| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 7, 2022, MVB Financial Corp. (“MVB”) entered into a Credit Agreement, dated as of October 7, 2022 (the “Credit Agreement”), with Raymond James Bank, a Florida-chartered bank (“Raymond James Bank”).
Under the Credit Agreement, Raymond James Bank has extended to MVB a senior term loan in the aggregate principal amount of up to $10,000,000 (the “Loan Amount”) for general corporate purposes, including, but not limited to, effectuating the acquisition of 37.5% of the outstanding equity interests of Warp Speed Holdings LLC (“Warp Speed”) on a fully diluted basis (the “Warp Speed Investment”), and to pay any and all transaction fees, costs and expenses related to the Credit Agreement. MVB may prepay the loan at any time or from time to time without premium or penalty, and is required to prepay certain amount of the loan in the event of MVB’s disposition of affiliates or subsidiaries, or capital raise or refinancing of its indebtedness. Amounts prepaid by MVB may not be reborrowed. The loan will mature thirty months after the effective date of the Credit Agreement, unless accelerated earlier upon an event of default.
In connection with the closing of the Warp Speed Investment as contemplated by the Credit Agreement, MVB borrowed $10,000,000.00 and paid Raymond James Bank an upfront fee of 1% of the Loan Amount.
The loan under the Credit Agreement will bear interest per annum at a rate equal to 2.75% plus term secured overnight financing rate (“SOFR”), which rate will reset monthly, subject to the Default Rate (described below) not being applicable. As of October 6, 2022, the applicable interest rate was 5.80%. Accrued interest is payable on the last business day of each month, beginning with October 31, 2022, with the then outstanding principal balance of the loan payable on the last business day of each quarter in the amount of $125,000 during the first year and $250,000 thereafter. The Credit Agreement also contains certain yield protection provisions in favor of Raymond James Bank.
MVB’s obligations under the Credit Agreement are secured by a pledge of MVB’s equity interest in each of (i) MVB Bank, Inc., (ii) Potomac Mortgage Group, Inc. and (iii) MVB Community Development Corp. The Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants and customary events of default. The negative covenants include restrictions on, among other things, indebtedness, liens, investments, mergers and acquisitions, asset sales and other dispositions, sales and leasebacks, dividends and other distributions. Upon the occurrence of an event of default, Raymond James Bank may declare any outstanding amounts under the Credit Agreement immediately due and payable. In addition, during the continuance of an event of default, Raymond James Bank may declare that the loan outstanding under the Credit Agreement will bear interest at a rate that is 5.00% per annum in excess of the interest rate otherwise payable (the “Default Rate”).
MVB and its subsidiary bank are also required to satisfy certain financial covenants including: (i) MVB (on a consolidated basis) and the subsidiary bank must be “well capitalized” at all times, as defined and determined by the applicable governmental authority having jurisdiction over MVB or the subsidiary bank; (ii) the subsidiary bank must maintain a Total Risk-Based Capital Ratio
