PORTER BANCORP, INC. (NASDAQ:PBIB) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
On March30, 2018, the Company and Patriot entered into a registration rights agreement, under which the Company granted Patriot demand registration rights after six months. The registrations rights are available for the common shares purchased under the Securities Purchase Agreement and common shares issuable upon conversion of the Non-Voting Common Shares purchased under the Securities Purchase Agreement. The Company is required to maintain this registration statement continuously in effect until all such shares have been sold or become eligible for sale without restrictions under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The registration rights agreement permits up to three demand registrations and also grants piggyback registration rights, subject to certain exceptions. The holders of registrable securities must comply with certain standard provisions facilitating the filing and effectiveness of the registration statement as well.
The Company may be required to pay monthly liquidated damages if it fails to comply with its demand registration obligations within the required timeframes for filing and obtaining effectiveness of a demand registration statement, or if the registration statement ceases to be effective or the holders of registrable securities are unable to utilize the prospectus therein to sell such securities. Unless the Company is permitted to postpone these deadlines or is entitled to a grace period under the registration rights agreement, the amount of the monthly liquidated damages is 0.5% of the aggregate purchase price paid to acquire registrable securities under the Securities Purchase Agreement, and is capped at 3% of the purchase price.
Unregistered Sales of Equity Securities.
On March30, 2018, Porter Bancorp, Inc. (the “Company”) completed a $14.950 million stock offering in a private placement (the “Private Placement”) to Patriot Financial Partners III, L.P., an accredited investor. The Private Placement included the sale of 150,000 shares of common shares and 1.0 million shares of Non-Voting Common Shares at $13.00 per share.
Non-voting common shares contain an automatic conversion feature as follows: Each issued and outstanding Non-Voting Common Share shall automatically be converted into one (1) common share (the “Conversion Rate”) upon the transfer of such Non-Voting Common Share (or any security convertible to or exercisable for such Non-Voting Common Share) in (a) a widespread public distribution, including to a registration statement filed with and declared effective by the SEC or to Rule 144 under the Securities Act, (b) a transfer in which no transferee (or group of associated transferees) would receive more than 2% of any class of Voting Securities or (c) a transfer to a transferee that controls more than 50% of the Voting Securities without any transfer from the transferor. The foregoing automatic conversion may occur as to some or all of the Non-Voting Common Shares held by any holder.
The securities issued and sold in the Private Placement were offered and sold by the Company in reliance upon an exemption from registration to Rule 4(2) of the Securities Act. The Private Placement was a private transaction directly between the Company and Patriot and accomplished to the Securities Purchase Agreement. The Company did not pay placement fees in this transaction.