Item 1.01 Entry into a Material Definitive Agreement.
On November 25, 2020, First Western Financial, Inc. (the "Company") completed
the issuance and sale (the "Offering") of $10,000,000 in aggregate principal
amount of 4.25% Fixed-to-Floating Subordinated Notes due 2030 (the "Notes")
pursuant to Subordinated Note Purchase Agreement, dated November 25, 2020 (the
"Note Purchase Agreement"), by and among the Company and certain institution
"accredited investors," as such term is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), and "qualified
institution buyers," as defined in Rule 144A promulgated by the SEC under the
Securities Act (collectively, the "Purchasers"). The Notes were issued by the
Company to the Purchasers at a price equal to 100% of their face amount. The
Notes were offered and sold by the Company to the Purchasers in a private
offering in reliance on the exemption from the registration requirements of
Section 4(a)(2) of the Securities Act, and the provisions of Regulation D
thereunder. The Company intends to use the proceeds from the Offering for
general corporate purposes.
The Notes mature on December 1, 2030 (the "Maturity Date"), and bear interest at
a fixed annual rate of 4.25%, payable semi-annually in arrears, to, but
excluding, December 1, 2025. From and including December 1, 2025 to, but
excluding, the Maturity Date or early redemption date, the interest rate will
reset quarterly to an interest rate per annum equal to Three-Month Term SOFR (as
defined in the Notes), or an alternative rate determined in accordance with the
terms of the Notes if Three-Month Term SOFR cannot be determined or a Benchmark
Transition Event (as defined in the Notes) has occurred, plus 402 basis points,
payable quarterly in arrears. Notwithstanding the foregoing, in the event that
Three-Month Term SOFR or the alternate rate if a Benchmark Transition Event has
occurred is less than zero, then Three-Month Term SOFR or the alternate rate, as
the case may be, shall be deemed to be zero. The Company is entitled to redeem
the Notes, in whole or in part, on or after December 1, 2025, and to redeem the
Notes at any time in whole upon certain other events, at a redemption price
equal to 100% of the outstanding principal amount of the Notes to be redeemed
plus any accrued and unpaid interest to, but excluding, the redemption date. Any
redemption of the Notes will be subject to prior regulatory approval to the
extent required.
The Note Purchase Agreement contains certain customary representations,
warranties, and covenants made by each of the Company and the Purchasers. The
Notes are not subject to any sinking fund and are not convertible into or
exchangeable for any other securities or assets of the Company or any of its
subsidiaries. The Notes are not subject to redemption at the option of the
holders. Principal and interest on the Notes are subject to acceleration only in
limited circumstances. The Notes are unsecured, subordinated obligations of the
Company and generally rank junior in right to payment to the prior payment in
full of all existing claims of creditors of the Company, whether now outstanding
or subsequently created, assumed, or incurred. The Notes are the obligations of
the Company only and are not obligations of, and are not guaranteed by, any of
the Company's subsidiaries including First Western Trust Bank. The Notes were
designed to qualify initially as Tier 2 capital for the Company for regulatory
capital purposes
The foregoing descriptions of the Note Purchase Agreement and the Notes do not
purport to be complete and are subject to, and qualified in their entirety by,
the full text of the form of the Note Purchase Agreement and the form of Notes,
each of which is attached hereto as an exhibit and is incorporated herein by
reference.
Keefe, Bruyette & Woods, A Stifel Company acted as the sole placement agent for
the Offering. Norton Rose Fulbright US LLP served as legal counsel to the
Company.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
2
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
4.1 Form of 4.25% Fixed-to-Floating Rate Subordinated Note (attached as
exhibit A to Exhibit 10.1 hereto).
10.1 Form of Subordinated Note Purchase Agreement, dated November 25, 2020,
by and among First Western Financial, Inc. and the several purchasers
named therein.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
in the Inline XBRL document)
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