Item 1.01. Entry into a Material Definitive Agreement.
3.875% Senior Unsecured Notes due 2028
Indenture
On August 7, 2020, Emergent BioSolutions Inc. (the “Company”)
completed its previously announced offering of $450 million aggregate principal amount of 3.875% Senior Unsecured Notes due 2028
(the “Notes”).
The Notes were issued pursuant to an indenture, dated as of
August 7, 2020 (the “Indenture”), by and among the Company, certain subsidiaries of the Company party thereto as guarantors
and U.S. Bank National Association, as trustee. The Notes are fully and unconditionally guaranteed, jointly and severally, on an
unsecured basis, by each of the Company’s direct and indirect subsidiaries that guarantee debt under its credit facilities.
The Notes are senior unsecured obligations of the Company, and the Notes and their guarantees rank equally in right of payment
with all of the Company’s and the guarantors’ existing and future unsubordinated indebtedness, but are effectively
junior to all of the Company’s and the guarantors’ existing and future secured indebtedness (including the Company’s
credit facilities), to the extent of the value of the assets securing that indebtedness. In addition, the Notes are structurally
subordinated to all of the existing and future obligations of the Company’s subsidiaries that do not guarantee the Notes.
Interest on the Notes will be payable on February 15 and August
15 of each year until maturity, commencing on February 15, 2021. The Notes will mature on August 15, 2028.
On or after August 15, 2023, the Company may, at its option,
redeem the Notes, in whole or in part, at the applicable redemption prices set forth in the Indenture, plus accrued and unpaid
interest, if any, to, but excluding, the date of redemption. Prior to August 15, 2023 the Company may redeem all or a portion of
the Notes at a redemption price equal to 100% of the principal amount of the Notes plus a “make-whole” premium described
in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Prior to August 15, 2023,
the Company may redeem up to 40% of the aggregate principal amount of the Notes using the net cash proceeds of certain equity offerings
at the redemption price set forth in the Indenture. Upon the occurrence of a “change of control” (as defined in the
Indenture), the Company must offer to repurchase the Notes at a purchase price of 101% of the principal amount of such Notes plus
accrued and unpaid interest, if any, to, but excluding, the repurchase date.
Subject to certain qualifications and exceptions, the Indenture
restricts the Company’s and its restricted subsidiaries’ ability to, among other things: (i) incur or guarantee additional
debt or issue certain preferred stock; (ii) make certain investments; (iii) create restrictions on the payment of dividends or
other amounts from certain of the Company’s restricted subsidiaries; (iv) enter into certain transactions with affiliates;
(v) merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of the Company’s assets;
(vi) sell certain assets, including capital stock of the Company’s subsidiaries; (vii) designate the Company’s subsidiaries
as unrestricted subsidiaries; (viii) pay dividends, redeem or repurchase capital stock or make other restricted payments; and (ix)
incur certain liens.
The Indenture provides for events of default that, if certain
events occur, would permit the trustee or holders of at least 25% in aggregate principal amount of the Notes then outstanding to
declare the principal of and unpaid interest on the Notes to be immediately due and payable.
The foregoing description of the Indenture does not purport
to be complete and is qualified in its entirety by reference to the full text of the Indenture. A copy of the Indenture is filed
herewith as Exhibit 4.1 and is incorporated herein by reference.
Purchase Agreement
The Notes described above were offered and sold pursuant to
a purchase agreement, dated August 4, 2020 (the “Purchase Agreement”), by and among the Company, the subsidiaries of
the Company named therein as guarantors, and Wells Fargo Securities, LLC, as representative of the several initial purchasers identified
therein (collectively, the “Initial Purchasers”). The Notes were resold to persons reasonably believed to be “qualified
institutional buyers” pursuant to Rule 144A under the Securities Act of 1933 (as amended, the “Securities Act”)
and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes have not been registered
for sale under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This Form 8-K does
not constitute an offer to sell any securities or a solicitation of an offer to purchase any securities.
The foregoing description of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. A copy of the
Purchase Agreement is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Credit Agreement Amendment
On August 7, 2020, the Company entered into that certain Second
Amendment to Amended and Restated Credit Agreement (the “Credit Agreement Amendment”) among the Company, as borrower,
certain subsidiaries of the Company, as guarantors, Wells Fargo Bank, National Association, as administrative agent (in such capacity,
the “Administrative Agent”), and certain lenders party thereto. The Credit Agreement Amendment amends the Amended and
Restated Credit Agreement, dated as of October 15, 2018, among the Company, the lenders party thereto from time to time and the
Administrative Agent (as previously amended and supplemented, the “Existing Credit Agreement”) relating to the Company’s
senior secured credit facilities consisting of a senior revolving credit facility (the “Revolving Credit Facility”)
and senior term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Senior
Secured Credit Facility”).
The Credit Agreement Amendment amends the Existing Credit Agreement
to expressly permit the incurrence of the indebtedness with respect to the Notes. The Credit Agreement Amendment also amends the
consolidated net leverage ratio financial covenant by increasing the maximum level to 4.50 to 1.00 (subject to an increase to 5.00
to 1.00 for an applicable four quarter period, at the election of the Company, in connection with a permitted acquisition having
an aggregate consideration in excess of $75.0 million).
In addition, the Credit Agreement Amendment increases the applicable
margin by 0.25% if our consolidated net leverage ratio equals or exceeds 3.50 to 1.00, such that borrowings under the Revolving
Credit Facility and the outstanding principal amount of the Term Loan Facility shall bear interest at a rate per annum equal to
(a) a eurocurrency rate plus a margin ranging from 1.25% to 2.25% per annum, depending on our consolidated net leverage ratio or
(b) a base rate (which is the highest of the prime rate, the federal funds rate plus 0.50%, and a eurocurrency rate for an interest
period of one month plus 1%) plus a margin ranging from 0.25% to 1.25%, depending on our consolidated net leverage ratio. In addition,
the commitment fee that we are required to pay in respect of the average daily unused commitments under the Revolving Credit Facility
shall be 0.15% to 0.35% per annum, depending on our consolidated net leverage ratio.
The Credit Agreement Amendment also amends the Existing Credit
Agreement to permit incremental term loan facilities or one or more increases in the commitments under the Revolving Credit Facility
in an aggregate amount not to exceed an amount of additional indebtedness that would cause the consolidated secured net leverage
ratio of the Company to exceed 2.75 to 1.00, plus an amount equal to the greater of $300 million and 100% of Consolidated EBITDA
(as defined in the Existing Credit Agreement) of the Company, plus the amount of any permanent reductions in the Revolving Credit
Facility commitments, plus the amount of optional prepayments of the outstanding Term Loan Facility. The Credit Agreement Amendment
also amends certain affirmative covenants, negative covenants and events of default thereunder.
The foregoing description of the Credit Agreement Amendment
does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement Amendment.
A copy of the Credit Agreement Amendment is filed herewith as Exhibit 10.2 and is incorporated herein by reference.