Company: HCWB
Filing Date: 2025-04-28
Form Type: DEF 14A
Source: 0000950170-25-058961
Chunk: 46

Company: HCW Biologics Inc.
Filing Date: 2025-04-28
Form: DEF 14A
Chunk 46
---
 gross proceeds of the sale of the Pledged Collateral. If the Secured Notes are repaid on the Maturity Date, holders will receive a fixed bonus payment in addition to payment of outstanding principal and accrued and unpaid interest. If a bonus payment is paid, then there is no prepayment penalty. The Amended and Restated Note Purchase Agreement also contains default provisions, according to which, following an event of default, the Company may be required to distribute the Pledged Collateral to the Noteholders on a pro rata basis based on a $10.0 million issuance of Secured Notes, in full satisfaction of the indebtedness evidenced by the Secured Notes. In other words, 69.05% 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. 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 our Common Stock under certain conditions, subject to final documentation.

Under the Principal Terms for Conversion, Noteholders and the Company will agree that at least $6,580,000 principal amount of the Secured Notes will be converted into shares of our Common Stock at a conversion price of $26.00 per share (post-reverse stock split). As part of the conversion, the Company will issue warrants to purchase shares of our Common Stock to the converting Noteholders for up to an additional $3,290,000 of shares of our Common Stock, at an exercise price of $26.00 per share. Upon conversion, converting Noteholders would be subject to a lock-up period of 180 days from the date of conversion. Further, the Escrow Agreement will be amended such that the proceeds from the Pledged Collateral will be allocated among the Company and the converting Noteholders. Specifically, assuming $6,580,000 principal amount of Secured Notes will be converted, upon a sale of the Pledged Collateral, converting Noteholders will have the right to receive their pro rata share of 49.11% of the net proceeds received in such sale. The Company will retain the remaining 50.89% of proceeds upon the sale of the Pledged Collateral (subject to the rights of any non-converting Noteholders in such proceeds as collateral for repayment of their Notes). As described below, conversion of principal amount of the Secured Notes will result in a dollar-for-dollar