Company: HCWB
Filing Date: 2025-02-11
Form Type: PRE 14A
Source: 0001193125-25-024372
Chunk: 31

Company: HCW Biologics Inc.
Filing Date: 2025-02-11
Form: PRE 14A
Chunk 31
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 of the total Wugen shares are security for the Senior Secured Notes and would be transferred in the event of a default, pro rata, to the Holders.

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Amended terms of the Amended and Restated Note Purchase Agreement included a conversion feature, which would
give Noteholders a right to convert the outstanding indebtedness to shares of the Company’s common stock under certain conditions, subject to final documentation. The holders of the Secured Notes have no obligation to exercise the conversion
option, however, if the holders of the majority of principal of Secured Notes outstanding choose to do so, then all the holders of Secured Notes must do so.

Under the Principal Terms for Conversion, as more fully set forth in Appendix __, [Noteholders and the Company will agree that at least [$6,000,000] principal
amount of the Secured Notes will be converted into shares of Common Stock at a conversion price of [$0.65] per share, and the Escrow Agreement will be amended to provide that, upon a sale of the Pledged Collateral, converting Noteholders will have
the right to receive [__%] of the net proceeds received in such sale for every [$100,000.00] principal amount of Secured Notes so converted. As described below, conversion of principal amount of the Secured Notes will result in a dollar-for-dollar increase in stockholders’ equity, contributing to the Company’s plan to gain compliance with the Nasdaq Minimum Shareholder Equity Rule and
maintaining listing of the Company’s Common Stock on the Nasdaq Capital Market.] NOTE: SUMMARY DESCRIPTION TO BE UPDATED IN THE FINAL PROXY STATEMENT WHEN PRINCIPAL TERMS FOR CONVERSION ARE FINALIZED.

Possible Effects if Proposal Three is Approved

If
our stockholders approve Proposal Three, we would be able to convert up to approximately $6.9 million principal amount of debt to stockholders equity by issuance of shares of our Common Stock, thus increasing the Company’s
stockholders’ equity by up to approximately $6.9 million, significantly contributing to the Company gaining compliance with the Nasdaq Minimum Shareholder Equity Rule. Shares of Common Stock that would be issuable to the Noteholders in
connection with the conversion of the Notes would have the same rights and privileges as the shares of our currently authorized Common Stock. The issuance of such shares will not affect the rights of the holders of outstanding Common Stock, but such
issuance will have a dilutive effect on our existing stockholders, including on the