Item 1.01. Entry into a Material Definitive
Agreement.
On December 20, 2022, Novavax, Inc. (the “Company”)
completed its previously announced offering of $150 million aggregate principal amount of 5.00% Convertible Senior Notes due 2027 (the
“Notes”). The Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the offering of the Notes,
the Company granted to the initial purchasers a 30-day option to purchase up to an additional $25.25 million aggregate principal amount
of the Notes. The Notes were issued pursuant to an indenture, dated December 20, 2022 (the “Indenture”), between the Company
and The Bank of New York Mellon Trust Company, N.A., as trustee.
The Notes are senior unsecured obligations of
the Company and will mature on December 15, 2027, unless earlier converted, redeemed, or repurchased. The Notes will bear interest at
a rate of 5.00% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023.
The Notes are convertible at the option of the
holders at any time prior to the close of business on the business day immediately preceding September 15, 2027, only under the following
circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2023 (and only during such calendar
quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive)
during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter
is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after
any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture)
per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported
sale price of the Company’s common stock and the conversion rate for the Notes on each such trading day; (3) if the Company calls
such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption
date, but only with respect to the Notes called (or deemed called) for redemption; and (4) upon the occurrence of specified corporate
events as set forth in the Indenture. On or after September 15, 2027 until the close of business on the business day immediately preceding
the maturity date (December 15, 2027), holders of the Notes may convert all or any portion of their Notes at any time, regardless of the
foregoing conditions. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be,
cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s
election, in the manner and subject to the terms and conditions provided in the Indenture.
The conversion rate for the Notes will initially
be 80.0000 shares of the Company’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion
price of $12.50 per share of common stock. The initial conversion price of the Notes represents a conversion premium of 25% of the public
offering price in the Company’s concurrent common stock offering that closed on December 20, 2022. The conversion rate for the Notes
is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. In addition, following certain corporate
events that occur prior to the maturity date of the Notes or if the Company delivers a notice of redemption in respect of the Notes, the
Company will, under certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes (or
any portion thereof) in connection with such a corporate event or convert its Notes called (or deemed called) for redemption during the
related redemption period (as defined in the Indenture), as the case may be.
The Company may not redeem the Notes prior to
December 22, 2025. The Company may redeem for cash all or any portion of the Notes, at its option, on or after December 22, 2025, if the
last reported sale price of the common stock has been at least 130% of the conversion price for the Notes then in effect for at least
20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period)
ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption
price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, to, but excluding, the redemption
date. If the Company redeems less than all the outstanding Notes, at least $50 million aggregate principal amount of Notes must be outstanding
and not subject to redemption as of the date of the relevant notice of redemption. No sinking fund is provided for the Notes.
If the Company undergoes a fundamental change
(as defined in the Indenture), holders may require, subject to certain conditions and exceptions as set forth in the Indenture, the Company
to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount
of the Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date.
The Indenture includes customary covenants and
sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of
bankruptcy or insolvency events of default involving the Company or its significant subsidiaries after which the Notes become automatically
due and payable. The following events are considered “events of default” under the Indenture:
| · | default in any payment of interest on any Note when due and payable and the default continues for a
period of 30 days; |
| · | default in the payment of principal of any Note when due and payable at its stated maturity, upon optional
redemption, upon any required repurchase, upon declaration of acceleration or otherwise; |
| · | failure by the Company to comply with its obligation to convert the Notes in accordance with the Indenture
upon exercise of a holder’s conversion right, and such failure continues for three business days; |
| · | failure by the Company to give (i) a fundamental change notice or notice of a make-whole fundamental
change, and such failure continues for two business days or (ii) notice of certain specified corporate events, and such failure continues
for three business days; |
| · | failure by the Company to comply with its obligations in respect of any consolidation, merger or sale
of assets; |
| · | failure by the Company to comply with any of the other agreements in the Indenture for 60 days after
receipt of written notice of such failure from the trustee or the holders of at least 25% in aggregate principal amount of the Notes then
outstanding; |
| · | default by the Company or any of its significant subsidiaries (as defined in the Indenture) with respect
to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any
indebtedness for money borrowed in excess of $35 million (or its foreign currency equivalent), in the aggregate of the Company and/or
any of the Company’s significant subsidiaries, whether such indebtedness now exists or shall hereafter be created, (i) resulting
in such indebtedness becoming or being declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay
the principal of any such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity,
upon required repurchase, upon declaration of acceleration or otherwise, and in the cases of clauses (i) and (ii), such acceleration shall
not have been rescinded or annulled or such failure to pay or default shall not have been cured or waived, or such indebtedness shall
not have been paid or discharged, as the case may be, within 30 days after written notice to the Company by the trustee or to the Company
and the trustee by holders of at least 25% in aggregate principal amount of the Notes then outstanding in accordance with the Indenture;
and certain events of bankruptcy, insolvency or reorganization of the Company or any of the Company’s significant subsidiaries;
and |
| · | certain events of bankruptcy, insolvency or reorganization of the Company of any of the Company’s
significant subsidiaries. |
If certain bankruptcy or insolvency-related events
of default occur, the principal of, and accrued and unpaid interest, on, all of the then-outstanding Notes shall automatically become
due and payable. If an event of default with respect to the Notes, other than certain bankruptcy and insolvency-related events of default,
occurs and is continuing, the trustee, by notice to the Company, or the holders of at least 25% in aggregate principal amount of the outstanding
Notes by notice to the Company and the trustee, may, and the trustee at the request of such holders shall, declare 100% of the principal
of, and accrued and unpaid interest, on, all the outstanding Notes to be due and payable.
Notwithstanding the foregoing, the Indenture provides
that, to the extent the Company so elects, the sole remedy for an event of default relating to certain failures by the Company to comply
with certain reporting covenants in the Indenture will, for the first 365 days after the occurrence of such an event of default, consist
exclusively of the right to receive additional interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the
Notes outstanding for each day during the first 180 days after the occurrence of such an event of default and 0.50% per annum of the principal
amount of the Notes outstanding from the 181st day to, and including, the 365th day following the occurrence of such event of default,
as long as such event of default is continuing.
The Indenture provides that the Company shall
not consolidate with, enter into a binding share exchange with, or merge with or into another person or sell, assign, convey, transfer,
lease or otherwise dispose of the Company’s properties and assets substantially as an entirety to any successor person, unless:
(i) the resulting, surviving or transferee person (if not the Company) is a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia, and such corporation (if not the Company) expressly assumes by supplemental
indenture all of the Company’s obligations under the Notes and the Indenture; (ii) immediately after giving effect to such transaction,
no default or event of default has occurred and is continuing under the Indenture and (iii) other conditions specified in the Indenture
are met.
A copy of the Indenture is attached hereto as
Exhibit 4.1 (including the form of the Notes attached hereto as Exhibit 4.2) and is incorporated herein by reference (and this description
is qualified in its entirety by reference to such documents).
The Company’s net proceeds from this
offering were approximately $142.2 million after deducting the initial purchasers’ discounts and commissions and the estimated
offering expenses payable by the Company. The Company may use the net proceeds from the offering of the Notes for general corporate
purposes, including but not limited to the continued global commercial launch of Nuvaxovid™, repayment or repurchase of a
portion of the $325 million in outstanding principal amount of its 3.75% convertible senior unsecured notes due February 1, 2023,
working capital, capital expenditures, research and development expenditures, clinical trial expenditures, repayments under its
supply agreements, as well as acquisitions and other strategic purposes.