On May 23, 2022 (the "Effective Date"), CASI Pharmaceuticals, Inc. ("CASI") reported that entered into a Business Loan Agreement, Commercial Security Agreement, Commercial Pledge Agreement and a Promissory Note (collectively, the " Agreement") with East West Bank ("EWB") (Filing, 8-K, CASI Pharmaceuticals, MAY 23, 2022, View Source [SID1234614975]). Under the Agreement, EWB made available to the Company a revolving line of credit up to a maximum of USD $10.0 million. The Agreement contains customary representations, warranties, financial covenants and ratios, reporting and other covenants, and events of default. The Agreement will mature on December 31, 2022, unless extended to April 30, 2024 subject to certain conditions as defined in the Agreement. Proceeds received under the Agreement are intended to finance short-term working capital needs.
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In general, amounts borrowed under the Agreement are secured by a lien on the Company’s assets, including first priority security interest in accounts receivable and inventory and pledge of available-for-sale securities. Under the Agreement, CASI shall maintain at least $2,500,000 cash on deposit at EWB. EWB shall, when certain conditions are met, partially or fully release this cash deposit requirement.
Upon the Effective Date, the Company was required to pay a closing fee equal to $50,000. Amounts borrowed under the Agreement bear interest, payable monthly. Such interest shall accrue based upon the daily Wall Street Journal Prime Rate (as quoted in the "Money Rates" column of The Wall Street Journal (Western Edition)) plus 0.35 % with a floor rate of 3.85%. Interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.
The foregoing description of the Agreement does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of the Agreement that will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.