EXHIBIT 7
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. 4 June 26, 2002
$10,000,000
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 Ten Million Dollars ($10,000,000), 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, 2002, 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 defined in this Note shall have the
meanings assigned to them in the Amended
and Restated Investor Rights Agreement dated as of the date hereof, as amended,
restated, supplemented or otherwise modified from time to time (the "Amended
and Restated Investor Rights Agreement"), by and between the Company and Payee.
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 Conversion Price then in effect 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
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principal (as determined by the Board of Directors) national securities
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.
"Stock Interest Portion" shall mean one-half of the interest due and
payable on this Note at any Interest Payment Date.
This Note is the Company's 4% Convertible Senior Note authorized for
issuance pursuant to and in accordance with the June 2002 Note Purchase
Agreement dated as of the date hereof by and between the Company and Payee (the
"June 2002 Note Purchase Agreement").
The registered holder of this Note is entitled to the benefits of the
Amended and Restated 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 Amended and Restated
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 8(b) of the Amended and Restated Investor Rights Agreement,
a mandatory redemption of this Note pursuant to Section 3 of the Amended and
Restated Investor Rights Agreement, or a repurchase of the Notes pursuant to
Section 6 of the Amended and Restated 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 Amended and Restated 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.
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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 Amended and Restated 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 Amended
and Restated Investor Rights Agreement.
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 Amended and
Restated Investor Rights Agreement or under applicable law shall operate as a
waiver of such right or remedy.
NOTWITHSTANDING ANYTHING IN THIS NOTE TO THE CONTRARY, THE COMPANY
HEREBY EXPRESSLY WAIVES, AND SHALL BE PROHIBITED FROM ENFORCING OR SEEKING TO
ENFORCE, ANY RIGHT OR REMEDY (INCLUDING, WITHOUT LIMITATION, ANY COMMON LAW
RIGHT OR REMEDY) TO SET OFF, COUNTERCLAIM, DEDUCT OR OTHERWISE REDUCE ANY
AMOUNT WHICH THE COMPANY MAY BE ENTITLED TO RECEIVE FROM PAYEE OR ITS
AFFILIATES AGAINST ANY AMOUNTS PAYABLE UNDER THIS NOTE.
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 June 2002 Note Purchase Agreement, the Amended
and Restated Investor Rights Agreement or the Second Amended and Restated
Registration Rights Agreement dated as of the date hereof between the Company
and Payee (the "Second Amended and Restated Registration Rights Agreement" and,
collectively with the June 2002 Note Purchase Agreement and the Amended and
Restated Investor Rights Agreement, the "Related Documents") or the borrowings
hereunder or
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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 Amended and Restated 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 or any of the
Related Documents and such default shall continue for thirty (30) days after
written notice thereof to the Company by the holder of this Note;
(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
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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;
(j) this Note or any of the Related Documents 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) the Initial Shelf Registration Statement (as defined in the
Second Amended and Restated 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;
(l) there occurs an event of default under any of the Other Notes
(as defined below); or
(m) 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
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(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); 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 Amended and Restated Investor Rights
Agreement or available at law or equity.
For purposes of the foregoing provisions:
"Material Contract" shall mean any contract, agreement or commitment
that involves performance of services or delivery of goods or 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).
"Other Notes" shall mean (i) the First December 2000 Note, (ii) the
Second December 2000 Note, (iii) the September 2001 Note, and (iv) any other
promissory notes or evidence of Indebtedness issued by the Company to Payee.
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The Company agrees to pay, in addition to all other sums payable
hereunder, reasonable attorneys' fees and costs incurred by Xxxxx 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.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Novavax, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. XxXxxxxx, Esq.
Vice President and General Counsel
Telecopy: (000) 000-0000
To Payee:
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Executive Vice President of Legal Affairs
and General Counsel
Telecopy: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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.
Each of the Company and Payee 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,
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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.
The Company 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 on the Tennessee Process Agent 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, Xxxxx shall also deliver a copy thereof to the Company in accordance
with the notice provision set forth herein. The Company 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 the
Company 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 Xxxxx, 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 Maryland 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. Payee 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
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proceedings with respect to this Note and the transactions contemplated hereby.
Service on the Maryland Process Agent 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 Company shall also deliver a copy
thereof to Payee in accordance with the notice provision set forth herein.
Payee 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 Payee 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/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: President & 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 Amended and Restated 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
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
Amended and Restated 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)