Form of Subordinated Note Purchase Agreement, dated July 8, 2021 by and among Bridgewater Bancshares, Inc. and the Purchasers
SUBORDINATED NOTE PURCHASE AGREEMENT
This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of July 8, 2021, and is made by and among Bridgewater Bancshares, Inc., a Minnesota corporation (“Company”), and the several purchasers of the Subordinated Notes (as defined herein) identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, Company is offering up to $30,000,000 in aggregate principal amount of Subordinated Notes, which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).
WHEREAS, Company has engaged Piper Sandler & Co. as its exclusive placement agent (“Placement Agent”) for the offering of the Subordinated Notes.
WHEREAS, each of the Purchasers is an institutional “accredited investor” as such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), or a “qualified institutional buyer” as such term is defined in Rule 144A of the Securities Act (“QIB”).
WHEREAS, the offer and sale of the Subordinated Notes by Company is being made in reliance upon the exemptions from registration available under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.
WHEREAS, each Purchaser is willing to purchase from Company a Subordinated Note in the principal amount set forth on such Purchaser’s respective signature page hereto (each, a “Subordinated Note Amount”) in accordance with the terms, subject to the conditions and in reliance on, the recitals, representations, warranties, covenants and agreements set forth herein and in the Subordinated Notes and in the Indenture (as defined herein).
WHEREAS, at Closing, Company and the Purchasers shall execute and deliver a Registration Rights Agreement, substantially in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which, among other things, Company will agree to provide certain registration rights with respect to the Subordinated Notes under the Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:
“Affiliate(s)” means, with respect to any Person, such Person’s immediate family members, partners, members or parent and subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with said Person.
“Agreement” has the meaning set forth in the preamble hereto.
“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Subordinated Note represented by a global certificate, the rules and procedures of DTC that apply to such transfer or exchange.
“Bank” means Bridgewater Bank, a Minnesota state-chartered bank and wholly owned subsidiary of Company.
“Business Day” means any day other than a Saturday, Sunday or any other day on which banking institutions in the State of Minnesota are permitted or required by any applicable law or executive order to close.
“Closing” has the meaning set forth in Section 2.2.
“Closing Date” means the date hereof.
“Company” has the meaning set forth in the preamble hereto and shall include any successors to Company.
“Company Covered Person” has the meaning set forth in Section 4.2.4.
“Company’s Reports” means (i) the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC, including the audited financial statements contained therein and the information from the Company’s definitive proxy statement for its 2021 annual meeting of shareholders incorporated by reference into the Form 10-K; and (ii) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the SEC, including the unaudited financial statements contained therein.
“Disbursement” has the meaning set forth in Section 3.1.
“Disqualification Event” has the meaning set forth in Section 4.2.4.
“DTC” has the meaning set forth in Section 5.7.
“Equity Interest” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person which is not a corporation, and any and all warrants, options or other rights to purchase any of the foregoing.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FDIC” means the Federal Deposit Insurance Corporation.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America.
“Global Notes” has the meaning set forth in Section 3.1.
“Governmental Agency(ies)” means, individually or collectively, any federal, state, county or local governmental department, commission, board, regulatory authority or agency (including each applicable Regulatory Agency) with jurisdiction over Company or a Subsidiary of Company.
“Governmental Licenses” has the meaning set forth in Section 4.3.
“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.
“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining to the protection, preservation, conservation or regulation of the environment which relates to real property, including: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations.
“Indebtedness” means and includes: (i) all obligations arising from the borrowing of money that, according to GAAP as in effect from time to time, would be included in determining total liabilities as shown on the consolidated balance sheet of Company or any Subsidiary of Company; and (ii) all obligations secured by any lien on property owned by Company or any Subsidiary whether or not such obligations shall have been assumed; provided, however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained in the ordinary course of Company’s or Bank’s business (including federal funds purchased, advances from any Federal Home Loan Bank, secured deposits of municipalities, letters of credit issued by Company or Bank and repurchase arrangements) and consistent with customary banking practices and applicable laws and regulations.
“Indenture” means the indenture, dated as of the date hereof, by and between Company and U.S. Bank National Association, as trustee, under which the Subordinated Notes are to be issued, substantially in the form attached hereto as Exhibit A, as the same may be amended or supplemented from time to time in accordance with the terms thereof.
“Leases” means all leases, licenses or other documents providing for the use or occupancy of any portion of any Property, including all amendments, extensions, renewals, supplements, modifications, sublets and assignments thereof and all separate letters or separate agreements relating thereto.
“Material Adverse Effect” means, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material and adverse to the financial condition, results of operations or business of such Person, or (ii) would materially impair the ability of any Person to perform its respective obligations under any of the Transaction Documents, or otherwise materially impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Agencies, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions, including changes in interest rates, affecting financial institutions or their market prices generally and not specifically related to Company or Purchasers, (4) natural disasters or other force majeure events or the effects of any outbreak, escalation or worsening of any epidemic, pandemic or disease (including the COVID-19 virus), (5) changes in national or international political or social conditions, including the engagement by the United States in hostilities, where or not pursuant to the declaration of a national emergency or war, or by the occurrence of any military attack upon or within the United States, (6) direct effects of compliance with this Agreement on the operating performance of Company or Purchasers, including expenses incurred by Company or Purchasers in consummating the transactions contemplated by this Agreement, and (7) the effects of any action or omission taken by Company with the prior written consent of Purchasers, and vice versa, or as otherwise contemplated by this Agreement and the Subordinated Notes, which in the event of (1), (3), (4) and (5) do not disproportionately affect the operations or business of the Company or its Subsidiaries in comparison to other banking institutions with similar operations.
“Maturity Date” means July 15, 2031.
“Person” means an individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other entity or organization.
“Placement Agent” has the meaning set forth in the Recitals.
“Property” means any real property owned or leased by Company or any Affiliate or Subsidiary of Company.
“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.
“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, by and among Company and the Purchasers in the form attached as Exhibit B hereto.
“QIB” has the meaning set forth in the Recitals.
“Regulation D” has the meaning set forth in the Recitals.
“Regulatory Agencies” means any federal or state agency charged with the supervision or regulation of depository institutions or holding companies of depository institutions, or engaged in the insurance of depository institution deposits, or any court, administrative agency or commission or other authority, body or agency having supervisory or regulatory authority with respect to Company, Bank or any of their Subsidiaries.
“SEC” means the U.S. Securities and Exchange Commission.
“Secondary Market Transaction” has the meaning set forth in Section 5.3.
“Securities Act” has the meaning set forth in the Recitals.
“Subordinated Note” means the Subordinated Note (or collectively, the “Subordinated Notes”) in the form attached as an exhibit to the Indenture, as amended, restated, supplemented or modified from time to time, and each Subordinated Note delivered in substitution or exchange for such Subordinated Note.
“Subordinated Note Amount” has the meaning set forth in the Recitals.
“Subsidiary” means with respect to any Person, any corporation or entity in which a majority of the outstanding Equity Interest is directly or indirectly owned by such Person.
“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217, as amended, modified and supplemented and in effect from time to time or any replacement thereof.
“Transaction Documents” has the meaning set forth in Section 22.214.171.124.
“Trustee” means the trustee or successor in accordance with the applicable provisions of the Indenture.
|(a)||A copy, certified by the Secretary or Assistant Secretary of Company, of the Second Amended and Restated Articles of Incorporation of Company;|
|(b)||A certificate of good standing of Company issued by the Secretary of State of the State of Minnesota;|
|(c)||A copy, certified by the Secretary or Assistant Secretary of Company, of the Amended and Restated Bylaws of Company;|
|(d)||A copy, certified by the Secretary or Assistant Secretary of Company, of the resolutions of the board of directors of Company, and any committee thereof, authorizing the issuance of the Subordinated Notes and the execution, delivery and performance of the Transaction Documents;|
|(e)||An incumbency certificate of the Secretary or Assistant Secretary of Company certifying the names of the officer or officers of Company authorized to sign the Transaction Documents and the other documents provided for in this Agreement; and|
|(f)||The opinion of Barack Ferrazzano Kirschbaum & Nagelberg LLP, counsel to Company, dated as of the Closing Date, substantially in the form set forth at Exhibit C attached hereto addressed to the Purchasers and Placement Agent.|
|(a)||Transaction Documents. This Agreement and the Registration Rights Agreement, each duly authorized and executed by each Purchaser.|
|(b)||Subordinated Note Amount. The Subordinated Note Amounts set forth on the signature pages hereto.|
|(c)||Indenture. The Indenture, duly authorized and executed by the Trustee.|
Company hereby represents and warrants to each Purchaser that, except as disclosed in the Company’s Reports:
Company hereby further covenants and agrees with each Purchaser as follows:
Each Purchaser hereby represents and warrants to Company, and covenants with Company, severally and not jointly, as follows:
if to Company:
Bridgewater Bancshares, Inc.
4450 Excelsior Boulevard, Suite 100,
St. Louis Park, Minnesota 55416
Attention: Chief Financial Officer
with a copy to:
Barack Ferrazzano Kirschbaum & Nagelberg LLP
200 West Madison Street, Suite 3900
Chicago, IL 60606
Attention: Joseph T. Ceithaml
Bridgewater Bancshares, Inc.
4450 Excelsior Boulevard, Suite 100,
St. Louis Park, Minnesota 55416
Attention: General Counsel
if to Purchasers:
To the address indicated on such Purchaser’s signature page.
or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of notice; provided that no change in address shall be effective until five (5) Business Days after being given to the other party in the manner provided for above. Any notice given in accordance with the foregoing shall be deemed given when delivered personally or, if mailed, three (3) Business Days after it shall have been deposited in the United States mails as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to such courier (provided next business day delivery was requested).
[Signature Pages Follow]
IN WITNESS WHEREOF, Company has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
Bridgewater Bancshares, Inc.
Chief Financial Officer
[Company Signature Page to Subordinated Note Purchase Agreement]
IN WITNESS WHEREOF, the undersigned Purchaser has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
[INSERT PURCHASER’S NAME]
Address of Purchaser:
Subordinated Note Amount:
[Purchaser Signature Page to Subordinated Note Purchase Agreement]
FORM OF INDENTURE
FORM OF REGISTRATION RIGHTS AGREEMENT
OPINION OF COUNSEL