Item 1.01 Entry into a Material Definitive Agreement.
On September 30, 2022, Novavax, Inc. (the "Company"), FUJIFILM Diosynth
Biotechnologies UK Limited ("FDBK"), FUJIFILM Diosynth Biotechnologies Texas,
LLC ("FDBT") and FUJIFILM Diosynth Biotechnologies USA, Inc. ("FDBU" and
together with FDBK and FDBT, "Fujifilm") entered into a Confidential Settlement
Agreement and Release (the "Settlement Agreement") regarding amounts due to
Fujifilm in connection with the termination of manufacturing activity at FDBT
under the Commercial Supply Agreement (the "CSA") dated August 20, 2021 and
Master Services Agreement dated June 30, 2020 and associated statements of work
(the "MSA") by and between the Company and Fujifilm.
Pursuant to the Settlement Agreement, the Company is responsible for payment of
up to $185 million (the "Settlement Payment") to Fujifilm in connection with
cancellation of manufacturing activity at FDBT under the CSA, of which (i) $47.8
million, constituting the initial reservation fee under the CSA, was credited
against the Settlement Payment on September 30, 2022 and (ii) the remaining
balance is to be paid in four equal quarterly installments of $34.3 million each
beginning March 31, 2023. Under the Settlement Agreement, Fujifilm is required
to use commercially reasonable efforts to mitigate the losses associated with
the vacant manufacturing capacity caused by the termination of manufacturing
activities at FDBT under the CSA, and the final two quarterly installments will
be mitigated by any replacement revenue achieved by Fujifilm between July 1,
2023 and December 31, 2023.
Absent prior termination notification from the Company, the MSA will be
considered terminated with respect to all activities in FDBU and FDBT on October
21, 2022 and the impact of the termination will be determined in accordance with
the provisions of the MSA. The terms and conditions of the MSA and CSA will
remain in full force and effect with respect to the ongoing activities at FDBK.
In addition, the Company and Fujifilm mutually released all claims relating to
(i) the cancellation of batches to be manufactured at FDBT under the MSA or CSA,
(ii) FDBT facility idle time in 2022, (iii) failure to complete product
performance qualification testing of batches manufactured by Fujifilm by
December 2021 and (iv) any obligation by Fujifilm to reserve capacity or
manufacture batches at FDBT for the benefit of the Company under the MSA or CSA.
The foregoing description of the material terms of the Settlement Agreement does
not purport to be complete and is qualified in its entirety by reference to the
Settlement Agreement, which will be filed with the Securities and Exchange
Commission as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2022.
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