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VELOCITY FINANCIAL, INC. : Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Registrant Arrangement, Other Events (Form 8-K)


Point 2.03 Creation of a direct financial obligation.

At March 15, 2022we have entered into note purchase agreements (collectively, the “Note Purchase Agreement”) for the issuance of a total $215,000,000
principal amount of 7.125% Senior Secured Notes due 2027 (the “Notes”). The ticket purchase agreement has been concluded between Velocity Financial, Inc.as guarantor of the Notes (the “Guarantor”), our wholly-owned subsidiary Velocity Commercial Capital, LLCas issuer of the Notes (the “Issuer”), US Bank Trust Company, National Associationas collateral agent (the “Collateral Agent”) and the various respective purchasers of the Notes.

The Issuer issued the Notes on March 15, 2022. The Notes are guaranteed by
Velocity Financial, Inc. The Notes will expire on March 15, 2027, subject to prepayment, redemption or redemption. Interest on the Notes is payable semi-annually on March 15 and September 15 of each year, from
September 15, 2022. The terms of the notes provide for optional redemption prior to their maturity, under the terms and conditions and at the prices specified in the note purchase agreement. In the event of a change of control, as defined in the Securities Purchase Agreement, the holders of Securities may request the Issuer to redeem the Securities at 100% of the principal amount outstanding plus accrued but unpaid interest. The Notes and related collateral are first ranking obligations of the Issuer and the Guarantor, respectively, and secured by liens on substantially all of the debtors’ assets, other than assets subject to securitization and debt financing. warehouse and other customary exceptions and limitations.

The proceeds from the issuance of the notes were used to repay in full the obligations under our term credit agreement, dated February 5, 2021and the remaining proceeds will be used for general corporate and other working capital purposes.

The note purchase agreement contains positive and negative covenants, including financial covenants regarding minimum net asset value, net unsecuritized debt to equity ratio, collateral value, total collateral value and senior non-securitized debt service coverage ratio requirements.

The offering and sale of the Bonds has been made solely in private placement transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act “). The Notes have not been registered under securities law or any state securities law and may not be offered or sold in United States failure to register or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

The foregoing descriptions of the Notes, related collateral, ticket purchase agreement and related collateral agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the ticket purchase agreement and related collateral agreement. warranty statements filed as Schedules 4.1, 10.1 and 10.2 and incorporated herein by reference.

The representations, warranties and covenants contained in the foregoing agreements are made solely for the purposes of such agreements and solely for the benefit of the parties to such agreements. Representations, warranties and covenants are a means of allocating contractual risk between the parties and are not necessarily intended to establish particular facts as facts, may be subject to materiality standards or other qualifications applicable to agreements which differ from those applicable to investors and are not promises or guarantees of accuracy or of future actions or events. Investors should not rely on any such representations, warranties or covenants.

Item 8.01. Other events.

At March 16, 2022, Velocity Financial, Inc. issued a press release announcing the issuance of the Notes. A copy of the press release is filed as Exhibit 99.1 to this current report on Form 8-K.

Item 9.01 Exhibits.

Number                                    Description

 4.1           Form of 7.125% Senior Secured Note due 2027 of Velocity Commercial
             Capital, LLC (included in Exhibit 10.1 hereto).

10.1           Form of Note Purchase Agreement Dated as of March 15, 2022, among
             Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank
             Trust Company, National Association, as collateral agent, and the
             respective purchasers of the Notes.

10.2           Security Agreement, dated as of March 15, 2022, among Velocity
             Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust
             Company, National Association, as collateral agent.

99.1           Press Release.

104          Cover Page Interactive Data File (embedded within the Inline XBRL

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