| FORM 4 | UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940 |
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| Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b). | |||||||||||||||||
1. Name and Address of Reporting Person*
(Street)
| 2. Issuer Name and Ticker or Trading Symbol Velocity Financial, Inc. [ VEL ] | 5. Relationship of Reporting Person(s) to Issuer (Check all applicable)
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| 3. Date of Earliest Transaction (Month/Day/Year) 04/07/2020 | ||||||||||||||||||||||||||
| 4. If Amendment, Date of Original Filed (Month/Day/Year) | 6. Individual or Joint/Group Filing (Check Applicable Line)
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| Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned | ||||||||||
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| 1. Title of Security (Instr. 3) | 2. Transaction Date (Month/Day/Year) | 2A. Deemed Execution Date, if any (Month/Day/Year) | 3. Transaction Code (Instr. 8) | 4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5) | 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) | 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) | 7. Nature of Indirect Beneficial Ownership (Instr. 4) | |||
| Code | V | Amount | (A) or (D) | Price | ||||||
| Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities) | |||||||||||||||
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| 1. Title of Derivative Security (Instr. 3) | 2. Conversion or Exercise Price of Derivative Security | 3. Transaction Date (Month/Day/Year) | 3A. Deemed Execution Date, if any (Month/Day/Year) | 4. Transaction Code (Instr. 8) | 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) | 6. Date Exercisable and Expiration Date (Month/Day/Year) | 7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4) | 8. Price of Derivative Security (Instr. 5) | 9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) | 10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) | 11. Nature of Indirect Beneficial Ownership (Instr. 4) | ||||
| Code | V | (A) | (D) | Date Exercisable | Expiration Date | Title | Amount or Number of Shares | ||||||||
| Series A Convertible Preferred Stock | $3.85 | 04/07/2020 | A(1)(2) | 20,000(1)(2) | (1)(2) | (8) | Common Stock | 5,194,805(1)(2)(3) | $1,000(10) | 20,000(1)(2)(3) | I(3) | See Footnotes(1)(2)(3)(4)(5) | |||
| Private Placement Warrants | $2.96 | 04/07/2020 | A(1)(2)(6)(7) | 892,778(3)(6)(7) | (6)(7) | (9) | Common Stock | 892,778(3)(4)(5)(6)(7) | (10) | 892,778(3) | I(3) | See Footnotes(1)(2)(3)(4)(5) | |||
| Private Placement Warrants | $4.94 | 04/07/2020 | A(1)(2)(6)(7) | 446,389(3)(6)(7) | (6)(7) | (9) | Common Stock | 446,389(3)(4)(5)(6)(7) | (10) | 446,389(3) | I(3) | See Footnotes(1)(2)(3)(4)(5) | |||
1. Name and Address of Reporting Person*
(Street)
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1. Name and Address of Reporting Person*
(Street)
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1. Name and Address of Reporting Person*
(Street)
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1. Name and Address of Reporting Person*
(Street)
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| Explanation of Responses: |
| 1. Pursuant to a Securities Purchase Agreement, dated as of April 5, 2020, by and between Snow Phipps Group AIV, L.P. ("SPG AIV"), Snow Phipps Group (RPV), L.P. ("SPG RPV"), TOBI III SPE I LLC and Velocity Financial, Inc. (the "Issuer"), SPG AIV and SPG RPV acquired from the Issuer an aggregate of (i) 20,000 newly issued shares of Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), and (ii) warrants to purchase an aggregate of 3,013,125 shares of the Issuer's common stock par value $0.01 ("Common Stock") (the "Warrants"). The Series A Preferred Stock is not convertible and the Warrants are not exercisable until the Issuer obtains stockholder approval as required by applicable NYSE rules ("Stockholder Approval"). After the Issuer obtains Stockholder Approval, the Series A Preferred Stock is convertible into, with respect to each share of Series A Preferred Stock so converted, |
| 2. (Continued from footnote 1) the number of shares of Common Stock equal to the then applicable conversion rate (plus cash in lieu of fractional shares, if any) at any time, in whole or in part, at the option of SPG AIV and SPG RPV (or a respective permitted transferee) at an initial conversion price of $3.85 per share of Common Stock. The initial conversion rate for the Series A Preferred Stock is 259.74, and is subject to customary antidilution adjustments. In addition, the Series A Preferred Stock is subject to conversion at the option of the Issuer after October 7, 2021 in accordance with the terms thereof. The Series A Preferred Stock is also subject to repurchase, at the option of SPG AIV and SPG RPV (or a respective permitted transferee), in accordance with the terms thereof. The Series A Preferred Stock has no expiration date. |
| 3. This form 4 is being filed by and on behalf of each of the following: Ian K. Snow, who serves as the managing member of SPG GP, LLC, the general partner of Snow Phipps Group AIV, L.P., and Snow Phipps Group (RPV), L.P. (Ian K. Snow, collectively, with SPG GP LLC, Snow Phipps Group AIV, L.P. and Snow Phipps Group (RPV), L.P., the "Reporting Persons"). Represents (i) 19,010 share of Series A Preferred Stock and 1,272,882 Warrants held directly by Snow Phipps Group AIV, L.P. and (ii) 990 shares of Series A Preferred Stock and 66,284 Warrants held directly by Snow Phipps Group (RPV), L.P. Other than Snow Phipps Group AIV, L.P. and Snow Phipps Group (RPV), L.P., the Reporting Persons do not themselves directly hold any Warrants or Series A Preferred Stock. |
| 4. The amount shown represents the beneficial ownership held by each of the Reporting Persons as a group. Each of the Reporting Persons disclaims beneficial ownership of the securities to the extent it exceeds their pecuniary interest therein and the inclusion of the Series A Preferred Stock and Warrants in this report shall not be deemed to be an admission of beneficial ownership of the reported Series A Preferred Stock and Warrants for the purposes of Section 16 of the Exchange Act or otherwise. Messrs. Pless and Mantel, each a Partner of SPG GP, LLC and / or one of its affiliates, were appointed to the board of directors of the Issuer as a representative of the Reporting Persons. |
| 5. (Continued from footnote 4) Solely for purposes of Section 16 of the Exchange Act, the Reporting Persons are deemed directors-by-deputization. Information with respect to each Reporting Person is given solely by such Reporting Person, and no Reporting Person has responsibility for the accuracy or completeness of information supplied by another Reporting Person. |
| 6. After the Issuer obtains the Stockholder Approval, the Warrants are exercisable at the warrantholder's option at any time, in whole or in part, through April 7, 2025. The 1,272,882 Warrants held by SPG AIV and the 66,284 Warrants held by SPG RPV are convertible into Common Stock according to the following pricing mechanics (i) the 848,588 Warrants held by SPG AIV and 44,189 Warrants held by SPG RPV have an exercise price of $2.96 per share and are exercisable as of April 7, 2020 and (ii) the 424,294 Warrants held by SPG AIV and 22,095 Warrants held by SPG RPV have an exercise price of $4.94 per share and are exercisable as of April 7, 2020. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to customary antidilution adjustments.. The Issuer is not required to effect an exercise of Warrants, if after giving effect to the issuance of Common Stock upon exercise of such Warrants such warrantholder |
| 7. (Continued from footnote 6) together with its affiliates would beneficially own 49% or more of the Issuer's outstanding Common Stock. The election of a warrantholder to exercise Warrants may be conditioned or contingent upon the occurrence of a specified event or transaction. |
| 8. The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless converted into Common Stock or repurchased and cancelled by the Issuer. |
| 9. The right to purchase the Warrants is exercisable at any time or from time to time after receipt of the Approvals for five (5) years, but in no event later than 5:00 p.m., New York City time, April 7, 2025. |
| 10. The Warrants were issued to the Reporting Persons in connection with their purchase of the Series A Preferred Stock at an aggregate purchase price of $1000 per share of Series A Preferred Stock. |
| Remarks: |
| Exhibit 24 - Confirming Statement by Written Consent of the Managing Member of SPG GP, LLC Exhibit 99.1 - Joint Filer Information, incorporated herein by reference. |
| SPG GP, LLC, /s/ Alan Mantel, as authorized signatory of SPG GP, LLC | 04/08/2020 | |
| ** Signature of Reporting Person | Date | |
| Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. | ||
| * If the form is filed by more than one reporting person, see Instruction 4 (b)(v). | ||
| ** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a). | ||
| Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure. | ||
| Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number. | ||
