Velo3D, Inc. (NYSE: VLD) (“Velo3D” or the “Company”), a leading additive manufacturing technology company for mission-critical metal parts, today announced that it has entered into a securities purchase agreement with certain affiliated institutional investors (collectively, the “Investor”) for the purchase and sale of up to $105 million in aggregate principal amount of the Company’s senior secured convertible notes (the “Notes”) in a registered direct offering (the “Offering”).

The Company expects to issue $70 million in aggregate principal amount of the Notes (the “Initial Notes”) at the initial closing of the Offering on or about August 14, 2023 (the “Initial Closing”), subject to the satisfaction of customary closing conditions. In addition, the Company has granted the Investor the right to purchase up to an additional $35 million in aggregate principal amount of the Notes (the “Additional Notes”) so long as the notice to exercise such option is provided no later than the first anniversary of the Initial Closing. The Company estimates the net proceeds from the Initial Closing will be approximately $66 million, after deducting estimated fees and expenses payable by the Company. The Company intends to use approximately $22 million of the net proceeds from the Offering to repay the outstanding indebtedness under its existing credit facility with Silicon Valley Bank and the remaining net proceeds for working capital, capital expenditures and general corporate purposes.

The Notes will have an initial conversion rate of 475.1722 shares of the Company’s common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $2.10 per share of the Company’s common stock). The initial conversion price represents a premium of approximately 15% to the $1.83 per share closing price of the Company’s common stock on the New York Stock Exchange on August 9, 2023. The initial conversion price will adjust to 110% of the average of the three daily volume-weighted-average prices (“VWAP”) of the Company’s common stock during the three trading day period ending on and including August 17, 2023, if such average is lower than the initial conversion price, with a corresponding adjustment to the conversion rate. The conversion rate will also be subject to customary anti-dilution adjustments and adjustments for certain corporate events. Subject to certain conditions, the Company can require conversion of the Notes if the closing price of the Company’s common stock exceeds 175% of the conversion price for at least 20 VWAP trading days in a 30 consecutive VWAP trading day period.

As described below, the Notes will be senior secured obligations of the Company and will be effectively senior to all of the Company’s unsecured indebtedness to the extent of the collateral securing the Notes. Aside from the foregoing, the Notes will rank pari passu with all of the Company’s other senior indebtedness and senior to any of the Company’s subordinated indebtedness. The Notes will bear interest at 6.00% per annum, payable quarterly in cash commencing October 1, 2023, and will mature on August 1, 2026. When the Company repays principal on the Notes pursuant to the terms of the Notes, it will be required to pay 115% of the principal amount repaid (the “Repayment Price”). On the first day of each three-month period beginning on January 1, 2024 (a “Partial Redemption Date”), holders of the Notes may require the Company to redeem a portion of the principal amount of the Notes at the Repayment Price plus accrued interest. The aggregate principal amount of the Initial Notes that will be redeemable on a Partial Redemption Date will be $8,750,000 for a Repayment Price of $10,062,500. Subject to certain exceptions, upon the completion of certain equity financings at a price below the conversion price, holders of the Notes will have the right to require the Company to use up to 15% of the gross proceeds of the equity financing to redeem a portion of the principal amount of the Notes at the Repayment Price plus accrued interest. Holders of the Notes will also have the right to require the Company to repurchase all or a portion of their Notes upon the occurrence of certain corporate events constituting a “fundamental change” at the greater of (a) 110% of the conversion value (calculated based on the 5-day VWAP of the Company’s common stock during the period beginning on the later of the five VWAP trading days prior to the effective date of such fundamental change and the five VWAP trading days prior to the public announcement of such fundamental change) and (b) 100% of the Repayment Price plus accrued interest.

The Notes provide that, as of the issue date of the Initial Notes (which period may be extended in the reasonable discretion of the collateral agent for the Notes), the Company will have delivered to the collateral agent a U.S. security agreement, a U.S. intellectual property security agreement and UCC financing statements, in form and substance satisfactory to the collateral agent, which created a first lien security interest in all the Company’s assets, including, but not limited to, the Company’s intellectual property (subject to prior liens and other customary exclusions, in each case acceptable to the collateral agent in its sole discretion) and perfected a first lien security interest in all such assets other than the Company’s non-U.S. assets and the Company’s bank accounts. At or before 30 days after the issue date of the Initial Notes (which period may be extended in the reasonable discretion of the collateral agent), the Company will deliver to the collateral agent such additional security documents, in form and substance reasonably acceptable to the collateral agent, which perfect a first lien security interest in all the Company’s remaining assets (subject to prior liens and other customary exclusions, in each case acceptable to the collateral agent in its sole discretion).

Credit Suisse Securities (USA) LLC is acting as sole placement agent for the Offering.

The Notes are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-268346) that was filed with the United States Securities and Exchange Commission (the “SEC”) on November 14, 2022, and declared effective on November 21, 2022. A prospectus supplement relating to and describing the terms of the Offering has been filed with the SEC and is available on the SEC’s website at www.sec.gov. The Offering is being made only by means of the prospectus supplement and accompanying prospectus. Electronic copies of the prospectus supplement and the accompanying prospectus may also be obtained from Credit Suisse Securities (USA) LLC, Attention: Prospectus Department at 6933 Louis Stephens Drive, Morrisville, NC 27560, United States, or by calling 1-800-221-1037, or by email at usa.prospectus@credit-suisse.com. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other federal securities laws. Any statements contained herein that do not describe historical facts, including, but not limited to, statements regarding the satisfaction of customary closing conditions related to the Offering and sale of the Notes, the expected net proceeds and timing of completion of the Offering, the expected use of proceeds and the Company’s entry into security agreements with respect to the Notes, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements. Such risks and uncertainties include, among others, the risks identified in the prospectus supplement and accompanying prospectus related to the Offering, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 20, 2023, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023, incorporated by reference therein, and subsequent filings with the SEC. Any of these risks and uncertainties could materially and adversely affect the Company’s results of operations, which would, in turn, have a significant and adverse impact on the price of the Company’s securities. The Company cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events, except as required by applicable law.

About Velo3D:

Velo3D is a metal 3D printing technology company. 3D printing—also known as additive manufacturing (AM)—has a unique ability to improve the way high-value metal parts are built. However, legacy metal AM has been greatly limited in its capabilities since its invention almost 30 years ago. This has prevented the technology from being used to create the most valuable and impactful parts, restricting its use to specific niches where the limitations were acceptable. Velo3D has overcome these limitations so engineers can design and print the parts they want. The company’s solution unlocks a wide breadth of design freedom and enables customers in space exploration, aviation, power generation, energy and semiconductor to innovate the future in their respective industries. Using Velo3D, these customers can now build mission-critical metal parts that were previously impossible to manufacture. The end-to-end solution includes the Flow™ print preparation software, the Sapphire^® family of printers, and the Assure™ quality control system—all of which are powered by Velo3D’s Intelligent Fusion™ manufacturing process. The company delivered its first Sapphire^® system in 2018 and has been a strategic partner to innovators such as SpaceX, Honeywell, Honda, Chromalloy, and Lam Research. Velo3D has been named to San Francisco Chronicle’s prestigious annual list of Top Workplaces in the Bay Area 2022.

VELO, VELO3D, SAPPHIRE and INTELLIGENT FUSION, are registered trademarks of Velo3D, Inc.; and WITHOUT COMPROMISE, FLOW and ASSURE are trademarks of Velo3D, Inc. All Rights Reserved © Velo3D, Inc.

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