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QT Imaging Holdings Inc.
11/01/2024 | Press release | Distributed by Public on 11/01/2024 14:31
Material Agreement Form 8 K
Item 1.01 Entry into a Definitive Material Agreement
As previously disclosed by QT Imaging Holdings, Inc. (the "Company") in a Current Report on Form 8-K filed on November 22, 2023 with the Securities and Exchange Commission (the "SEC"), on November 16, 2023, the Company entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd., a Cayman Islands exempt limited partnership (the "Investor"), pursuant to which the Investor agreed, subject to the conditions therein, to purchase from the Company shares of its common stock, par value $0.0001 (the "Common Stock"), for a value of up to $50,000,000 of which $10,000,000 was to be advanced by the Investor as evidenced by a promissory note (such advance, the "Pre-Paid Advance"). Furthermore, as previously disclosed by the Company in a Current Report on Form 8-K filed on March 5, 2024 with the SEC, the Company, as consideration for the Pre-Paid Advance, on March 4, 2024 issued to the Investor a promissory note (the "Investor Note"). Undefined terms used herein have the meanings defined in the Investor Note.
As previously also disclosed in a Current Report on Form 8-K with the SEC on September 13, 2024, a Trigger Event occurred under the terms of the Investor Note on September 11, 2024, as a result of which the Company made the first of its monthly payments due to the Investor on September 13, 2024, of approximately $1,500,000. In addition, as previously disclosed in a Current Report on Form 8-K filed on September 30, 2024 with the SEC (the "September 30thCurrent Report"), the Company and the Investor entered into an Omnibus Amendment (the "First Amendment") to the Financing Documents, dated as of September 26, 2024, to reduce the Company's obligations resulting from the Trigger Event as described in the September 30thCurrent Report.
On October 31, 2024, the Company and the Investor entered into that certain Second Omnibus Amendment (the "Second Amendment", and together with the SEPA, the Investor Note and the First Amendment, the "Financing Documents"), pursuant to which the parties agreed to amend certain terms of the Financing Documents as described below.
Pursuant to the Second Amendment, the Maturity Date of the Investor Note will be extended from December 15, 2025 to March 31, 2026, such that all amounts outstanding under the Investor Note will be immediately due and payable on the extended Maturity Date.
Further, the Second Amendment acknowledges the Company's obligation to make monthly payments to the Investor in the amount of the Trigger Principal Amount due to the occurrence of the Trigger Event and revised Section 1(c) of the Investor Note to provide that no further monthly payments will be owed during the period beginning on the date of the Second Amendment and ending on February 15, 2025. In exchange for this relief, beginning on February 15, 2025, and continuing on the same day of each successive Calendar Month until and including November 15, 2025, whether or not a Trigger Event has occurred and is continuing as of such dates, the Company will make monthly payments in an amount equal to $500,000 plus the Payment Premium plus accrued and unpaid interest under the Investor Note as of each such payment date. Such monthly payments will not be reduced or offset by any amount, including, but not limited to, any net sales proceeds of the Company Shares (as defined in the SEPA) or any value of the Company Shares based on the VWAP as quoted by Bloomberg, LP.
Further, pursuant to the terms of the Second Amendment, the Company has elected to reduce the Floor Price to $0.50 per share, effective as of the date of the Second Amendment, and acknowledges and confirms that the reduction of the Floor Price will not affect its obligation to make monthly payments under the Second Amendment nor will it reduce such monthly payments.
In addition, to the extent that the Investor converts any portion of the Investor Note into shares of the Company's common stock between the date of the Second Amendment and January 15, 2025, the first $500,000 of such conversions of the Investor Note shall reduce the principal balance of the Investor Note. For the avoidance of doubt and without implication that the opposite would otherwise be true, all other conversions of the Investor Note shall be applied as provided for in and consistent with the terms of the Investor Note.
The Second Agreement also provides that in the event that the Company's common stock is delisted from trading on the Nasdaq Stock Market, the Investor consents to the occurrence of such delisting from the Nasdaq Stock Market, if it is to happen, and that it will not constitute an Event of Default as per the Omnibus Agreement, provided that (i) the Company uses its best efforts to have its common stock relisted on The Nasdaq Capital Market as soon as possible and (ii) the Company's common stock is listed on either the OTC Markets' OTCQX or OTCQB market tier within 30 days in the event that a delisting from the Nasdaq Stock Market occurs.
All terms, conditions and provisions of the Financing Documents shall remain in full force and effect and remain unaffected and unchanged, such that the Second Amendment in no way acts as a release or relinquishment of, and in no way affects, the liens, security interests and rights created by or arising under the Financing Documents, or the priority thereof, such that those liens, security interests and rights, as well as all rights, remedies, titles, liens and equities securing the Financing Documents and indebtedness as modified are ratified, confirmed, renewed and extended in all respects. The
Second Amendment is a modification only and not a novation, such that it shall be considered attached to the Investor Note and made a part thereof, and shall not release or affect the liability of any guarantor, surety or endorser of the Investor Note, or release any owner of collateral securing the Investor Note, such that the validity, priority and enforceability thereof shall not be impaired. Any event of default under the Second Amendment shall constitute an Event of Default under the Investor Note.
The Company also agreed, pursuant to the Second Amendment, in consideration of the mutual covenants contained therein, to fully and unconditionally release and forever discharge the Investor and its affiliates and their respective officers, directors, employees, agents, legal representatives, successors, and assigns (the "Released Parties"), from any and all claims, actions, obligations, liabilities, demands and/or causes of action, of whatever kind or character, whether now known or unknown, in law or equity, which against the Released Parties, the Company or QT Imaging ever had, now have, or hereafter can, shall, or may have, for, upon, or by reason of any matter, cause, or thing whatsoever up to the date of the Second Amendment, with such release being binding upon and inure to the benefit of the parties
hereto and their respective administrators, legal representatives, successors, and assigns.
Finally, the Second Amendment provides that an Event of Default under the Investor Note shall occur automatically, without the requirement of any notice from the Investor to the Company, if any creditor other than the Investor, or any party acting in a similar capacity, initiates or attempts to initiate any action intending to foreclose, seize, or take control over any asset of the Company, whether through legal processes or by any other means, which shall include, but shall not be limited to, the filing of any legal actions aiming at foreclosure, the initiation of such proceedings, or any preparatory steps taken by such creditor that clearly indicate an intention to foreclose on assets due to the Company's failure to meet its obligations to such creditor. Upon the occurrence of any such event, an Event of Default shall have occurred and all obligations under the Investor Note shall automatically become immediately due and payable, and the Investor shall be entitled to exercise all rights and remedies available under the Investor Note and applicable law, without any further notice, demand, or action required on the part of the Investor. Notwithstanding any other provision in the Second Amendment or the Investor Note, the aforementioned clause is to serve as an additional Event of Default, augmenting, and not replacing, any Events of Default as specified within the Investor Note.
This Current Report provides a summary of the Second Amendment, the description of which does not purport to be complete and is qualified in its entirety by the terms and conditions of such agreement. A copy of the Second Amendment is filed as Exhibit 10.1 hereto and is incorporated by reference into this Current Report.