| Item 1.01 | Entry into a Material Definitive Agreement. |
Notes Offering
On July 23, 2020, Equity Bancshares, Inc. (the “Company”) entered into Subordinated Note Purchase Agreements (collectively, the “Note Purchase Agreement”) with certain qualified institutional buyers (the “Purchasers”) pursuant to which the Company issued and sold $33,000,000 in aggregate principal amount of its 7.00% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The offering of the Notes is a further issuance of the Company’s 7.00% Fixed-to-Floating Rate Subordinated Notes due 2030 of which the Company previously issued and sold $42,000,000 in aggregate principal amount on June 29, 2020 (the “Initial Closing”). The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D thereunder. The Company intends to use the net proceeds from the offering for general corporate purposes.
In connection with the issuance and sale of the Notes, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers with substantially the same terms as the Registration Rights Agreement entered into in connection with the Initial Closing. Under the terms of the Registration Rights Agreement, the Company has agreed to conduct an offer to exchange the Notes for subordinated notes with substantially the same terms as the Notes in an offering registered under the Securities Act. If the Company fails to comply with certain of its obligations under the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes.
The Notes were issued under an Indenture, dated as of June 29, 2020 (the “Indenture”), by and between the Company and UMB Bank, N.A., as trustee. The Notes will mature on June 30, 2030. From and including June 29, 2020, to, but excluding, June 30, 2025 or the date of earlier redemption, the Company will pay interest on the Notes semi-annually in arrears on June 30 and December 30 of each year, commencing on December 30, 2020, at a fixed interest rate of 7.00% per annum. From and including June 30, 2025, to, but excluding, the maturity date or the date of earlier redemption (the “Floating Rate Period”), the Company will pay interest on the Notes at a floating interest rate. The floating interest rate will be reset quarterly, and the interest rate for any Floating Rate Period shall be equal to the then-current Three-Month Term SOFR (as defined in the Indenture) plus 688 basis points for each quarterly interest period during the Floating Rate Period. Interest payable on the Notes during the Floating Rate Period will be paid quarterly in arrears on March 30, June 30, September 30, and December 30, of each year, commencing on September 30, 2025. Notwithstanding the foregoing, in the event that the benchmark rate is less than zero, the benchmark rate shall be deemed to be zero.
The Company has committed to the Federal Reserve Bank of Kansas City that, other than upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event,” or “Investment Company Event” (each as defined in the Indenture), the Company will not redeem any of the Notes prior to September 30, 2025. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital adequacy rules or regulations.
There is no right of acceleration of maturity of the Notes in the case of default in the payment of principal of, or interest on, the Notes or in the performance of any other obligation of the Company under the Notes or the Indenture. The Indenture provides that holders of the Notes may accelerate payment of indebtedness only upon the Company’s or the Bank’s bankruptcy, insolvency, reorganization, receivership or other similar proceedings.
The Notes are general unsecured, subordinated obligations of the Company and rank junior to all of its existing and future Senior Indebtedness (as defined in the Indenture), including all of its general creditors. The Notes will be equal in right of payment with any of the Company’s existing and future subordinated indebtedness, and will be senior to the Company’s obligations relating to any junior subordinated debt securities issued to the Company’s subsidiary trusts. In addition, the Notes are effectively subordinated to all secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness.
The foregoing descriptions of the Indenture, the Notes, the Note Purchase Agreement and Registration Rights Agreement does not purport to be complete and are each qualified in their entirety by reference to the full text of such agreements, which are incorporated as Exhibits 4.1, 4.2, 10.1 and 10.2, respectively, and incorporated herein by reference.
