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Exhibit 1
CONVERTIBLE NOTE
THIS NOTE AND THE SHARES OF COMMON STOCK OF NOVAVAX, INC. (OR OTHER SECURITIES)
WHICH MAY BE ISSUABLE AS INTEREST ON OR UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY OF THE STATES OF THE UNITED STATES, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL (I) SUCH SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR
(II) THE HOLDER HEREOF PROVIDES (A) A WRITTEN OPINION OF LEGAL COUNSEL, WHICH
COUNSEL AND OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO
NOVAVAX, INC., TO THE EFFECT THAT THE PROPOSED TRANSFER OF SUCH SECURITIES MAY
BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, OR (B) A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") REASONABLY
SATISFACTORY TO NOVAVAX, INC. TO THE EFFECT THAT UNDER THE SECURITIES ACT THE
PROPOSED TRANSFER OF THE SECURITIES WITHOUT REGISTRATION WILL NOT RESULT IN A
RECOMMENDATION BY THE STAFF OF THE COMMISSION THAT ACTION BE TAKEN WITH RESPECT
THERETO, OR (C) SUCH OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO
NOVAVAX, INC. THAT THE PROPOSED TRANSFER OF SUCH SECURITIES MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT.
4% CONVERTIBLE SENIOR NOTE
No. 1 December 19, 2000
$20,000,000
NOVAVAX, INC., a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to the order of KING PHARMACEUTICALS, INC., a
Tennessee corporation, or its registered assigns ("PAYEE"), the principal amount
of Twenty Million Dollars ($20,000,000), on December 19, 2007, with interest
from the date hereof on the unpaid balance of such principal amount as provided
herein, which interest is payable semi-annually on June 30 and December 31 of
each year commencing June 30, 2001, and on the date such unpaid balance shall
become due and payable in full (whether at maturity or at a date fixed for
repurchase or by declaration or otherwise) (each an "INTEREST PAYMENT DATE").
Capitalized terms used and not
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defined in this Note shall have the meanings assigned to them in the Investor
Rights Agreement dated as of December 19, 2000 (the "INVESTOR RIGHTS AGREEMENT")
by and between the Company and King Pharmaceuticals, Inc.
Interest payable on this Note shall be computed on the basis of a
360-day year of twelve 30-day months and applied to the actual number of days
elapsed and shall accrue at a fixed rate equal to four percent (4%) per annum.
All payments with respect to this Note shall be credited first to the payment of
accrued but unpaid interest and then to the repayment of principal. The rate of
interest payable hereunder shall in no event exceed the maximum rate permitted
by applicable law.
Payments of principal on this Note shall be made in lawful money of the
United States in immediately available funds at the address of Payee set forth
below.
Except as provided in the following sentence, payments of interest on
this Note shall be made in lawful money of the United States in immediately
available funds at the address of Payee set forth below. If the Average Closing
Price calculated with respect to an Interest Payment Date is equal to or greater
than the Initial Conversion Price and no Event of Default shall have occurred
and be continuing as of such Interest Payment Date, the Company, at its option,
shall have the right to pay up to the full amount of the Stock Interest Portion
of the interest due on such Interest Payment Date by issuing to Payee the number
of fully paid and nonassessable shares of Common Stock which is determined by
dividing such Stock Interest Portion by the Average Closing Price calculated
with respect to such Interest Payment Date and by delivering a certificate or
certificates for shares of such Common Stock in such denomination or
denominations as Payee may request at the address specified by Payee. For
purposes of the foregoing provision:
"AVERAGE CLOSING PRICE" means, with respect to any Interest Payment
Date, the average Closing Price per share, rounded up to four (4) decimal
points, of the Common Stock during the twenty (20) consecutive trading days
ending with and including the third trading day immediately preceding such
Interest Payment Date.
"CLOSING PRICE" means, with respect to each share of Common Stock, for
any day, the reported last sales price regular way per share or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case (a) on the American Stock Exchange
as reported in THE WALL STREET JOURNAL (or other similar newspaper) for American
Stock Exchange Composite Transactions or, if the Common Stock is not listed or
admitted to trading on such exchange, on the principal (as determined by the
Board of Directors) national securities
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exchange on which the Common Stock is listed or admitted to trading or (b) if
not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq National
Market, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any American Stock Exchange member firm selected from
time to time by the Company for that purpose. If no such prices are available,
the Closing Price per share of Common Stock shall be the fair value of a share
as determined in good faith by the Board of Directors.
"INITIAL CONVERSION PRICE" means Ten Dollars ($10).
"STOCK INTEREST PORTION" shall mean one-half of the interest due and
payable on this Note at any Interest Payment Date.
This Note is one of the Company's 4% Convertible Senior Notes
authorized for issuance in the aggregate original principal amount of
$25,000,000 pursuant to the Note Purchase Agreement. The registered holder of
this Note is entitled to the benefits of the Investor Rights Agreement and may
enforce the agreements of the Company contained therein and exercise the
remedies provided for thereby or otherwise available in respect thereof and is
subject to the provisions thereof and limitations of rights provided therein.
The Investor Rights Agreement contains provisions permitting the amendment or
waiver of certain of the terms thereof.
Except in connection with a prepayment of a portion of this Note
pursuant to SECTION 4 of the Investor Rights Agreement, a mandatory redemption
of this Note pursuant to SECTION 3 of the Investor Rights Agreement, or a
repurchase of the Notes pursuant to SECTION 6 of the Investor Rights Agreement,
this Note may not be prepaid by the Company without the prior written consent of
Payee.
At the option of the holder hereof, the principal amount of this Note
or any portion of such principal amount may, at the times and upon the
conditions set forth in the Investor Rights Agreement, be converted into fully
paid and nonassessable shares of Common Stock, as such shares shall be
constituted at the time of such conversion at the Conversion Price in effect at
the time of such conversion.
At the option of the holder hereof, the Company may be required to
prepay or repurchase this Note in whole or in part under certain circumstances
as specified in the Investor Rights Agreement. At the option of the Company, the
Company may have the right to redeem this Note (in whole, but not in part) under
certain circumstances as specified in the Investor Rights Agreement.
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If any payment of principal or interest on this Note shall become due
on a Saturday, Sunday, or a public holiday under the laws of the State of
Maryland, such payment shall be made on the next succeeding business day and
such extension of time shall be included in computing interest in connection
with such payment.
Upon payment in full of all principal and interest payable hereunder,
this Note shall be surrendered to the Company for cancellation.
The Company waives presentment, demand, notice of nonperformance,
protest, notice of protest, and notice of dishonor. No delay on the part of
Payee in exercising any right or remedy hereunder, under the Investor Rights
Agreement or under applicable law shall operate as a waiver of such right or
remedy.
In the case of the happening of any of the following events (herein
called "EVENTS OF DEFAULT"):
(a) any representation or warranty made by the Company in or
in connection with this Note, the Note Purchase Agreement, the Investor Rights
Agreement or the Registration Rights Agreement, or the borrowings hereunder or
thereunder, shall prove to have been false or misleading in any material respect
when made or deemed to be made;
(b) default shall be made by the Company in the payment of any
interest of this Note when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise and such default shall continue for fifteen
(15) days after such payment shall have become due and payable;
(c) default shall be made by the Company in the payment of any
principal of this Note when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment or redemption
thereof or by acceleration thereof or otherwise;
(d) the Company shall have failed to make or consummate an
Offer to Purchase in accordance with the Investor Rights Agreement;
(e) default shall be made by the Company in the due observance
or performance of any covenant or agreement contained in this Note, the Note
Purchase Agreement or the Related Agreements and such default shall continue for
thirty (30) days after written notice thereof to the Company by the holder of
this Note; PROVIDED, that a breach by the Company of the representation and
warranty made by the Company in Section 7.15 of the
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HPV License Agreement (as defined in the Note Purchase Agreement) shall not
constitute an Event of Default hereunder if such breach was not caused in whole
or in part by any actions or inactions of the Company;
(f) default shall be made by the Company or any subsidiary of
the Company in the due observance or performance of any covenant or agreement
contained in any Material Contract (as defined below) and the other party to
such Material Contract shall have declared default thereunder;
(g) there occurs with respect to any Material Indebtedness (as
defined below), whether such Material Indebtedness now exists or shall hereafter
be created, (i) an event of default that has caused the holder thereof to
declare such Material Indebtedness to be due and payable prior to its stated
maturity and such Material Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within fifteen (15) days of such
acceleration and/or (ii) the failure to make a principal payment at the final
fixed maturity and such defaulted payment shall not have been made, waived or
extended within fifteen (15) days of such payment default;
(h) the Company or any subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code or any other federal, state or foreign bankruptcy,
insolvency, liquidation or similar law, (ii) consent to the institution of, or
fail to contravene in a timely and appropriate manner, any such proceeding or
the filing of any such petition, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official for the
Company or for a substantial part of its property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally, to pay its
debts as they become due or (vii) take corporate action for the purpose of
effecting any of the foregoing;
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Company or of a substantial part of its property or
assets under Title 11 of the United States Code or any other federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for the Company or for a substantial part of the property or assets of the
Company, or (iii) the winding-up or liquidation of the Company, and such
proceeding or petition shall continue undismissed for ninety (90) days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for thirty (30) days;
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(j) this Note, the Note Purchase Agreement or any Related
Agreements shall for any reason cease to be, or be asserted by the Company not
to be, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms;
(k) any final judgment or order (not covered by insurance) for
the payment of money in excess of Fifty Thousand Dollars ($50,000) in the
aggregate for all such final judgments or orders shall be rendered against the
Company or any subsidiary which shall not be paid or discharged within thirty
(30) days following entry of the final judgment or order that causes the
aggregate amount of all such final judgments and orders outstanding and not paid
or discharged to exceed Fifty Thousand Dollars ($50,000); or
(l) the Initial Shelf Registration Statement (as defined in
the Registration Rights Agreement) with respect to the shares of Common Stock
issuable upon the conversion of this Note shall not have been declared effective
by the Commission within one hundred eighty (180) calendar days after the
issuance of this Note;
then, and in any such event (other than an event described in paragraph (h) or
(i) above, and at any time thereafter during the continuance of such event, (i)
the unpaid principal of this Note shall bear interest (computed on the basis of
a 360-day year of twelve 30-day months), at a fixed rate equal to ten (10%) per
annum, (ii) the holder of this Note may, by written notice to the Company,
accelerate the maturity of this Note whereupon the entire principal amount of
this Note, together with all accrued and unpaid interest thereon and all other
liabilities of the Company hereunder, shall become due and payable immediately,
without presentment, demand, notice of nonperformance, protest, notice of
protest, and notice of dishonor, all of which are hereby expressly waived by the
Company, anything contained herein to the contrary notwithstanding; PROVIDED,
HOWEVER, that with respect to a default described in paragraph (h) or (i) above,
this Note, and all of such principal, interest and other liabilities shall
automatically become due and payable without presentment, demand, notice of
nonperformance, protest, notice of protest, and notice of dishonor, all of which
are hereby expressly waived by the Company, anything contained herein to the
contrary notwithstanding, and (iii) the holder of this Note may exercise all or
any other remedies provided by the Investor Rights Agreement or available at law
or equity.
For purposes of the foregoing provisions:
"MATERIAL CONTRACT" shall mean (i) any supply or packaging agreement
related to Estrasorb(TM); and (ii) any other contract, agreement or commitment
that involves performance of services or delivery of goods or
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materials by or to the Company or any of its subsidiaries in an amount or value
in excess of Two Million Dollars ($2,000,000) during any twelve (12) month
period.
"MATERIAL INDEBTEDNESS" shall mean any Indebtedness of the Company
and/or its subsidiaries having an outstanding principal or other amount of more
than Fifty Thousand Dollars ($50,000).
The Company agrees to pay, in addition to all other sums payable
hereunder, reasonable attorneys' fees and costs incurred by Payee in connection
with the collection of this Note.
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Note shall be in writing and shall
be deemed to have been given when (i) delivered personally to the recipient,
(ii) telecopied to the recipient (with hard copy sent to the recipient by
reputable overnight courier service (charges prepaid) that same day) if
telecopied before 5:00 p.m. Eastern time on a business day, and otherwise on the
next business day, or (iii) one business day after being sent to the recipient
by reputable overnight courier service (charges prepaid). Such notices, demands
and other communications shall be sent to the following Persons at the following
addresses:
To the Company:
Novavax, Inc.
8320 Guilford Road
Columbia, Maryland 21046
Attn: Chief Executive Officer
Telecopy: (301) 854-3902
with a copy (which shall not constitute notice) to:
White & McDermott, P.C.
65 William Street
Suite 250
Wellesley, Massachusetts 02481
Attn: David A. White
Telecopy: (781) 237-8120
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To King:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attn: Executive Vice President
and General Counsel
Telecopy: (423) 989-6282
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
8300 Greensboro Drive
McLean, Virginia 22102
Attn: Richard T. Horan, Jr.
Thomas E. Repke
Telecopy: (703) 610-6200
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Notice to any other holder shall be addressed to such holder at the address set
forth for such holder in the Company's records or at such other address and/or
to the attention of such other person as such holder may designate by written
notice to the Company.
This Note may be modified or amended only by a writing signed by the
Company and Payee.
This Note may be transferred only upon surrender of the original Note
for registration of transfer, duly endorsed, or accompanied by a duly executed
written instrument of transfer in form reasonably satisfactory to the Company.
Thereupon, a new Note or Notes of denominations of One Million Dollars
($1,000,000) (or integral multiples thereof) having an aggregate principal
amount and accrued and unpaid interest equal to the principal amount and accrued
and unpaid interest of such original Note will be issued to, and registered in
the name of, the transferee or transferees. Interest and principal are payable
only to the registered holder of this Note.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, or interest on, or other amount payable under this Note as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Note, and the Company
(to the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law.
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Each of the Company and Payee each hereby waives personal service of
any process upon it in connection with any suit, action or proceeding arising
out of or relating to this Note or the transactions contemplated hereby, and
hereby covenants and agrees that all such service of process may be made in the
manner set forth above with the same effect as though served on it personally.
The Company hereby covenants and agrees that any suit, action or
proceeding initiated by the Company against Payee, its affiliates, subsidiaries,
successors and/or assigns arising out of or relating to this Note or the
transactions contemplated hereby shall be brought exclusively in the federal
courts located in and/or state courts of the State of Tennessee. In the event of
any such suit, action or proceeding initiated by the Company, each of the
Company and Payee hereby submits to the exclusive jurisdiction and venue of the
federal courts located in and state courts of the State of Tennessee and hereby
waives any and all objections based on jurisdiction or venue that such party may
have under applicable law or the Federal Rules of Civil Procedure. Each of the
parties hereby irrevocably designates CT Corporation in the State of Tennessee
(the "TENNESSEE PROCESS AGENT") as its designee, appointee and agent to receive,
for and on its behalf, service of process in the State of Tennessee in any such
action, suit or proceedings with respect to this Note and the transactions
contemplated hereby. Service shall be deemed complete upon delivery thereof to
the Tennessee Process Agent, provided that, in the case of any such service upon
the Tennessee Process Agent, the party effecting such service shall also deliver
a copy thereof to the other parties in accordance with the notice provision set
forth herein. Each such party shall take all such action as may be necessary to
continue the appointment of the Tennessee Process Agent in full force and effect
or to appoint another agent, who shall thereafter be referred to herein as the
"Tennessee Process Agent", so that each such party shall at all times have an
agent for service for the foregoing purposes in the State of Tennessee.
Payee hereby covenants and agrees that any suit, action or proceeding
initiated by Payee against the Company, its affiliates, subsidiaries, successors
and/or assigns arising out of or relating to this Note or the transactions
contemplated hereby shall be brought exclusively in the federal courts located
in and/or state courts of the State of Maryland. In the event of any such suit,
action or proceeding initiated by Payee, each of the Company and Payee hereby
submit to the exclusive jurisdiction and venue of the federal courts located in
and state courts of the State of Maryland and hereby waive any and all
objections based on jurisdiction or venue that such party may have under
applicable law or the Federal Rules of Civil Procedure. Each of the
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foregoing parties hereby irrevocably designates CT Corporation in the State of
Maryland (the "MARYLAND PROCESS AGENT"), as its designee, appointee and agent to
receive, for and on its behalf, service of process in the State of Maryland in
any such suit, action or proceedings with respect to this Note and the
transactions contemplated hereby. Service shall be deemed complete upon delivery
thereof to the Maryland Process Agent, provided that, in the case of any such
service upon the Maryland Process Agent, the party effecting such service shall
also deliver a copy thereof to the other parties in accordance with the notice
provision set forth herein. Each such party shall take all such action as may be
necessary to continue the appointment of the Maryland Process Agent in full
force and effect or to appoint another agent, who shall thereafter be referred
to herein as the "Maryland Process Agent", so that each such party shall at all
times have an agent for service for the foregoing purposes in the State of
Maryland.
This Note shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered on its behalf on and as of the day and year first written
above.
NOVAVAX, INC.
By: /s/ John Spears
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Name: John Spears
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Title: President and CEO
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OPTION OF THE HOLDER TO ELECT PURCHASE
TO: NOVAVAX, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from NOVAVAX, INC. (the "Company") as to the
occurrence of a Change of Control with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $100,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Investor Rights Agreement
referred to in this Note at the repurchase price, together with accrued interest
to, but excluding, such date, to the registered holder hereof.
Date:
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Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note in
every particular without alteration or
enlargement or any change whatever.
Principal amount to be repaid (if less than
all):
$
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Social Security or Other
Taxpayer Identification Number
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CONVERSION NOTICE
TO: NOVAVAX, INC.
The undersigned registered owner of this Note hereby
irrevocably exercises the option to convert this Note, or the portion thereof
(which is One Thousand Dollars ($1,000) or an integral multiple thereof) below
designated, into shares of Common Stock of Novavax, Inc. in accordance with the
terms of the Investor Rights Agreement referred to in this Note, and directs
that the shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares or any
portion of this Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will provide the appropriate
information below and pay all transfer taxes payable with respect thereto. Any
amount required to be paid to the undersigned on account of interest accompanies
this Note.
Date:
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Signature(s)
