| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 14, 2019, United Bancorp, Inc. (the “Company”) entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”) pursuant to which the Company sold and issued $20.0 million in aggregate principal amount of its6.00% fixed-to-floating rate subordinated notes due 2029 (the “Notes”). The Notes were issued by the Company to the Purchasers at a price equal to 100% of their face amount. The Notes have a stated maturity of May 15, 2029, are redeemable, in whole or in part, on or after May 15, 2024, and at any time upon the occurrences of certain events. The Notes will bear interest at a fixed rate of 6.00% per year, from and including May 14, 2019 to, but excluding, May 15, 2024. From and including May 15, 2024 to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month LIBOR plus 362.5 basis points.
The Purchase Agreement contains certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand. The Notes were offered and sold by the Company 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 Rule 506 of Regulation D thereunder. Each Purchaser qualified as an “accredited investor” within the meaning of Rule 501(a) of Regulation D. The Company intends to use the net proceeds from the offering to support regulatory capital ratios and for general corporate purposes, including growth initiatives at the Company’s wholly-owned commercial bank subsidiary, Unified Bank. The Notes are expected to qualify for treatment as Tier 2 capital for regulatory capital purposes.
The form of Purchase Agreement is attached as Exhibit 10.1 to this Current Report onForm 8-K and is incorporated herein by reference. The descriptions herein of the Purchase Agreement are summaries and are qualified in their entirety by reference to the full text of the forms of Purchase Agreement.
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 holder. Subject to limited exceptions, the Company cannot redeem the Notes for the first five years of the term. On or after May 15, 2024, the Company may redeem the Notes, in whole or in part, at its option, on any interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the Notes being redeemed, together with any accrued and unpaid interest on the Notes being redeemed to but excluding the date of redemption.
Principal and interest on the Notes are subject to acceleration only in limited circumstances. The Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s current and future senior indebtedness.
The form of the Note is attached as Exhibit 4.1 to this Current Report onForm 8-K and is incorporated herein by reference. The descriptions of the Notes herein are summaries and are qualified in their entirety by reference to the full text of the form of Note.
