On April 21, 2023, HCW Biologics Inc. (the "Company") entered into a secured Development Line of Credit Agreement (the "Agreement") with Prime Capital Ventures, LLC, as lender (the "Lender"), pursuant to which the Lender shall advance loans to the Company in an aggregate principal amount not to exceed $26.25 million (the "Maximum Amount") with a scheduled maturity date of April 20, 2028 (the "Maturity Date") (Filing, HCW Biologics, APR 21, 2023, View Source [SID1234630609]). The note issued pursuant to the Agreement bears interest at a fixed rate of seven (7) percent per annum, due monthly in arrears on the first day of each month, and the outstanding principal on the note shall be due and payable in full on the Maturity Date.
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Under the Agreement, within ten (10) days of receipt of the executed Agreement by each of the Company and the Lender, the Company will be required to wire $5.25 million to Lender to serve as a reserve for the payment of interest under the Agreement. In addition, out of the initial advance, the Company shall pay to the Lender a non-refundable fee in the amount of $1.25 million. The Lender is required to make advances to the Company pursuant to the terms of the Agreement in an amount not to exceed the Maximum Amount. The initial advance from the Lender to the Company is contingent upon the Company’s (1) receipt of all necessary permits and approvals to conduct its business and (2) the compliance with all applicable laws, including zoning and environmental laws.
The Agreement contains customary representations, warranties, affirmative and negative covenants, including financial reporting covenants, events of default and indemnification provisions in favor of the Lender referred to in the Agreement. The covenants include restrictions governing the Company’s ability to amend its certificate of incorporation or bylaws in a manner adverse to the Lender, the Company’s incurrence of liens and indebtedness, the Company’s ability to make investments, and the Company’s entry into certain merger and acquisition transactions or dispositions and other matters, all subject to certain exceptions. In connection with the Agreement, the Lender has been granted a first priority lien and security interest in the Company’s new facility under construction at 3300 Corporate Way, Miramar Florida and various construction project-related bank accounts.
The foregoing description of the Agreement is not intended to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference.