Item 3. Legal Proceedings
Item 3. LEGAL PROCEEDINGS
On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against members of the Novavax board of directors and members of senior management in the Delaware Court of Chancery, captioned Thomas Golubinski v. Richard H. Douglas, et al. , No. 2021-0172-JRS. Novavax is deemed a nominal defendant. Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserted claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff sought an award of damages to the Company, an order rescinding both awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the lawsuit or any claim arising from the April 2020 and June 2020 awards. On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses, to which the defendants filed an opposition. The action is currently stayed, and upon final resolution of the plaintiff’s motion for an award of fees and expenses, the action will be automatically dismissed.
On November 12, 2021, Sothinathan Sinnathurai filed a purported class action in the U.S. District Court for the District of Maryland against Novavax and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al. , No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). The complaint in the Sinnathurai Action alleges that the defendants made certain purportedly false and misleading statements concerning NVX-CoV2373, including with respect to the Company’s manufacturing capabilities and NVX-CoV2373’s regulatory and commercial prospects. The purported class is defined as those who purchased or otherwise acquired Novavax securities between March 2, 2021 and October 19, 2021. The complaint demands an award of damages on behalf of the purported class and attorneys’ fees incurred in connection with the litigation. On January 26, 2022, the court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action. The court has ordered the co-lead plaintiffs to file an amended complaint by March 11, 2022. The Company’s response to the amended complaint is due April 25, 2022.
After the Sinnathurai Action was filed, three derivative lawsuits were filed and are currently pending in the U.S. District Court for the District of Maryland: Robert E. Meyer v. Stanley C. Erck, et al. , No. 8:21-cv-02996-TDC (the “Meyer Action”), Shui Shing Yung v. Stanley C. Erck, et al. , No. 8:21-cv-03248-TDC (the “Yung Action”), and William Kirst, et al. v. Stanley C. Erck, et al. , No. 8:22-cv-00024-TDC (the “Kirst Action”). The derivative lawsuits name members of the board of directors and certain members of senior management as defendants. Novavax is deemed a nominal defendant. The derivative plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action. Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement. Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees. Novavax removed the Kirst Action from the Circuit Court for Montgomery County, Maryland. On February 7, 2022, the plaintiffs in the Kirst Action filed a motion to remand the action to state court and, in response, the Company has filed an opposition. The Court also entered an order tolling the defendants’ time to respond to the complaints in the Meyer and Yung Actions pending submission of a joint proposed briefing schedule on any
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anticipated motion practice in those cases by March 25, 2022. On February 4, 2022, the Court entered an order consolidating the Meyer and Yung Actions.
We are also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, we do not expect the resolution of these other legal proceedings to have a material adverse effect on our financial position, results of operations, or cash flows.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II