compensation for soliciting another to purchase any of the
Securities, except for the Discount and/or any fee payable to the Company's
introducing agent, Friedman, Billings, Xxxxxx Group, Inc.
(g) The Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act, 12
Del. C. (S)3801, et seq. (the "Statutory Trust Act") with all requisite power
and authority to own property and to conduct the business it transacts and
proposes to transact and to enter into and perform its obligations under the
Operative Documents to which it is a party. The Trust is duly qualified to
transact business as a foreign entity and is in good standing in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, business or assets of the
Trust, whether or not occurring in the ordinary course of business. The Trust is
not a party to or otherwise bound by any agreement other than the Operative
Documents. The Trust is and will be, under current law, classified for federal
income tax purposes as a grantor trust and not as an association or publicly
traded partnership taxable as a corporation.
(h) The Trust Agreement has been duly authorized by the Company
and, on the Closing Date specified in Section 2(b), will have been duly executed
and delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of equity. Each
of the Administrative Trustees of the Trust is an employee of the Company or one
of its subsidiary banks and has been duly authorized by the Company to execute
and deliver the Trust Agreement.
(i) Each of the Guarantee and the Indenture has been duly
authorized by the Company and, on the Closing Date, will have been duly executed
and delivered by the Company, and, assuming due authorization, execution and
delivery by the Guarantee Trustee, in the case of the Guarantee, and by the
Indenture Trustee, in the case of the Indenture, will be a legal, valid and
binding obligation of the Company enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
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(j) The Preferred Securities and the Common Securities have
been duly authorized by the Trust and, when issued and delivered against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and non-assessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement, enforceable against the Trust in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity. The issuance of the
Securities is not subject to any preemptive or other similar rights. On the
Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance (each, a "Lien").
(k) The Junior Subordinated Notes have been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
to the Indenture Trustee for authentication in accordance with the Indenture
and, when authenticated in the manner provided for in the Indenture and
delivered to the Trust against payment therefor in accordance with the Debt
Securities Subscription Agreement, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity.
(l) This Purchase Agreement has been duly authorized, executed
and delivered by the Company and the Trust.
(m) Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, nor the
consummation of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the Trust Agreement or the
charter or bylaws of the Company or any subsidiary of the Company or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Trust or the Company or any of
its subsidiaries or their respective properties or assets (collectively,
"Governmental Entities"), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any Lien upon any property or assets of the
Trust, the Company or any of the Company's subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Trust, the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or (B) to which any of the
property or assets of any of them is subject, or any judgment, order or decree
of any court, governmental authority or arbitrator, except, in the case of this
clause (ii), for such conflicts, breaches, violations, defaults, Repayment
Events (as defined below) or Liens which (X) would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents and (Y) would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), earnings,
business, liabilities
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and assets (taken as a whole) or business prospects of the Company and its
subsidiaries taken as a whole, whether or not occurring in the ordinary course
of business (a "Material Adverse Effect") or (iii) require the consent,
approval, authorization or order of any court or Governmental Entity. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust or the Company
or any of its subsidiaries prior to its scheduled maturity.
(n) The Company has been duly incorporated and is validly
existing as a corporation under the laws of Kentucky, with all requisite
corporate power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.
(o) The Company has no subsidiaries that are material to its
business, financial condition or earnings other than those subsidiaries listed
in Schedule 1 attached hereto (the "Significant Subsidiaries"). Each Significant
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction in which it is chartered or
organized, with all requisite corporate power and authority to own, lease and
operate its properties and conduct the business it transacts and proposes to
transact. Each Significant Subsidiary is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction where the
nature of its activities requires such qualification, except where the failure
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.
(p) Each of the Trust, the Company and each of the Company's
subsidiaries hold all necessary approvals, authorizations, orders, licenses,
certificates and permits (collectively, "Government Licenses") of and from
Governmental Entities necessary to conduct their respective businesses as now
being conducted, and neither the Trust, the Company nor any of the Company's
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Government License, except where the failure to be
so licensed or approved or the receipt of an unfavorable decision, ruling or
finding, would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
where the invalidity or the failure of such Governmental Licenses to be in full
force and effect, would not, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its subsidiaries are in compliance with all
applicable laws, rules, regulations, judgments, orders, decrees and consents,
except where the failure to be in compliance would not, singly or in the
aggregate, have a Material Adverse Effect.
(q) All of the issued and outstanding shares of capital stock
of the Company and each of its subsidiaries are validly issued, fully paid and
non-assessable; all of the issued and outstanding capital stock of each
subsidiary of the Company is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim or equitable right; and none of
the issued and outstanding capital stock of the Company or any subsidiary was
issued in violation of
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any preemptive or similar rights arising by operation of law, under the charter
or by-laws of such entity or under any agreement to which the Company or any of
its subsidiaries is a party.
(r) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or similar organizational
documents or (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the
Company or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of any of them is subject,
except, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.
(s) There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company or the Trust after due inquiry, threatened
against or affecting the Trust or the Company or any of the Company's
subsidiaries, except for such actions, suits or proceedings that, if adversely
determined, would not, singly or in the aggregate, adversely affect the
consummation of the transactions contemplated by the Operative Documents or have
a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Trust or the Company or any of its
subsidiaries is a party or of which any of their respective properties or assets
is subject, including ordinary routine litigation incidental to the business,
are not expected to result in a Material Adverse Effect.
(t) The accountants of the Company who certified the Financial
Statements (as defined below) are independent public accountants of the Company
and its subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder.
(u) The audited consolidated financial statements (including
the notes thereto) and schedules of the Company and its consolidated
subsidiaries for the fiscal year ended December 31, 2001 (the "Financial
Statements") and the interim unaudited consolidated financial statements of the
Company and its consolidated subsidiaries for the quarter ended June 30, 2002
(the "Interim Financial Statements") provided to the Purchaser are the most
recent available audited and unaudited consolidated financial statements of the
Company and its consolidated subsidiaries, respectively, and fairly present in
all material respects, in accordance with U.S. generally accepted accounting
principles, the financial position of the Company and its consolidated
subsidiaries, and the results of operations and changes in financial condition
as of the dates and for the periods therein specified, subject, in the case of
Interim Financial Statements, to year-end adjustments (which are expected to
consist solely of normal recurring adjustments). Such consolidated financial
statements and schedules have been prepared in accordance with U.S. generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein).
(v) None of the Trust, the Company nor any of its subsidiaries
has any material liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether
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due or to become due, including any liability for taxes (and there is no past or
present fact, situation, circumstance, condition or other basis for any present
or future action, suit, proceeding, hearing, charge, complaint, claim or demand
against the Company or its subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial Statements or
the Interim Financial Statements and (ii) normal fluctuations in the amount of
the liabilities referred to in clause (i) above occurring in the ordinary course
of business of the Trust, the Company and all of its subsidiaries since the date
of the most recent balance sheet included in such Financial Statements.
(w) The Company's report on FRY-9C, dated December 31, 2001
(the "FRY-9C"), provided to the Purchaser is the most recently available such
report, and the information therein fairly presents in all material respects the
financial position of the Company and its subsidiaries.
(x) Since the respective dates of the Financial Statements,
Interim Financial Statements and the FRY-9C, there has not been (A) any material
adverse change or development with respect to the condition (financial or
otherwise), earnings, business, assets or business prospects of the Company and
its subsidiaries, taken as a whole, whether or not occurring in the ordinary
course of business or (B) any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock other than regular
quarterly dividends on the Company's common stock.
(y) The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "Bank Holding
Company Act"), and the regulations of the Board of Governors of the Federal
Reserve System (the "Federal Reserve"), and the deposit accounts of the
Company's subsidiary banks are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law and the rules and
regulations of the FDIC, and no proceeding for the termination of such insurance
are pending or, to the knowledge of the Company or the Trust after due inquiry,
threatened.
(z) The documents of the Company filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Company's most recent Annual Report on Form 10-K, at
the time they were or hereafter are filed by the Company with the Commission
(collectively, the "1934 Act Reports"), complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations"), and, at the date of this
Purchase Agreement and on the Closing Date, do not and will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and other than
such instruments, agreements, contracts and other documents as are filed as
exhibits to the Company's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q or Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of Regulation S-K
promulgated by the Commission to which the Company or any of its subsidiaries is
a party.
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(aa) None of the Trust, the Company nor any of its subsidiaries
is subject or is party to, or has received any notice from any Regulatory Agency
(as defined below) that any of them will become subject or party to any
investigation with respect to, any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory enforcement action,
proceeding or order with or by, or is a party to any commitment letter or
similar undertaking to, or is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board resolutions
at the request of, any Regulatory Agency that, in any such case, currently
restricts in any material respect the conduct of their business or that in any
material manner relates to their capital adequacy, their credit policies, their
management or their business (each, a "Regulatory Action"), nor has the Trust,
the Company or any of its subsidiaries been advised by any Regulatory Agency
that it is considering issuing or requesting any such Regulatory Action; and
there is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
the Trust, the Company or any of its subsidiaries, except where such unresolved
violation, criticism or exception would not, singly or in the aggregate, have a
Material Adverse Effect. As used herein, the term "Regulatory Agency" means any
federal or state agency charged with the supervision or regulation of depositary
institutions or holding companies of depositary institutions, or engaged in the
insurance of depositary institution deposits, or any court, administrative
agency or commission or other governmental agency, authority or instrumentality
having supervisory or regulatory authority with respect to the Trust, the
Company or any of its subsidiaries.
(bb) No labor dispute with the employees of the Trust, the
Company or any of its subsidiaries exists or, to the knowledge of the executive
officers of the Trust or the Company, is imminent, except those which would not,
singly or in the aggregate, have a Material Adverse Effect.
(cc) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any Governmental
Entity, other than those that have been made or obtained, is necessary or
required for the performance by the Trust or the Company of their respective
obligations under the Operative Documents, as applicable, or the consummation by
the Trust and the Company of the transactions contemplated by the Operative
Documents.
(dd) Each of the Trust, the Company and each subsidiary of the
Company has good and marketable title to all of its respective real and personal
properties, in each case free and clear of all Liens and defects, except for
those that would not, singly or in the aggregate, have a Material Adverse
Effect; and all of the leases and subleases under which the Trust, the Company
or any subsidiary of the Company holds properties are in full force and effect,
except where the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect,
and none of the Trust, the Company or any subsidiary of the Company has any
notice of any claim of any sort that has been asserted by anyone adverse to the
rights of the Trust, the Company or any subsidiary of the Company under any such
leases or subleases, or affecting or questioning the rights of such entity to
the continued possession of the leased or subleased premises under any such
lease or sublease, except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect.
13
(ee) The Company has no present intention to exercise its option
to defer payments of interest on the Junior Subordinated Notes as provided in
the Indenture. The Company believes that the likelihood that it would exercise
its rights to defer payments of interest on the Junior Subordinated Notes as
provided in the Indenture at any time during which the Junior Subordinated Notes
are outstanding is remote because of the restrictions that would be imposed on
the Company's ability to declare or pay dividends or distributions on, or to
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal, interest or premium on, or repay, repurchase or redeem, any of its
debt securities that rank pari passu in all respects with or junior in interest
to the Junior Subordinated Notes.
(ff) The information provided by the Company and the Trust
pursuant to this Purchase Agreement does not, as of the date hereof, and will
not, as of the Closing Date, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
5. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to, and agrees with, the Company and the Trust
as follows:
(a) The Purchaser is aware that the Securities have not been
and will not be registered under the Securities Act and may not be offered or
sold within the United States or to "U.S. persons" (as defined in Regulation S
under the Securities Act) except in accordance with Rule 903 of Regulation S
under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act.
(b) The Purchaser is an "accredited investor," as such term is
defined in Rule 501(a) of Regulation D under the Securities Act.
(c) Neither the Purchaser, nor any of the Purchaser's
affiliates, nor any person acting on the Purchaser's or the Purchaser's
Affiliate's behalf has engaged, or will engage, in any form of "general
solicitation or general advertising" (within the meaning of Regulation D under
the Securities Act) in connection with any offer or sale of the Preferred
Securities.
6. Agreements of the Company and the Trust. The Company and
the Trust jointly and severally agree with the Purchaser as follows:
(a) The Company and the Trust will arrange for the
qualification of the Preferred Securities for sale under the laws of such
jurisdictions as the Purchaser may designate and will maintain such
qualifications in effect so long as required for the sale of the Preferred
Securities. The Company or the Trust, as the case may be, will promptly advise
the Purchaser of the receipt by the Company or the Trust, as the case may be, of
any notification with respect to the suspension of the qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
14
(b) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates to, nor will either of them permit any person
acting on its or their behalf (other than the Purchaser) to, resell any
Preferred Securities that have been acquired by any of them.
(c) Neither the Company nor the Trust will, nor will either of
them permit any of their Affiliates or any person acting on their behalf to,
engage in any "directed selling efforts" within the meaning of Regulation S
under the Securities Act with respect to the Securities.
(d) Neither the Company nor the Trust will, nor will either of
them permit any of their Affiliates or any person acting on their behalf to,
directly or indirectly, make offers or sales of any security, or solicit offers
to buy any security, under circumstances that would require the registration of
any of the Securities under the Securities Act.
(e) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates or any person acting on their behalf to,
engage in any form of "general solicitation or general advertising" (within the
meaning of Regulation D) in connection with any offer or sale of the any of the
Securities.
(f) So long as any of the Securities are outstanding, (i) the
Securities shall not be listed on a national securities exchange registered
under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) neither the Company nor the Trust shall be an open-end
investment company, unit investment trust or face-amount certificate company
that is, or is required to be, registered under section 8 of the Investment
Company Act, and, the Securities shall otherwise satisfy the eligibility
requirements of Rule 144A(d)(3).
(g) Each of the Company and the Trust shall furnish to the
holders, and to subsequent holders of the Preferred Securities, a duly completed
and executed certificate in the form attached hereto as Annex F, including the
attachments referenced in such Annex, which certificate and attachments shall be
so furnished by the Company and the Trust not later than forty five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company and not later than ninety (90) days after the end of each fiscal
year of the Company.
(h) Each of the Company and the Trust will, during any period
in which it is not subject to and in compliance with section 13 or 15(d) of the
Exchange Act, or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, shall provide to
each holder of the Securities and to each prospective purchaser (as designated
by such holder) of the Securities, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. If the Company and the Trust are required
to register under the Exchange Act, such reports filed in compliance with Rule
12g3-2(b) shall be sufficient information as required above. This covenant is
intended to be for the benefit of the Purchaser, the holders of the Securities,
and the prospective purchasers designated by the Purchaser and such holders,
from time to time, of the Securities.
(i) Neither the Company nor the Trust will, until one hundred
eighty (180) days following the Closing Date, without the Purchaser's prior
written consent, offer, sell,
15
contract to sell, grant any option to purchase or otherwise dispose of, directly
or indirectly, (i) any Preferred Securities or other securities of the Trust
other than as contemplated by this Purchase Agreement or (ii) any other
securities convertible into, or exercisable or exchangeable for, any Preferred
Securities or other securities of the Trust.
7. Payment of Expenses. The Company, as depositor of the Trust,
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Trust under this Purchase Agreement, whether
or not the transactions contemplated herein are consummated or this Purchase
Agreement is terminated, including all costs and expenses incident to (i) the
authorization, issuance, sale and delivery of the Preferred Securities and any
taxes payable in connection therewith; (ii) the fees and expenses of qualifying
the Preferred Securities under the securities laws of the several jurisdictions
as provided in Section 6(a); (iii) the fees and expenses of the counsel, the
accountants and any other experts or advisors retained by the Company or the
Trust; (iv) the fees and all reasonable expenses of the Guarantee Trustee, the
Property Trustee, the Delaware Trustee, the Indenture Trustee and any other
trustee or paying agent appointed under the Operative Documents, including the
fees and disbursements of counsel for such trustees, which fees shall not exceed
a $2,000 acceptance fee and $2,000 in administrative fees annually; (v) the fees
and all reasonable expenses of Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware
counsel retained by the Purchaser, which fees and expenses shall not exceed
$2,000; and (vi) the fees and all reasonable expenses of Mayer, Brown, Xxxx &
Maw, special counsel retained by the Purchaser, which fees and expenses shall
not exceed $32,750. The Purchaser agrees to pay (or, in the event the Company
has already paid such amounts, to reimburse the Company for) the annual
administrative fees exceeding the amount to be paid by the Company as provided
for in clause (iv) of the immediately preceding sentence of the Guarantee
Trustee, the Property Trustee, the Delaware Trustee, the Indenture Trustee and
any other trustee or paying agent appointed under the Operative Documents,
including the fees and disbursements of counsel for such trustee, which amount
shall not exceed $2,000 annually.
If the sale of the Preferred Securities provided for in this Purchase
Agreement is not consummated because any condition set forth in Section 3 to be
satisfied by either the Company or the Trust is not satisfied, because this
Purchase Agreement is terminated pursuant to Section 10 or because of any
failure, refusal or inability on the part of the Company or the Trust to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by a reason of a default by the Purchaser, the
Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses (including the fees and expenses of each of the
Purchaser's counsel specified in subparagraphs (v) and (vi) of the immediately
preceding paragraph) that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Preferred Securities. The
Company shall not in any event be liable to the Purchaser for the loss of
anticipated profits from the transactions contemplated by this Purchase
Agreement.
8. Indemnification. (a) The Company and the Trust agree jointly
and severally to indemnify and hold harmless the Purchaser, the Purchaser's
affiliates, Trapeza Funding LLC, Trapeza Partners L.P. and Credit Suisse First
Boston Corporation (collectively, the "Indemnified Parties") and the Indemnified
Parties' respective directors, officers, employees and agents and each person
who "controls" the Indemnified Parties within the meaning of either
16
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents furnished or made
available to the Purchaser by or on behalf of the Company, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or (iii) the breach
or alleged breach of any representation, warranty or agreement of either Seller
contained herein, and agrees to reimburse each such Indemnified Party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Company or the Trust may otherwise have.
(a) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever due from the Trust under
paragraph (a) above.
(b) Promptly after receipt by an Indemnified Party under this
Section 8 of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) above
unless and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a) above.
Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the Indemnified Party) also be counsel to the Indemnified Party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. An indemnifying party will not,
without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.
9. Contribution. (a) In order to provide for just and
equitable contribution in circumstances under which the indemnification provided
for in Section 8 hereof is for any reason held to be unenforceable for the
benefit of an Indemnified Party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and
17
expenses incurred by such Indemnified Party, as incurred, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Sellers, on
the one hand, and the Purchaser, on the other hand, from the offering of the
Securities or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the Sellers, on the one hand, and the Purchaser, on the other hand, in
connection with the statements, omissions or breaches, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
(b) The relative benefits received by the Sellers, on the one
hand, and the Purchaser, on the other hand, in connection with the offering of
the Securities shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Securities (before deducting
expenses) received by the Sellers and the Discount received by the Purchaser
bear to the aggregate of such net proceeds and commissions.
(c) The Sellers and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an Indemnified Party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such Indemnified
Party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement, omission or alleged omission or breach or alleged breach.
(d) Notwithstanding any provision of this Section 9 to the
contrary, the Purchaser shall not be required to contribute any amount in excess
of the Discount.
(d) No person guilty of fraudulent misrepresentation (within
the meaning of section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) For purposes of this Section 9, the Purchaser, each person,
if any, who controls the Purchaser within the meaning of section 15 of the
Securities Act or section 20 of the Exchange Act and the respective partners,
directors, officers, employees and agents of the Purchaser or any such
controlling person shall have the same rights to contribution as the Purchaser,
while each officer and director of the Company, each trustee of the Trust and
each person, if any, who controls the Company within the meaning of section 15
of the Securities Act or section 20 of the Exchange Act shall have the same
rights to contribution as the Sellers.
10. Termination. This Purchase Agreement shall be subject to
termination in the absolute discretion of the Purchaser, by notice given to the
Company and the Trust prior to delivery of and payment for the Preferred
Securities, if prior to such time (i) a downgrading shall have occurred in the
rating accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization," as that term is used by
the Commission in
18
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company's debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at
least $17,000,000 stated liquidation value of Preferred Securities, (iii) the
Company or any of its subsidiaries that is an insured depository institution
shall cease to be "adequately-capitalized" within the meaning of 12 U.S.C.
Section 1831 and applicable regulations adopted thereunder, or any formal
administrative or judicial action is taken by any appropriate federal banking
agency against the Company or any such insured subsidiary for unsafe and unsound
banking practices, or violations of law, (iv) a suspension or material
limitation in trading in securities generally shall have occurred on the New
York Stock Exchange, (v) a suspension or material limitation in trading in any
of the Company's securities shall have occurred on the exchange or quotation
system upon which the Company' securities are traded, if any, (vi) a general
moratorium on commercial banking activities shall have been declared either by
federal or Kentucky authorities or (vii) there shall have occurred any outbreak
or escalation of hostilities, or declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the Purchaser's judgment, impracticable or
inadvisable to proceed with the offering or delivery of the Preferred
Securities.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Trust or their respective officers or trustees and of the
Purchaser set forth in or made pursuant to this Purchase Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of the Purchaser, the Company or the Trust or any of the their respective
officers, directors, trustees or controlling persons, and will survive delivery
of and payment for the Preferred Securities. The provisions of Sections 7, 8 and
9 shall survive the termination or cancellation of this Purchase Agreement.
12. Amendments. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.
13. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered by hand or courier or sent by facsimile and confirmed to the Purchaser
c/o Trapeza Funding, LLC, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx 00000,
Attention: Xxxxxx X. Xxxxx, Facsimile: (000) 000-0000; with a copy to Mayer,
Brown, Xxxx & Maw, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
J. Xxxx Xxxxxxxxx, Facsimile: (000) 000-0000; and if sent to the Company or the
Trust, will be mailed, delivered by hand or courier or sent by facsimile and
confirmed to it at The Bank of Kentucky Financial Corporation, 0000 Xxxxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxx, Attention: Xxxxxx X. Xxxxxxxxx, Facsimile: ( 859)
282-2837.
14. Successors and Assigns. This Purchase Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers,
19
employees, agents and controlling persons referred to in Section 8 hereof and
their successors, assigns, heirs and legal representatives, any right or
obligation hereunder. None of the rights or obligations of the Company or the
Trust under this Purchase Agreement may be assigned, whether by operation of law
or otherwise, without the Purchaser's prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company's or the Trust's consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase Agreement.
15. Applicable Law. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).
16. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING
BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS
PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF
NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
17. Counterparts and Facsimile. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
20
IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of
the date first written above.
The Bank of Kentucky Financial
Corporation
By: ______________________________
Name: Xxxxxx X. Xxxx
Title: President and Chief
Executive Officer
The Bank of Kentucky Capital
Trust I
By: The Bank of Kentucky Financial
Corporation, as Depositor
By: ______________________________
Name: Xxxxxx X. Xxxx
Title: President and Chief
Executive Officer
Trapeza CDO I, LLC
By: ______________________________
Name:
Title:
21
SCHEDULE 1
List of Significant Subsidiaries
The Bank of Kentucky, Inc.
22
ANNEX A-I
Pursuant to Section 3(c)(i) of the Purchase Agreement, Mayer, Brown,
Xxxx & Maw, special counsel for the Purchaser, shall deliver an opinion to the
effect that:
(i) the Company and each Significant Subsidiary is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized; the Company has
corporate power and authority to (i) execute and deliver, and to
perform its obligations under, the Operative Documents to which it is a
party and (ii) issue and perform its obligations under the Notes;
(ii) neither the issue and sale of the Common Securities,
the Preferred Securities or the Junior Subordinated Notes, nor the
purchase by the Trust of the Junior Subordinated Notes, nor the
execution and delivery of and compliance with the Operative Documents
by the Company or the Trust nor the consummation of the transactions
contemplated thereby will constitute a breach or violation of the Trust
Agreement or the charter or by-laws of the Company;
(iii) the Amended and Restated Trust Agreement has been duly
authorized, executed and delivered by the Company and duly executed and
delivered by the Administrative Trustees;
(iv) each of the Guarantee and the Indenture has been duly
authorized, executed and delivered by the Company and, assuming it has
been duly authorized, executed and delivered by the Guarantee Trustee
and the Indenture Trustee, respectively, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general
principles of equity;
(v) the Junior Subordinated Notes have been duly authorized
and executed by the Company and delivered to the Indenture Trustee for
authentication in accordance with the Indenture and, when authenticated
in accordance with the provisions of the Indenture and delivered to the
Trust against payment therefor, will constitute legal, valid and
binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of
equity;
(vi) the Trust is not, and, following the issuance of the
Preferred Securities and the consummation of the transactions
contemplated by the Operative Documents and the application of the
proceeds therefrom, the Trust will not be, an "investment company" or
an entity "controlled" by an "investment company," in each case within
the meaning of Section 3(a) of the Investment Company Act; and
(vii) assuming (i) the accuracy of the representations and
warranties, and compliance with the agreements contained in the
Purchase Agreement and (ii) that the Preferred Securities are sold in a
manner contemplated by, and in accordance with the
A-I-1
Purchase Agreement and the Amended and Restated Trust Agreement, it is
not necessary in connection with the offer, sale and delivery of the
Preferred Securities by the Trust to the Purchaser, to register any of
the Securities under the Securities Act or to require qualification of
the Indenture under the Trust Indenture Act of 1939, as amended.
(viii) the Purchase Agreement has been duly authorized,
executed and delivered by the Company; and
(ix) the Purchase Agreement has been duly authorized,
executed and delivered by the Trust.
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of New York, the Delaware General
Corporation Law and the federal laws of the United States; (B) as to matters
involving the application of laws of any jurisdiction other than the State of
New York and the Delaware General Corporation Law or the federal laws of the
United States, (i) rely, to the extent deemed proper and specified in such
opinion, upon the opinion of other counsel of good standing believed to be
reliable and who are satisfactory to the Purchaser or (ii) assume such law is
substantially similar to the law of the State of New York and, (C) as to matters
of fact, rely to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
A-I-2
ANNEX A-II
Pursuant to Section 3(c)(ii) of the Purchase Agreement, General Counsel
for the Company shall deliver an opinion, or the Company shall provide an
Officers' Certificate, to the effect that:
(x) all of the issued and outstanding shares of capital
stock of each Significant Subsidiary are owned of record by the
Company, and the issuance of the Preferred Securities and the Common
Securities is not subject to any contractual preemptive rights known to
such [counsel/officer];
(xi) no consent, approval, authorization or order of any
court or governmental authority is required for the issue and sale of
the Common Securities, the Preferred Securities or the Junior
Subordinated Notes, the purchase by the Trust of the Junior
Subordinated Notes, the execution and delivery of and compliance with
the Operative Documents by the Company or the Trust or the consummation
of the transactions contemplated in the Operative Documents, except
such approvals (specified in such [opinion/certificate]) as have been
obtained;
(xii) to the knowledge of such [counsel/officer], there is
no action, suit or proceeding before or by any government, governmental
instrumentality, arbitrator or court, domestic or foreign, now pending
or threatened against or affecting the Trust or the Company or any
Significant Subsidiary that could adversely affect the consummation of
the transactions contemplated by the Operative Documents or could have
a Material Adverse Effect.
(xiii) the Company is duly registered as a bank holding
company under the Bank Holding Company Act and the regulations
thereunder of the Federal Reserve Board, and the deposit accounts of
the Company's banking subsidiary are insured by the FDIC to the fullest
extent permitted by law and the rules and regulations of the FDIC, and
no proceeding for the termination of such insurance are pending or, to
such person's knowledge, threatened;
(xiv) The execution, delivery and performance of the
Operative Documents, as applicable, by the Company and the Trust and
the consummation by the Company and the Trust of the transactions
contemplated by the Operative Documents, as applicable, (i) will not
result in any violation of the charter or bylaws of the Company, the
charter or bylaws of the Bank, the Amended and Restated Trust Agreement
or the Certificate of Trust, and (ii) will not conflict with, or result
in a breach of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation or imposition of
any lien, charge and encumbrance upon any assets or properties of the
Company or any Significant Subsidiary under, (a) any agreement,
indenture, mortgage or instrument that the Company or any Significant
Subsidiary of the Company is a party to or by which it may be bound or
to which any of its assets or properties may be subject, or (b) any
existing applicable law, rule or administrative regulation [for General
Counsel only: except
A-II-1
that I express no opinion with respect to the securities laws of the
State of Delaware] of any court or governmental agency or authority
having jurisdiction over the Company or any Significant Subsidiary of
the Company or any of their respective assets or properties, except in
case of (ii), where any such violation, conflict, breach, default,
lien, charge or encumbrance, would not have a material adverse effect
on the assets, properties, business, results of operations or financial
condition of the Company and its subsidiaries, taken as whole.
[Applies only to in-house counsel opinion] [In rendering such opinions,
such counsel may (A) state that the above is limited to the laws of the States
of [Jurisdiction of bar admission], (B) rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company and
public officials.]
A-II-2
ANNEX B
Pursuant to Section 3(d) of the Purchase Agreement, Mayer, Brown, Xxxx
& Maw, special tax counsel for the Purchaser, shall deliver an opinion to the
effect that:
(i) the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association or a
publicly traded partnership taxable as a corporation; and
(ii) for United States federal income tax purposes, the
Junior Subordinated Notes will constitute indebtedness of the Company.
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of New York and the federal laws of the
United States and (B) rely as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company and public officials.
B-1
ANNEX C
Pursuant to Section 3(e) of the Purchase Agreement, Xxxxxxxx, Xxxxxx &
Finger, P.A., special Delaware counsel for the Purchaser, shall deliver an
opinion to the effect that:
(i) the Trust has been duly created and is validly existing
in good standing as a statutory trust under the Delaware Statutory
Trust Act, and all filings required under the laws of the State of
Delaware with respect to the creation and valid existence of the Trust
as a statutory trust have been made;
(ii) under the Delaware Statutory Trust Act and the Amended
and Restated Trust Agreement, the Trust has the trust power and
authority (A) to own property and conduct its business, all as
described in the Amended and Restated Trust Agreement, (B) to execute
and deliver, and to perform its obligations under, each of the Purchase
Agreement, the Common Securities Subscription Agreement, the Junior
Subordinated Note Subscription Agreement and the Preferred Securities
and the Common Securities and (C) to purchase and hold the Junior
Subordinated Notes;
(iii) under the Delaware Statutory Trust Act, the certificate
attached to the Amended and Restated Trust Agreement as Exhibit C is an
appropriate form of certificate to evidence ownership of the Preferred
Securities; the Preferred Securities have been duly authorized by the
Trust Agreement and, when issued and delivered against payment of the
consideration as set forth in the Purchase Agreement, the Preferred
Securities will be validly issued and (subject to the qualifications
set forth in this paragraph) fully paid and nonassessable and will
represent undivided beneficial interests in the assets of the Trust;
the holders of the Preferred Securities will be entitled to the
benefits of the Amended and Restated Trust Agreement and, as beneficial
owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware; and such counsel may note that the holders of the Preferred
Securities may be obligated, pursuant to the Amended and Restated Trust
Agreement, to (A) provide indemnity and/or security in connection with
and pay taxes or governmental charges arising from transfers or
exchanges of Preferred Securities certificates and the issuance of
replacement Preferred Securities certificates and (B) provide security
or indemnity in connection with requests of or directions to the
Property Trustee to exercise its rights and remedies under the Amended
and Restated Trust Agreement;
(iv) the Common Securities have been duly authorized by the
Trust Agreement and, when issued and delivered by the Trust to the
Company against payment therefor as described in the related Amended
and Restated Trust Agreement and the related Common Securities
Subscription Agreement, will be validly issued and fully paid and will
represent undivided beneficial interests in the assets of the Trust
entitled to the benefits of the Trust Agreement;
C-1
(v) under the Delaware Statutory Trust Act and the Amended
and Restated Trust Agreement, the issuance of the Preferred Securities
and the Common Securities is not subject to preemptive or other similar
rights;
(vi) under the Delaware Statutory Trust Act and the Amended
and Restated Trust Agreement, the execution and delivery by the Trust
of the Purchase Agreement, the Common Securities Subscription Agreement
and the Junior Subordinated Note Subscription Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust;
(vii) the Amended and Restated Trust Agreement constitutes a
legal, valid and binding obligation of the Company and the Trustees,
and is enforceable against the Company and the Trustees, in accordance
with its terms subject, as to enforcement, to the effect upon the
Amended and Restated Trust Agreement of (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent
conveyance or transfer and other similar laws relating to or affecting
the rights and remedies of creditors generally, (ii) principles of
equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity
or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution;
(viii) the issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the purchase by the Trust of the
Junior Subordinated Notes, the execution, delivery and performance by
the Trust of the Purchase Agreement, the Common Securities Subscription
Agreement and the Junior Subordinated Note Subscription Agreement, the
consummation by the Trust of the transactions contemplated by the
Purchase Agreement and compliance by the Trust with its obligations
thereunder do not violate (i) any of the provisions of the Certificate
of Trust or the Amended and Restated Trust Agreement or (ii) any
applicable Delaware law, rule or regulation;
(ix) no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any Delaware
court or Delaware governmental authority or Delaware agency is
necessary or required solely in connection with the issuance and sale
by the Trust of the Common Securities or the Preferred Securities, the
purchase by the Trust of the Junior Subordinated Notes, the execution,
delivery and performance by the Trust of the Purchase Agreement, the
Common Securities Subscription Agreement and the Junior Subordinated
Note Subscription Agreement, the consummation by the Trust of the
transactions contemplated by the Purchase Agreement and compliance by
the Trust with its obligations thereunder; and
(x) the holders of the Preferred Securities (other than
those holders who reside or are domiciled in the State of Delaware)
will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Trust and the
Trust will not be liable for any income tax imposed by the State of
Delaware.
C-2
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of Delaware and (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.
C-3
ANNEX D
Pursuant to Section 3(f) of the Purchase Agreement, White & Case,
special counsel for the Guarantee Trustee, the Property Trustee and the
Indenture Trustee, shall deliver an opinion to the effect that:
(iii) The Bank of New York, is a New York banking
corporation with trust powers duly organized and validly existing in
good standing under the laws of the State of New York with all
necessary corporate power and authority to execute, deliver and perform
its obligations under the terms of the Guarantee, the Amended and
Restated Trust Agreement and the Indenture;
(iv) the execution, delivery and performance by The Bank of
New York of the Guarantee, the Amended and Restated Trust Agreement and
the Indenture have been duly authorized by all necessary corporate
action on the part of The Bank of New York, each of the Guarantee, the
Amended and Restated Trust Agreement and the Indenture has been duly
executed and delivered by The Bank of New York, and each of the
Guarantee and the Indenture constitutes the legal, valid and binding
obligation of The Bank of New York enforceable against The Bank of New
York in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
to general principles of equity;
(v) the execution, delivery and performance of the
Guarantee, the Amended and Restated Trust Agreement and the Indenture
by The Bank of New York do not conflict with or constitute a breach of
(A) the articles of association or by-laws of The Bank of New York or
(B) any law or regulation of the United States of America or the State
of New York governing the banking or trust powers of the Bank of New
York;
(vi) no consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency of
the United States of America governing the banking or trust powers of
The Bank of New York is required for the execution, delivery or
performance by it of the Guarantee, the Amended and Restated Trust
Agreement or the Indenture;
(vii) the Junior Subordinated Notes have been duly
authenticated and delivered by The Bank of New York; and
(viii) The Preferred Securities have been duly authenticated
and delivered by The Bank of New York.
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of New York and the federal laws of the
United States and (B) rely as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company and public officials.
D-1
ANNEX E
Pursuant to Section 3(g) of the Purchase Agreement, Xxxxxxxx, Xxxxxx &
Finger, P.A., counsel for the Purchaser, shall deliver an opinion to the effect
that:
(i) The Bank of New York (Delaware) is duly
incorporated and validly existing as a Delaware banking
corporation under the laws of the State of Delaware with trust
powers and with its principal place of business in the State of
Delaware;
(ii) The Bank of New York (Delaware) has the corporate
power and authority to execute, deliver and perform its
obligations under, and has taken all necessary corporate action
to authorize the execution, delivery and performance of, the
Amended and Restated Trust Agreement and to consummate the
transactions contemplated thereby;
(iii) The Amended and Restated Trust Agreement has been
duly authorized, executed and delivered by The Bank of New York
(Delaware) and constitutes a legal, valid and binding obligation
of The Bank of New York (Delaware), and is enforceable against
The Bank of New York (Delaware), in accordance with its terms
subject as to enforcement, to the effect upon the Trust
Agreement of (i) applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance
or transfer and similar laws relating to or affecting the rights
and remedies of creditors generally, (ii) principles of equity,
including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to
indemnification or contribution;
(iv) The execution, delivery and performance by The
Bank of New York (Delaware) of the Amended and Restated Trust
Agreement do not conflict with or result in a violation of (A)
articles of association or by-laws of The Bank of New York
(Delaware) or (B) any law or regulation of the State of Delaware
or the United States of America governing the banking or trust
powers of The Bank of New York (Delaware) or, to our knowledge,
without independent investigation, of any indenture, mortgage,
bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to
which The Bank of New York (Delaware) is a party or by which it
is bound or, to our knowledge, without independent
investigation, of any judgment or order applicable to The Bank
of New York (Delaware); and
(v) No approval, authorization or other action by, or
filing with, any governmental authority of the State of Delaware
or the United States of America governing the banking and trust
powers of The Bank of New York (Delaware) is required in
connection with the execution and delivery by The Bank of New
York (Delaware) of the Amended and Restated Trust Agreement or
the performance by
X-0
Xxx Xxxx xx Xxx Xxxx (Delaware) of its obligations thereunder,
except for the filing of the Certificate of Trust with the
Secretary of State of the State of Delaware, which Certificate
of Trust has been filed with the Secretary of State of the State
of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of Delaware and the federal laws of the
United States and (B) rely as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company and public officials.
E-2
Annex F
Officer's Certificate
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive
Vice President] hereby certifies, pursuant to Section 6(g) of the Purchase
Agreement, dated as of November 14, 2002, among The Bank of Kentucky Financial
Corporation (the "Company"), The Bank of Kentucky Capital Trust I (the "Trust")
and Trapeza CDO I, LLC, that, as of [date], [20__], the Company had the
following ratios and balances:
BANK HOLDING COMPANY
As of [Quarterly Financial Dates], 2002
Tier 1 Risk Weighted Assets __________ %
Ratio of Double Leverage __________ %
Non-Performing Assets to Loans and OREO __________ %
Tangible Common Equity as a Percentage of
Tangible Assets __________ %
Ratio of Reserves to Non-Performing Loans __________ %
Ratio of Net Charge-Offs to Loans __________ %
Return on Average Assets (annualized) __________ %
Net Interest Margin (annualized) __________ %
Efficiency Ratio __________ %
Ratio of Loans to Assets __________ %
Ratio of Loans to Deposits __________ %
Double Leverage (exclude trust preferred as
equity) __________ %
Total Assets $ __________
Year to Date Income $ __________
* A table describing the quarterly report calculation procedures is provided on
page __
F-1
Annex F
Attached hereto are the [audited] [unaudited] consolidated and
consolidating financial statements (including the balance sheet, income
statement and, for year-end statements, notes thereto) of the Company and its
consolidated subsidiaries for the [fiscal year] [fiscal quarter] ended [date],
20__, which financial statements fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles ("GAAP"), the
financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the date, and for
the [___ quarter interim] [annual] period ended [date], 20__, and such financial
statements have been prepared in accordance with GAAP consistently applied
throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate as of this _____ day of _____________, 20__
________________________________
Name:
Title:
The Bank of Kentucky Financial
Corporation
[Address]
[Address]
[Telephone Number]
F-2
Annex F
FINANCIAL DEFINITIONS
BANK HOLDING COMPANY
--------------------------------------------------------------------------------------------------------------------------
Corresponding FRY-9C or LP Line Items with Line
Report Item Item corresponding Schedules Description of Calculation
--------------------------------------------------------------------------------------------------------------------------
Tier 1 Risk Weighted BHCK7206 Tier 1 Risk Ratio: Core Capital (Tier 1)/
Assets Schedule HC-R Risk-Adjusted Assets
--------------------------------------------------------------------------------------------------------------------------
Ratio of Double (BHCP0365)/(BCHCP3210) Total equity investments in subsidiaries divided
Leverage Schedule PC in the LP by the total equity capital. This field is
calculated at the parent company level.
"Subsidiaries" include bank, bank holding
company, and non-bank subsidiaries.
--------------------------------------------------------------------------------------------------------------------------
Non-Performing Assets (BHCK5525-BHCK3506+BHCK5526- Total Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO BHCK3507+BHCK2744)/(BHCK2122++BHCK2744) Estate+Other Nonaccrual & Repossessed
Schedules HC-C, HC-M & HC-N Assets)/Total Loans+Foreclosed Real Estate
--------------------------------------------------------------------------------------------------------------------------
Tangible Common (BHDM3210- (Equity Capital - Goodwill)/(Total Assets -
Equity as a BHCK3163)/(BHCK2170- Goodwill)
Percentage of BHCK3163)
Tangible Assets Schedule HC
--------------------------------------------------------------------------------------------------------------------------
Ratio of Reserves to (BHCK3123+BHCK3128)/(BHC Total Loan Loss and Allocated Transfer Risk
Non-Performing Loans K5525-BHCK3506+BHCK5526- Reserves/ Total Nonperforming Loans (Nonaccrual
BHCK3507) + Restructured)
Schedules HC & HC-N & HC-R
--------------------------------------------------------------------------------------------------------------------------
Ratio of Net (BHCK4635- Net charge offs for the period as a percentage
Charge-Offs to Loans BHCK4605)/(BHCK3516) of average loans.
Schedules HC-B & HC-K
--------------------------------------------------------------------------------------------------------------------------
Return on Average (BHCK4340/BHCK3368) Net Income as a percentage of Assets.
Assets (annualized) Schedules HI & HC-K
--------------------------------------------------------------------------------------------------------------------------
Net Interest Margin (BHCK4519)/(BHCK3515+BHC (Net Interest Income Fully Taxable Equivalent,
(annualized) K3365+BHCK3516+BHCK3401 if available/Average Earning Assets)
+BHCKB985)
Schedules HI Memorandum and HC-K
--------------------------------------------------------------------------------------------------------------------------
Efficiency Ratio (BHCK4093)/(BHCK4519+BHCK4079) (Non-interest Expense)/(Net Interest Income
Fully Taxable Equivalent, if available, plus
Schedule HI Non-interest Income)
--------------------------------------------------------------------------------------------------------------------------
Ratio of Loans to (BHCKB528+BHCK5369)/(BHCK2170) Total Loans & Leases (Net of Unearned Income &
Assets Gross of Reserve)/Total Assets
Schedule HC
--------------------------------------------------------------------------------------------------------------------------
F-2
Annex F
----------------------------------------------------------------------------------------------------------
Ratio of Loans to (BHCKB528+BHCK5369)/(BH Total Loans & Leases (Net of Unearned Income &
Deposits DM6631+BHDM6636+BHFN66 Gross of Reserve)/Total Deposits (Includes
31+BHFN6636) Domestic and Foreign Deposits)
Schedule HC
----------------------------------------------------------------------------------------------------------
Total Assets (BHCK2170) The sum of total assets. Includes cash and
balances due from depository institutions;
Schedule HC securities; federal funds sold and securities
purchased under agreements to resell; loans and
lease financing receivables; trading assets;
premises and fixed assets; other real estate
owned; investments in unconsolidated
subsidiaries and associated companies;
customer's liability on acceptances outstanding;
intangible assets; and other assets.
----------------------------------------------------------------------------------------------------------
Net Income (BHCK4300) The sum of income (loss)before extraordinary
Schedule HI items and other adjustments and extraordinary
items; and other adjustments, net of income
taxes.
----------------------------------------------------------------------------------------------------------
F-3
