-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gwl+wYKNnT0AZgIyAMGzxCn3fij1TZWzA3YfKT3LhBMBPo7+6BEgjTAaJyo4gFBz hbjk+ncctru98JnA7qyiTw== 0000950133-01-000155.txt : 20010123 0000950133-01-000155.hdr.sgml : 20010123 ACCESSION NUMBER: 0000950133-01-000155 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010108 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVAVAX INC CENTRAL INDEX KEY: 0001000694 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 222816046 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26770 FILM NUMBER: 1511599 BUSINESS ADDRESS: STREET 1: 8320 GUILFORD RD STREET 2: STE C CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 3078543900 MAIL ADDRESS: STREET 1: 8320 GUILFORD ROAD SUITE C STREET 2: 12111 PARKLAWN DR CITY: COLUMBIA STATE: MD ZIP: 21046 8-K 1 w44469e8-k.txt FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 8, 2001 NOVAVAX, INC. ------------- (Exact name of registrant as specified in its charter)
DELAWARE 0-26770 22-2816046 -------- ------- ---------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation or organization) File No.) Identification No.)
8320 GUILFORD ROAD, COLUMBIA, MD 21046 -------------------------------- ----- (Address of principal executive offices) (Zip code) (301) 854-3900 -------------- Registrant's telephone number, including area code NOT APPLICABLE -------------- (Former name or former address, if changed since last report) 2 NOVAVAX, INC. ITEMS TO BE INCLUDED IN THIS REPORT ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. Effective as of January 8, 2001, Novavax, Inc. ("Novavax") acquired the rights to AVC(TM) (sulfanilamide) vaginal anti-infective cream and suppositories, in the U.S. and Puerto Rico from King Pharmaceuticals, Inc. ("King") for $3.3 million. ITEM 5. OTHER EVENTS. Effective January 8, 2001, Novavax entered into a Copromotion Agreement with King, for Estrasorb(TM), Novavax's topical, transdermal estrogen replacement therapy, in the United States and Puerto Rico. Novavax granted to King an exclusive license to promote, market, distribute and sell Estrasorb(TM), worldwide, except in the United States, Canada, Italy, Netherlands, Greece, Switzerland and Spain. Also, effective January 8, 2001, as part of the Copromotion Agreement, King and Novavax will jointly market King's product, Nordette(R) (an oral contraceptive) in the United States and Puerto Rico. A copy of the press release relating to the events in Item 2. and Item 5. above, was issued on January 8, 2001 and is attached as Exhibit 99.1 and incorporated herein by this reference. ITEM 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. It is impractical at this time to provide this information. This information will be filed as soon as practical, but in no event not later than March 23, 2001. (b) Pro Forma Financial Information. It is impractical at this time to provide this information. This information will be filed as soon as practical, but in no event not later than March 23, 2001. (c) Exhibits. 3 10.1 Agreement for Purchase and Sale of Assets Relating to AVC(TM) Product Line dated as of January 8, 2001, by and between Novavax, Inc. and King Pharmaceuticals, Inc. 10.2 Copromotion Agreement dated as of January 8, 2001, between Novavax, Inc. and King Pharmaceuticals, Inc. 10.3 Exclusive License and Distribution Agreement dated as of January 8, 2001, between Novavax, Inc. and King Pharmaceuticals, Inc. 99.1 Press Release of Novavax, Inc. dated January 8, 2001.
4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NOVAVAX, INC. Date: January 19, 2001 By: /s/ Dennis W. Genge -------------------------------- Dennis W. Genge, Vice President And Chief Financial Officer/Treasurer EX-10.1 2 w44469ex10-1.txt AGREEMENT FOR PURCHASE AND SALE OF ASSETS 1 EXHIBIT 10.1 CONFIDENTIAL ================================================================================ AGREEMENT FOR PURCHASE AND SALE OF ASSETS RELATING TO AVC(TM) PRODUCT LINE BY AND BETWEEN NOVAVAX, INC. AND KING PHARMACEUTICALS, INC. ================================================================================ 2 TABLE OF CONTENTS ARTICLE 1 CONVEYANCE OF ASSETS; OTHER AGREEMENTS.............................................1 - ------------------------------------------------ 1.01 ASSETS TO BE CONVEYED..............................................................1 --------------------- 1.02 PURCHASE PRICE.....................................................................2 -------------- 1.03 PAYMENT............................................................................2 ------- 1.04 EXISTING INVENTORY OF PRODUCTS.....................................................2 ------------------------------ 1.05 CLOSING............................................................................2 ------- 1.06 DELIVERY OF DOCUMENTS..............................................................3 --------------------- 1.07 CONVEYANCE OF ASSETS AND INVENTORY.................................................3 ---------------------------------- 1.08 SCOPE OF NOVAVAX'S RIGHTS..........................................................3 ------------------------- 1.09 SUPPLY AGREEMENT...................................................................5 ---------------- 1.10 TAXES..............................................................................5 ----- 1.11 ASSUMED LIABILITIES................................................................5 ------------------- 1.12 ACCESS TO INFORMATION..............................................................6 --------------------- ARTICLE 2 ACCOUNTS RECEIVABLE AND RETURNED GOODS.............................................6 - ------------------------------------------------ 2.01 PRE-CLOSING ACCOUNTS RECEIVABLE....................................................6 ------------------------------- 2.02 POST-CLOSING ACCOUNTS RECEIVABLE...................................................6 -------------------------------- 2.03 RETURNED GOODS.....................................................................7 -------------- 2.04 CONTINGENT PAYMENT.................................................................7 ---- ------------------ ARTICLE 3 REGULATORY MATTERS.................................................................7 - ---------------------------- 3.01 FILINGS WITH FDA REGARDING TRANSFER OF NDAS........................................8 ------------------------------------------- 3.02 RESPONSIBILITY FOR THE PRODUCTS....................................................8 ------------------------------- 3.03 FDA ANNUAL REPORTS AND ADVERSE EVENT REPORT........................................9 ------------------------------------------- 3.04 REGULATORY AND MEDICAL AFFAIRS....................................................9 ------------------------------ 3.05 REBATES FOR AMOUNTS PAID UNDER GOVERNMENT PROGRAMS.................................9 -------------------------------------------------- 3.06 NON-TERRITORY NEW DRUG APPLICATIONS AND SALES......................................9 -------------------------------- ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................................10 - ---------------------------------------- 4.01 REPRESENTATIONS AND WARRANTIES OF KING............................................10 -------------------------------------- 4.02 REPRESENTATIONS AND WARRANTIES OF NOVAVAX.........................................13 ----------------------------------------- 4.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................................14 ------------------------------------------ 4.04 CERTAIN LIMITATIONS...............................................................14 ------------------- ARTICLE 5 INDEMNIFICATION...................................................................15 - ------------------------- 5.01 INDEMNIFICATION BY KING...........................................................15 ----------------------- 5.02 INDEMNIFICATION BY NOVAVAX........................................................16 -------------------------- 5.03 PAYMENTS..........................................................................16 -------- 5.04 CONDUCT OF LITIGATION.............................................................17 --------------------- ARTICLE 6 MISCELLANEOUS.....................................................................17 - ----------------------- 6.01 ENTIRE AGREEMENT..................................................................18 ---------------- 6.02 COUNTERPARTS......................................................................18 ------------ 6.03 BROKERAGE AND OTHER COMMISSIONS...................................................18 ------------------------------- 6.04 NOTICES...........................................................................18 ------- 6.05 ASSIGNMENT........................................................................19 ----------
3 6.06 GOVERNING LAW.....................................................................19 ------------- 6.07 HEADINGS..........................................................................19 -------- 6.08 EXPENSES..........................................................................20 -------- 6.09 SUCCESSORS AND ASSIGNS............................................................20 ---------------------- 6.10 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS.................................20 ------------------------------------------------- 6.11 NO IMPLIED WAIVER.................................................................20 ----------------- 6.12 FORCE MAJEURE.....................................................................20 ------------- 6.13 CONFIDENTIALITY...................................................................20 --------------- 6.14 RELATIONSHIP......................................................................20 ------------ 6.15 SEVERABILITY......................................................................21 ------------ 6.16 PRESS RELEASE.....................................................................21 ------------- 6.17 AFFILIATES........................................................................21 ---------- 6.18 WAIVER OF BULK SALES..............................................................21 -------------------- 6.19 EXHIBITS AND SCHEDULES............................................................21 ---------------------- 6.20 INTERPRETATION....................................................................21 --------------
SCHEDULES Schedule 1 List of Products Schedule 1.01(a) Tradenames Schedule 1.01(b) Description of Know-How Schedule 1.01(c) Regulatory Approvals and Filings Schedule 1.03 Wiring Instructions to King Pharmaceuticals, Inc. Schedule 1.04 Inventory and Expiration Dates Schedule 1.07 Liens, Claims, Charges, Encumbrances and Restrictions on the Assets and the Inventory Schedule 4.01(k) Form 483s, Warning Letters, Etc. Schedule 4.01(n) Suppliers EXHIBITS Exhibit A - Bill of Sale ii 4 AGREEMENT THIS AGREEMENT, is dated and entered into as of January 8, 2001 (this "Agreement"), between NOVAVAX, INC., a corporation organized and existing under the laws of the State of Delaware, having a principal place of business at 8320 Guilford Road, Columbia MD 21046 ("NOVAVAX") and KING PHARMACEUTICALS, INC., a corporation organized and existing under the laws of the State of Tennessee, having a principal place of business at 501 Fifth Street, Bristol, Tennessee 37620 ("KING"). W I T N E S S E T H: WHEREAS, KING desires to sell to NOVAVAX, and NOVAVAX desires to purchase from KING, certain assets relating to KING's pharmaceutical products in the Territory (as hereinafter defined) marketed under the tradename AVC(TM) listed on Schedule 1 attached hereto (collectively, the "Product" or "Products"), on the terms and subject to the conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and legal sufficiency of which are hereby mutually acknowledged, KING and NOVAVAX hereby covenant, contract, and agree as follows: ARTICLE 1 CONVEYANCE OF ASSETS; OTHER AGREEMENTS 1.01 ASSETS TO BE CONVEYED. On the Closing Date (as defined below), and subject to the terms and conditions of this Agreement (including, without limitation, the provisions of Section 1.08 hereof), KING will sell, assign, convey, transfer, and deliver to NOVAVAX, and NOVAVAX will purchase and accept from KING, the following: (a) All of KING's right, title, and interest in the United States of America, its territories and possessions (the "Territory"), in and to the tradename set forth on Schedule 1.01(a) attached hereto (the "Tradename"), together with the goodwill of the business symbolized by the Tradename in the Territory; (b) The know-how set forth on Schedule 1.01(b) attached hereto relating to the production, manufacturing, packaging, release, validation, and stability of the Products for use by NOVAVAX in the Territory (the "Know-How"); (c) Subject to the provisions of Section 3.06 hereof, all of KING's right, title, and interest in the Territory in and to the new drug application for the Product set forth on Schedule 1.01(c) attached hereto (the "NDA"), including supplements, records, and reports that are required to be kept under 21 C.F.R. Section 314.81 (or under any comparable regulation applicable to an abbreviated antibiotic drug application), whether issued or pending together with 5 correspondence to or from the United States Food and Drug Administration (the "FDA") which relates exclusively to the Product; and (d) The tradedress, if any, associated with the Products in the Territory, excluding any corporate or division name of KING or any of its Affiliates (as defined below), any logo of KING or its Affiliates, and any tradename (other than the Tradename) of KING or any of its Affiliates (the "Tradedress"). All of the assets described in Sections 1.01(a) - (d) are hereinafter sometimes referred to collectively as the "Assets." 1.02 PURCHASE PRICE. The purchase price for the Assets (the "Purchase Price") shall be Three Million Three Hundred Thirty-Two Thousand Dollars ($3,332,000). 1.03 PAYMENT. The Purchase Price shall be paid to KING by NOVAVAX by wire transfer of immediately available funds to the account specified in Schedule 1.03 attached hereto at the Closing (as defined below). 1.04 EXISTING INVENTORY OF PRODUCTS. On the Closing Date, KING will sell, assign, convey, and transfer to NOVAVAX, and NOVAVAX will purchase and accept from KING, all of KING's finished goods inventory of the Products with expiration dates more than nine (9) months from the Closing Date, as set forth on Schedule 1.04 attached hereto (the "Inventory"). The purchase price for the Inventory shall be equal to the book value of the Inventory as of the Closing Date, as reflected on KING's books and records, and shall be paid by NOVAVAX to KING ten (10) days after the Closing by wire transfer of immediately available funds to the account specified in Schedule 1.03. KING will complete shipping of the Inventory within ten (10) business days after the Closing Date. All Inventory will be shipped at NOVAVAX's expense to NOVAVAX's facilities in Maryland Heights, Missouri or such other locations as the parties may mutually agree via a carrier designated by NOVAVAX. KING shall bear the risk of loss to the Inventory until the Inventory has been delivered to the carrier designated by NOVAVAX. Thereafter NOVAVAX shall bear the risk of loss to the Inventory. KING will provide to NOVAVAX within ten (10) days of shipment of the Inventory, KING's standard certificate of analysis for each batch of Product shipped. 1.05 CLOSING. The closing of the transactions provided for in this Agreement (the "Closing") shall take place on January 8, 2001, or on such other date as KING and NOVAVAX may agree in writing (the "Closing Date"), at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102. 2 6 1.06 DELIVERY OF DOCUMENTS. (a) Subject to the terms and conditions of this Agreement, KING will deliver to NOVAVAX at the Closing (unless otherwise specified): (i) An executed irrevocable bill of sale in the form of Exhibit A hereto (the "Bill of Sale"); (ii) Copies of the materials comprising the Know-How described on Schedule 1.01(b), all in accordance with a time frame and in a manner reasonably acceptable to the parties, but in no event later than thirty (30) business days after the Closing Date; (iv) A complete copy of the NDA and other materials described in Section 1.01(c), all in accordance with a time frame and in a manner reasonably acceptable to the parties, but in no event later than thirty (30) business days after the Closing Date; (v) A copy of the information required by the FDA pursuant to 21 C.F.R. Section 314.72 to effect transfer of the NDA from KING to NOVAVAX; (vi) An executed copy of the Supply Agreement (as defined below); and (vii) A copy of the FDA Annual Reports and Adverse Event Report (both as defined below). (b) Subject to the terms and conditions of this Agreement, NOVAVAX will deliver to KING at the Closing: (i) The Purchase Price; and (ii) A copy of the information required by the FDA pursuant to 21 C.F.R. Section 314.72 to effect transfer of the NDA from KING to NOVAVAX. 1.07 CONVEYANCE OF ASSETS AND INVENTORY. KING agrees to transfer and convey the Assets and the Inventory to NOVAVAX free and clear of all liens, claims, charges, encumbrances, or restrictions, except as specifically described on Schedule 1.07 attached hereto. 1.08 SCOPE OF NOVAVAX'S RIGHTS. (a) NOVAVAX hereby acknowledges and agrees that, notwithstanding anything to the contrary set forth in this Agreement: (i) KING shall at all times be permitted to, and shall retain all know-how and other rights necessary to enable KING to, manufacture and market in and outside the Territory, and sell and distribute outside the Territory, the Products and any one or more pharmaceutical products that are equivalent or substantially equivalent to the Products; (ii) KING shall retain all know-how and rights necessary for KING to manufacture, market, sell and distribute all pharmaceutical products other than the Products; (iii) KING and its Affiliates 3 7 shall at all times be permitted to, and shall retain all know-how and other rights necessary to enable KING to, ship, deliver and distribute the Products to other parties within the Territory for purposes of having such other parties distribute the Products outside the Territory; (iv) neither NOVAVAX nor its Affiliates shall interfere with, or have the right to prohibit, the development, manufacture, sale, or distribution of the Products outside the Territory; (v) NOVAVAX will acquire no right, title, or interest whatsoever in any property or assets of KING or any of KING's Affiliates except as expressly set forth in this Agreement, including no right, title, or interest to any property or assets outside the Territory; (vi) neither NOVAVAX nor its Affiliates shall use or disclose the Know-How outside of the Territory; (vii) neither NOVAVAX nor its Affiliates shall manufacture, market, distribute, or sell any of the Products outside of the Territory or knowingly cause the Products to be manufactured, marketed, distributed, or sold outside the Territory; and (viii) neither NOVAVAX nor its Affiliates shall market, distribute or sell any of the Products inside the Territory to any person or entity which it knows or has any reason to suspect will market, sell or distribute the Product outside the Territory. (b) NOVAVAX acknowledges and agrees that KING and its Affiliates shall be entitled to use the Tradename and the Know-How after Closing to the extent necessary to fulfill KING's obligations hereunder, under the Supply Agreement, under applicable laws or regulations and in connection with the exercise of the rights reserved by KING and its Affiliates described in Section 1.08(a). (c) KING acknowledges and agrees that: (i) for a period of five (5) years from the Closing Date, except as provided in the Supply Agreement and except in connection with the exercise of the rights reserved by KING and its Affiliates described in Section 1.08(a), KING shall not, and shall not permit any of its Affiliates to, sell, produce, manufacture, market, or distribute in the Territory any identical product ("Identical Products") or any Products; (ii) other than for purposes of sales of Products or Identical Products outside the Territory neither KING nor its Affiliates shall knowingly cause the Products or any Identical Products to be manufactured, marketed, distributed, or sold inside the Territory to any person or entity other than NOVAVAX or its Affiliates; and (iii) other than for purposes of sales of Products or Identical Products outside the Territory, KING agrees that neither KING nor its Affiliates shall use or disclose the Know-How inside the Territory. This Section 1.08(c) shall not apply to any products produced, sold, manufactured, marketed, or distributed by any business (or any portion thereof), person, or group of persons, which is acquired by, or which acquires, or which forms a merger with KING or any of its Affiliates (whether through the formation of a new holding company or otherwise), in a single transaction or a series of related transactions provided that such business, person or group of persons sold, manufactured, marketed, or distributed such products prior to such merger or acquisition. (d) Nothing in this Section 1.08 shall prohibit (i) the provision by KING or any of its Affiliates of assistance to the purchaser of any manufacturing facility previously owned by KING or any of its Affiliates that is of the type of assistance that is customarily provided by sellers of manufacturing facilities to purchasers of such facilities and that relates solely to manufacturing; or (ii) the manufacture by KING or any of its Affiliates of any Identical Products in the Territory for sale or distribution outside the Territory. 4 8 (e) The parties acknowledge that the Inventory purchased under this Agreement and the Products to be supplied under the Supply Agreement may contain packaging and labeling with the names, logos, and trademarks of KING and its Affiliates (the "KING Packaging Materials"). NOVAVAX may distribute such Inventory and Products with the KING Packaging Materials; however, NOVAVAX shall not, and shall have no right to, use such names, logos, or tradenames for any other purpose and NOVAVAX shall acquire no right, title, or interest in or to such names, logos, and tradenames. (f) Notwithstanding Section 1.08(e) above, (i) NOVAVAX shall use commercially reasonable efforts to make all necessary arrangements as soon as possible so that NOVAVAX will ship all Products (other than the Inventory) without the use of any KING Packaging Materials, including obtaining all necessary packaging and labeling materials to do so and related regulatory approvals and, in any event, by March 31, 2001, NOVAVAX shall distribute all such Products without the use of any KING Packaging Materials, (ii) if any changes of packaging and labeling described in this subsection (f) render obsolete or unusable any packaging or labeling materials or components acquired by KING for the Products, then NOVAVAX shall purchase from KING at KING's Acquisition Cost (as defined in the Supply Agreement) all such packaging and labeling materials or components rendered obsolete or unusable, and (iii) NOVAVAX will purchase, at its expense, all tooling and/or equipment necessary to package and label the Products without KING Packaging Materials as contemplated by this subsection (f), except the tools, dies, molds, and the like used exclusively in the manufacture of the Products, if any, referenced in Section 1.11 of this Agreement. 1.09 SUPPLY AGREEMENT. Contemporaneously with the execution of this Agreement, KING and NOVAVAX are entering into a supply agreement (the "Supply Agreement") under which KING agrees to supply, and NOVAVAX agrees to purchase, the AVC(TM) Cream Product referenced on Schedule 1 at a purchase price equal to 110% of KING's Cost of Product (as defined in the Supply Agreement), and on the additional terms and conditions more specifically described therein, and which provides for certain other matters. The Supply Agreement shall not govern the AVC(TM) Suppositories referenced on Schedule 1, which may be manufactured and supplied for NOVAVAX by R.P. Scherer or another third party. 1.10 TAXES. NOVAVAX shall be responsible for and shall promptly pay all federal, state, and local transfer, sales, and other taxes, if any, levied or imposed as a result of the transactions contemplated by this Agreement, excluding any tax payable on any income or gain of KING. 1.11 ASSUMED LIABILITIES. NOVAVAX shall not assume or become liable for any obligation or liability of KING pertaining to the Assets or the Products, of any nature whatsoever, fixed or contingent, that arose prior to the Closing Date, including without limitation any undisclosed liabilities, any obligations pursuant to product warranties or product liabilities arising from Products manufactured or 5 9 shipped prior to the Closing, and any tax liabilities arising from the conduct of business of KING prior to the Closing or imposed upon KING as a result of the transfer of Assets hereunder. 1.12 ACCESS TO INFORMATION. For a period of four (4) years after the Closing, KING agrees to cooperate with NOVAVAX and to grant to NOVAVAX and its employees, attorneys, accountants, officers, representatives, and agents, during normal business hours and upon ten (10) days' advance notice, reasonable access to KING's management personnel and to the records relating to the Products (including, without limitation, the NDA) and to permit copying at NOVAVAX's expense of documents relating to the Assets for the purposes of (i) any financial reporting or tax matters (including, without limitation, any financial and tax audits, tax contests, tax examination, preparation of any NOVAVAX tax returns or financial records) relating to the Products; (ii) any claims or litigation involving NOVAVAX and the Assets relating to the Products; (iii) any investigation of NOVAVAX being conducted by any federal, state, or local governmental authority relating to the Products; (iv) any matter relating to any indemnification or representation or warranty or any other term of this Agreement; or (v) any similar or related matter. KING shall maintain all such records and documents in the United States and shall not destroy or dispose of any such records and documents without the prior written consent of NOVAVAX. NOVAVAX shall use its reasonable efforts to ensure that its access to and requests for records and documents pursuant to this Section are conducted so as not to interfere with the normal and ordinary operation of KING's business. NOVAVAX acknowledges that the records and documents made available to NOVAVAX by KING shall be governed by the Disclosure Agreement (as defined in Section 6.13 hereto). ARTICLE 2 ACCOUNTS RECEIVABLE AND RETURNED GOODS 2.01 PRE-CLOSING ACCOUNTS RECEIVABLE. KING and NOVAVAX agree that any accounts receivable or invoices arising out of sales of the Products by or on behalf of KING on or prior to 11:59 p.m. (E.S.T.) on the Closing Date shall inure to the benefit of KING. 2.02 POST-CLOSING ACCOUNTS RECEIVABLE. NOVAVAX and KING agree that any accounts receivable or invoices arising out of sales of the Products by or on behalf of NOVAVAX after 11:59 p.m. (E.S.T.) on the Closing Date shall inure to the benefit of NOVAVAX. Without derogating from the foregoing, KING agrees that it shall continue to take orders for the Products for ninety (90) days following the Closing Date. Such orders shall be reported by KING to NOVAVAX promptly after receipt and in no event more than two (2) business days after such orders are received. KING and NOVAVAX agree to determine promptly after the Closing a mutually agreeable reporting procedure to communicate the information required by this Section 2.02. 6 10 2.03 RETURNED GOODS. Except as otherwise expressly set forth below and subject to NOVAVAX's timely compliance with its obligations set forth in this Section 2.03, KING and NOVAVAX agree that during the six (6) month period immediately following the Closing Date, KING shall be responsible for handling returns of all Products that were sold by KING prior to the Closing Date and that are returned by customers for credit for other KING products after the Closing Date. KING shall handle such returns during such period in accordance with its then applicable returned goods policy. NOVAVAX agrees to provide KING with any information reasonably requested by KING from time to time regarding NOVAVAX's selling prices for the Products in order to assist KING in its determination of the reimbursement prices for returned Products. Such information shall be provided by NOVAVAX to KING promptly, and in any event within ten (10) days after KING's written request therefor. In the event that during such six (6) month period any returns are delivered to NOVAVAX, such returns shall be shipped by NOVAVAX to KING and KING shall reimburse NOVAVAX for the shipping costs incurred. 2.04 CONTINGENT PAYMENT. Two Million Dollars ($2,000,000) of the Purchase Price shall be received by KING as contingent payment (the "Contingent Payment") pending confirmation of aggregate, consolidated Net Sales (as defined below) of the Products in each of the calendar years 2001 through 2004 totaling not less than Eight Hundred Fifty Thousand Dollars ($850,000) per calendar year (for each of the relevant calendar years, the "Sales Target"), and such Contingent Payment shall be subject to pro rata reduction for Net Sales of Products below the Sales Target for each of the relevant calendar years. Notwithstanding the foregoing, the full Purchase Price, including the Contingent Payment, shall be retained by KING with no refund of the Contingent Payment if NOVAVAX fails to use commercially reasonable efforts to promote and sell the Products. If the immediately preceding sentence does not apply, then KING shall pay to NOVAVAX, within thirty (30) days after receiving from NOVAVAX's chief financial officer a certificate as to the aforesaid Net Sales during the applicable calendar years, a payment in the amount of twenty-five percent (25%) of the Contingent Payment if the Sales Target for a particular calendar year is not achieved, or such portion of such twenty-five percent (25%) of the Contingent Payment as shall reflect a pro rata reduction for consolidated Net Sales of Products during each of the relevant calendar years of less than the Sales Target for such calendar year. For purposes of this Agreement, Net Sales shall mean all gross revenue actually received by a party from sales of the Products, less (a) credits for refunds and returns, including returns for stock balancing purposes, (b) sales, use and similar taxes billed by such party to its customers and required to be paid to the appropriate taxing authorities by such party; (c) discounts, allowances and commissions paid or allowed by a party on sales of the Products, and (d) amounts paid by such party and billed through to such party's customers for insurance, shipping and similar charges. ARTICLE 3 REGULATORY MATTERS 7 11 3.01 FILINGS WITH FDA REGARDING TRANSFER OF NDAS. At the Closing, the parties shall file with the FDA the information required pursuant to 21 C.F.R. Section 314.72, or any successor regulation thereto, regarding the transfer of the NDAs from KING to NOVAVAX. KING shall file the information required of a former owner, and NOVAVAX shall file the information required of a new owner. The parties also agree to use their reasonable best efforts to take any and all other actions required by the FDA, or other necessary governmental agencies, if any, to effect the transfer of the NDA from KING to NOVAVAX. KING may retain an archival copy of the NDA, including supplements and records that are required to be kept under 21 C.F.R. Section 314.81, and KING shall treat such archived copies as Confidential Information (as defined in the Supply Agreement) of NOVAVAX and disclosure of such information shall be governed by the Supply Agreement. 3.02 RESPONSIBILITY FOR THE PRODUCTS. (a) After the Closing and in the Territory, NOVAVAX shall assume all regulatory responsibilities permitted by applicable laws and regulations to be assumed by NOVAVAX, reporting and otherwise, in connection with the Products and the NDA including, but not limited to, responsibility for reporting any adverse drug experiences in connection with the Products, and responsibility for compliance with all laws and regulations, including the Prescription Drug Marketing Act of 1987, as the same may be amended from time to time. (b) NOVAVAX and its Affiliates agree promptly to submit to KING all adverse drug experience information or customer complaints brought to the attention of NOVAVAX or its Affiliates in respect of the Products, as well as any material events and matters concerning or affecting the safety or efficacy of the Products. KING and its Affiliates agree promptly to submit to NOVAVAX all adverse drug experience information or customer complaints brought to the attention of KING or its Affiliates in respect of the Products, as well as any material events and matters concerning or affecting the safety or efficacy of the Products. NOVAVAX and KING agree to determine promptly after Closing a mutually agreeable reporting procedure to communicate the information required by this Section 3.02(b). (c) After the Closing, NOVAVAX shall assume all responsibility for any and all FDA fee obligations for holders or owners of approved New Drug Applications and approved, marketed prescription drug products relating to the Products, including, but not limited to, those defined under the Prescription Drug User Fee Act of 1992, as the same may be amended from time to time. (d) Promptly after the Closing, NOVAVAX shall submit a "Changes Being Effected in Thirty Days" filing ("CBE 30") with the FDA to request FDA permission for KING to manufacture and distribute the Products at its facility in Bristol, Tennessee, or at the facility of one of its Affiliates. KING shall provide NOVAVAX with all information necessary to submit such CBE 30. 8 12 (e) Promptly after the Closing, NOVAVAX shall take all actions necessary or required under applicable laws, rules, and regulations, to reflect that the Assets are owned by NOVAVAX and that NOVAVAX has responsibility therefor. (f) After the Closing, KING shall direct all complaints or inquiries concerning the Products in the Territory to NOVAVAX to the attention of Medical Affairs Department, at facsimile number (301) 854-3902. 3.03 FDA ANNUAL REPORTS AND ADVERSE EVENT REPORT. At the Closing, KING shall provide NOVAVAX with (i) a copy of the annual reports provided by KING to the FDA for the calendar years 1999 and 2000 (the "FDA Annual Reports") and (ii) a report listing in reasonable detail any and all adverse drug experiences and/or customer complaints brought to the attention of KING or its Affiliates in respect of the Products during the twelve (12) month period prior to the Closing Date, as well as any material events and matters concerning or affecting the safety or efficacy of the Products known to KING or its Affiliates prior to the Closing Date (the "Adverse Events Report"). 3.04 REGULATORY AND MEDICAL AFFAIRS. Upon the reasonable request of NOVAVAX, KING agrees to provide NOVAVAX with services relating to medical and regulatory affairs concerning the Products, at NOVAVAX's expense, for six (6) months following the Closing Date, the cost and nature of which shall be mutually agreed upon by the parties. 3.05 REBATES FOR AMOUNTS PAID UNDER GOVERNMENT PROGRAMS. NOVAVAX shall reimburse KING for all rebates KING is obligated to pay pursuant to any government rebate program for amounts charged to KING's NDC codes for the Products with respect to sales of the Products from one hundred twenty (120) days after the Closing Date. All payments due under this Section 3.05 shall be made promptly to KING upon submission to NOVAVAX of invoices that describe the requested payments in reasonable detail. NOVAVAX shall obtain new NDC codes for the Products as soon as practicable after the Closing Date. In the event NOVAVAX disputes an amount owed under a government rebate program, KING shall provide to NOVAVAX copies of any documents and records evidencing original rebate claims and any resubmissions of such claims and data relating to unit rebate calculations in order to enable NOVAVAX to resolve such disputed amount. 3.06 NON-TERRITORY NEW DRUG APPLICATIONS AND SALES. After the Closing, NOVAVAX agrees to cooperate with KING and permit KING to use the NDA to the extent necessary, useful or helpful in support of (a) any new drug applications or similar regulatory filings made by KING and/or its Affiliates outside the Territory and (ii) and sales by KING and its Affiliates of the Products outside the Territory. ARTICLE 4 9 13 REPRESENTATIONS AND WARRANTIES 4.01 REPRESENTATIONS AND WARRANTIES OF KING. KING makes the following representations and warranties. The phrase "to the knowledge of KING" or any substantially equivalent phrase, as used in this Article 4, shall mean to the actual knowledge of officers and directors of KING after reasonable inquiry. (a) ORGANIZATION AND STANDING. KING is a corporation duly organized, validly existing, and in good standing under the laws of the State of Tennessee. (b) POWER AND AUTHORITY. KING has all requisite corporate power and authority to execute, deliver, and perform this Agreement and the other agreements and instruments to be executed and delivered by it pursuant hereto and to consummate the transactions contemplated herein and therein. The execution, delivery, and performance of this Agreement and of the other agreements and instruments to be executed and delivered by KING pursuant hereto do not, and the consummation of the transactions contemplated hereby and thereby and compliance with the terms, conditions and provisions hereof and thereof will not, violate or conflict with any provisions of KING's Articles of Incorporation, Bylaws, any law or regulation applicable to KING, or any agreement, mortgage, lease, instrument, order, judgment, or decree to which KING is a party or by which KING is bound or constitute a default thereunder or result in the creation or acceleration of any lien, charge, security interest, or other encumbrance of any nature whatsoever on the Assets. (c) CORPORATE ACTION; BINDING EFFECT. KING has duly and properly taken all action required by law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize the execution, delivery, and performance by it of this Agreement, the Bill of Sale and the Supply Agreement (collectively, the Bill of Sale and the Supply Agreement are referred to herein as the "Collateral Agreements"), and the other instruments to be executed and delivered by it pursuant hereto and the consummation of transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by KING and constitutes, and the Collateral Agreements and the other instruments contemplated hereby and thereby when duly executed and delivered by KING will constitute, legal, valid, and binding obligations of KING enforceable against it in accordance with their respective terms, except as enforcement may be affected by bankruptcy, insolvency, or other similar laws relating to or affecting generally the enforcement of creditors' rights and by general principles of equity. (d) CONSENTS. No consent or approval of, or filing with or notice to, any federal, state, or local governmental or regulatory authority, agency, or department or any other person not a party to this Agreement is required or necessary to be obtained by KING or on its behalf in connection with the execution, delivery, and performance of this Agreement or the Collateral Agreements or to consummate the transactions contemplated hereby or thereby, except as contemplated by Section 3.01 hereof. No consent of any person who is a party to a contract or other agreement with respect to the manufacturing and sale of the Products is required to be obtained on the part of KING to consummate the transactions contemplated by this Agreement or 10 14 the Collateral Agreements and to continue the manufacture and sale of the Products as previously conducted by KING. (e) OWNERSHIP OF ASSETS. KING is the owner of, and as such has full right, title and interest in and to, the Assets described in Sections 1.01(a), 1.01(c), and 1.01(d) and, to KING's knowledge, the Assets described in Section 1.01(b), free and clear of all liens, claims, charges, or encumbrances, except for liens for taxes not yet due and payable and except as described on Schedule 1.07 attached hereto. (f) LITIGATION OR DISPUTES. Except as disclosed in Schedule 4.01(f) attached hereto, there is no claim, outstanding commitment to any governmental regulatory agency, action, suit, proceeding, investigation, or arbitration pending or, to KING's knowledge, threatened against KING relating to the Assets and, to KING's knowledge, no event has occurred nor does any condition exist on the basis of which any such proceeding would reasonably be expected to be instituted with any substantial chance of recovery, and KING is not in violation of or in default with respect to any applicable law, rule, regulation, judgment, order, writ, injunction, award, or decree of any arbitrator, court, or administrative body, the result of any of which, either individually or cumulatively, would have a materially adverse effect on the Assets in the Territory or KING's compliance with and performance under the terms of this Agreement or the Collateral Agreements. (g) TRADENAMES; INTELLECTUAL PROPERTY. Schedule 1.01(a) attached hereto is a true and correct list of all tradenames owned by KING and used by KING in the manufacture, marketing, and sale of the Product in the Territory. There are no registered trademarks used or held by KING for use in connection with or otherwise necessary for the conduct of KING's business as now conducted for the Products in the Territory. KING has good right to use the Know-How, Tradenames and Tradedress in the Territory without infringing on the rights of any third party. KING owns no patents necessary for the conduct of KING's business as now conducted for the Products in the Territory. To KING's knowledge, KING is not infringing on or violating in any material respect any patent, trademark, service mark, tradename or copyright of any third party with respect to the Assets, and KING has not received any notice of any claim that any of the Assets infringe on any property rights of any other party. There is no claim, action, suit, or proceeding, pending or, to KING's knowledge, threatened alleging that the use by KING or its Affiliates of the Tradename, Tradedress or the Know-How infringes any patents or other intellectual property rights of third parties. KING has not executed or granted to any Affiliate or any third party in the Territory any license, sublicense, or contract covering the Know-How, the Tradedress or the Tradenames. (h) COMPLIANCE WITH LAW AND NECESSARY PERMITS. KING has conducted its operations in connection with the manufacture and sale of the Products in material compliance with all applicable federal, state, and local laws and regulations, including FDA regulations, and KING has not received written notice of a violation or alleged violation of any such law or regulation. KING possesses all material approvals, consents, licenses, and permits ("Necessary Permits") required for the conduct of its business as now conducted for the Products or as will be necessary to perform its obligations under the Supply Agreement. All such Necessary Permits 11 15 possessed by KING are in full force and effect and (i) to KING's knowledge no suspension or cancellation of any Necessary Permit is threatened (ii) there is no reason to believe that on expiration any Necessary Permit will not be renewed, and (iii) none of the Necessary Permits will be materially adversely affected by the consummation of the transactions contemplated by this Agreement and the Collateral Agreements. (i) WARRANTY AND DISCLAIMER OF WARRANTIES. KING warrants that the Inventory was manufactured in accordance with the applicable specifications for the Products and in accordance with current good manufacturing practices in effect at the time of manufacture. KING further warrants that the Inventory, when delivered to NOVAVAX, will not be (i) adulterated or misbranded by KING within the meaning of the United States Federal Food, Drug and Cosmetic Act, as amended (the "FD&C Act") or (ii) an article that may not be introduced into interstate commerce under the provisions of Sections 404 or 505 of the FD&C Act. Set forth on Schedule 1.04 attached hereto is a list accurate in all material respects of the expiration dates of the Inventory. WITH RESPECT TO THE INVENTORY, KING MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AND SPECIFICALLY MAKES NO WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE. (j) RECALLS OR WITHDRAWALS. During the period commencing on January 1, 2000, and ending on the date hereof, there have been no: (i) Products which have been recalled or withdrawn by KING or its Affiliates in the Territory (whether voluntarily or otherwise) or (ii) proceedings in the Territory brought against KING or its Affiliates (whether such proceedings have since been completed or remain pending) seeking the recall, withdrawal, or seizure of any of the Products or seeking to enjoin KING or any of its Affiliates from distributing such Products. (k) FACILITIES AND MANUFACTURING. Except as set forth on Schedule 4.01(k) attached hereto, and only to the extent it could have a material adverse effect on the Assets or KING's performance hereunder or under any of the Collateral Agreements, during the period commencing on January 1, 2000, and ending on the date hereof, with respect only to the Products, neither KING nor its Affiliates have received or been subject to: (i) any FDA Form 483's relative to the Products; (ii) any FDA Notices of Adverse Findings relative to the Products; or (iii) warning letters or other correspondence from the FDA or any other governmental officials or agencies concerning the Products in which the FDA or other such governmental officials or agencies asserted that or questioned whether the operations of KING were not in compliance with applicable law, regulations, rules, or guidelines. (l) CONDUCT OF BUSINESS. Since January 1, 2000, KING has conducted its business relating to the Products in the ordinary course of its business in all material respects. (m) ABSENCE OF UNDISCLOSED LIABILITIES. To KING's knowledge, KING has no liabilities with respect to the Products or the Assets of any nature, whether accrued, absolute, contingent or otherwise, asserted or unasserted, known or unknown, that will become the obligation of NOVAVAX as a consequence of the transactions contemplated by this Agreement 12 16 or the Collateral Agreements, except for liabilities contemplated by the terms of this Agreement and the Collateral Agreements. (n) SUPPLIERS. Schedule 4.01(n) lists all suppliers to which KING made payments during calendar year 2000, or expects to make payments in relation to the Products during calendar year 2001, in excess of $5,000. KING has no information which might reasonably indicate that any of the suppliers listed on Schedule 4.01(n) intend to cease selling to or dealing with KING or the manufacturer of the Products, nor has any information been brought to KING's attention which might reasonably lead it to believe any such supplier intends to alter in any material respect the amount of such sales or the extent of dealings in relation to the Products or would alter in any material respect such sales or dealings in the event of the consummation of the transactions contemplated by this Agreement or the Collateral Agreements; provided, however, that NOVAVAX acknowledges and agrees that there currently exists no agreement for the manufacture or packaging of the AVC(TM) Suppositories referenced on Schedule 1 and that there can be no assurances regarding the success or timeliness of the filing of the CBE 30 or the FDA's response thereto, and that any inquiry or request by the FDA related to the CBE 30 for the AVC(TM) Cream could cause a delay or interruption of supply of the Products. Except as provided in the immediately preceding sentence, KING has no information which might reasonably indicate, nor has any information been brought to KING's attention which might reasonably lead it to believe that any supplier will not be able to fulfill outstanding or currently anticipated purchase orders placed by KING. 4.02 REPRESENTATIONS AND WARRANTIES OF NOVAVAX. NOVAVAX represents and warrants to KING as follows: (a) ORGANIZATION AND STANDING. NOVAVAX is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) POWER AND AUTHORITY. NOVAVAX has all requisite corporate power and authority to execute, deliver, and perform this Agreement, and the other agreements and instruments to be executed and delivered by it pursuant hereto and to consummate the transactions contemplated herein and therein. The execution, delivery, and performance of this Agreement by NOVAVAX do not, and the consummation of the transactions contemplated hereby will not, violate any provision of NOVAVAX's Certificate of Incorporation, Bylaws, any law or regulation applicable to NOVAVAX, or any agreement, mortgage, lease, instrument, order, judgment, or decree to which NOVAVAX is a party or by which NOVAVAX is bound. (c) CORPORATE ACTION; BINDING EFFECT. NOVAVAX has duly and properly taken all action required by law, its Certificate of Incorporation, its Bylaws, or otherwise, to authorize the execution, delivery, and performance by it of this Agreement and the other instruments to be executed by it pursuant hereto and the consummation of the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by NOVAVAX and constitutes, and the other instruments contemplated hereby when duly executed and delivered by NOVAVAX will constitute, legal, valid, and binding obligations of NOVAVAX enforceable 13 17 against it in accordance with their respective terms, except as enforcement may be affected by bankruptcy, insolvency, or other similar laws and by general principles of equity. (d) ACCESS TO INFORMATION. For a period of four (4) years after the Closing, NOVAVAX agrees to cooperate with KING and to grant to KING and its employees, attorneys, accountants, officers, representatives, and agents, during normal business hours and upon ten (10) days' advance notice, reasonable access to NOVAVAX's management personnel and to the records relating to the Products during the period the Assets were owned by KING (including, without limitation, the NDA) and to permit copying at KING's expense of documents relating to the Assets during the period the Assets were owned by KING for the purposes of (i) any financial reporting or tax matters (including, without limitation, any financial and tax audits, tax contests, tax examination, preparation of any KING tax returns or financial records) relating to the Product; (ii) any claims or litigation involving KING and the Assets relating to the Product; (iii) any investigation of KING being conducted by any federal, state, or local governmental authority relating to the Product; (iv) any matter relating to any indemnification or representation or warranty or any other term of this Agreement; or (v) any similar or related matter. NOVAVAX shall maintain all such records and documents in the United States and shall not destroy or dispose of any such records and documents without the prior written consent of KING. KING shall use its reasonable efforts to ensure that its access to and requests for records and documents pursuant to this Section are conducted so as not to interfere with the normal and ordinary operation of NOVAVAX's business. KING acknowledges that the records and documents made available to KING by NOVAVAX shall be governed by the Confidentiality Agreement (as defined in Section 6.13 hereto). Any employees, attorneys, accountants, officers, representatives, or agents of KING which access such information on KING's behalf pursuant to this Section 4.02(d) shall be bound by obligations of confidentiality not to disclose such information substantially similar in form and substance to the confidentiality obligations of KING set forth in the Confidentiality Agreement. (e) CONSENTS. No consent or approval of, or filing with or notice to, any federal, state, or local governmental or regulatory authority, agency, or department or any other person not a party to this Agreement is required or necessary to be obtained by NOVAVAX or on its behalf in connection with the execution, delivery, and performance of this Agreement or to consummate the transactions contemplated hereby, except as contemplated by Section 3.01 hereof. 4.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations, warranties, and indemnities of the parties hereto contained in this Article 4 and in Article 5 shall survive the Closing Date for a period equal to one (1) year, except that Section 4.01(e) (Ownership of Assets) and indemnification with respect thereto shall survive the Closing Date for a period equal to two (2) years. 4.04 CERTAIN LIMITATIONS. (a) KING does not make any representation or warranty as to the business prospects of the Products. NOVAVAX has conducted its own thorough due diligence review and analysis, 14 18 as it deemed necessary and appropriate of the Assets and of the business prospects of the Products. NOVAVAX is not relying on any representations or warranties from KING as to the business prospects of the Products or any other representations or warranties, except as expressly set forth herein. (b) NOVAVAX acknowledges and agrees that KING does not manufacture, package or test the Products and is dependent upon third parties for manufacturing, packaging and testing of the Products. NOVAVAX acknowledges and agrees that KING does not guarantee or warrant that any such third party will continue to manufacture, package or test the Products and/or supply the Products to KING. NOVAVAX acknowledges and agrees that there is no guarantee of a continued or uninterrupted supply of Products. NOVAVAX acknowledges and agrees that it is purchasing the Products subject to the foregoing limitations. KING and NOVAVAX agree to cooperate with each other in connection with the negotiation of any manufacturing, packaging, testing or supply arrangements for the Products. (c) NOVAVAX acknowledges and agrees that KING neither manufactures, packages or tests nor has a contract with a third party to have manufactured, packaged or tested the AVC(TM) Suppositories referenced in Schedule 1. NOVAVAX acknowledges and agrees that NOVAVAX shall be solely responsible for contracting with R.P. Scherer or other third parties to obtain the manufacturing, packaging and testing of such AVC(TM) Suppositories. ARTICLE 5 INDEMNIFICATION 5.01 INDEMNIFICATION BY KING. (a) KING shall indemnify, defend, and hold harmless NOVAVAX from and against and compensate NOVAVAX for any and all demands, claims, actions, causes of action, assessments, judgments, deficiencies, damage, loss, liability, and expense of any nature whatsoever (including, without limitation, reasonable attorneys' fees and expenses) (collectively, "Indemnified Amounts") arising out of, in whole or in part, (i) any misrepresentation or breach of representation, warranty, covenant, or agreement made or to be performed by KING or any non-fulfillment of any obligation of KING pursuant to this Agreement or the Collateral Agreements; (ii) any claim (including, without limitation, a claim based on contract, warranty or tort) arising out of the design, assembly, processing, manufacture, or sale of any Product sold and/or manufactured on or prior to the Closing Date or any services rendered by or on behalf of KING in respect of the Products on or prior to the Closing Date; (iii) any federal, state, local or other tax liability, or any assessment in the nature of any tax, including interest and penalties thereon, with respect to any fiscal period of KING or portion thereof on or prior to the Closing Date or arising out of the sale of the Products or the Assets on or prior to Closing; (iv) the litigation, if any, disclosed on Schedule 4.01(f) hereto and all related proceedings; and (v) any liability not specifically and expressly assumed by NOVAVAX, whether or not known or asserted at or prior to Closing, relating to or arising from the ownership, control, manufacture or sale of the Products or any of the Assets or any other state of facts which existed at or prior to Closing. 15 19 (b) In the event of indemnification by KING pursuant to Section 5.01(a)(i), KING shall not have any obligation to indemnify NOVAVAX from and against any Indemnified Amounts: (i) until NOVAVAX has incurred Indemnified Amounts in excess of a One Hundred Thousand Dollar ($100,000) threshold (after which point KING will be obligated to indemnify NOVAVAX from and against all Indemnified Amounts) or thereafter, and (ii) to the extent the Indemnified Amounts NOVAVAX has incurred exceed a One Million Dollar ($1,000,000) aggregate ceiling (after which point KING will have no obligation to indemnify NOVAVAX from and against further such Indemnified Amounts). (c) KING shall not be liable under this Section 5.01 for any settlement effected without its consent of any claim, litigation, or proceeding in respect of which indemnity may be sought hereunder, which consent shall not unreasonably be withheld. 5.02 INDEMNIFICATION BY NOVAVAX. (a) NOVAVAX shall indemnify, defend, and hold harmless KING from and against any and all Indemnified Amounts arising out of, in whole or in part, (i) any misrepresentation or breach of representation, warranty, covenant, or agreement made or to be performed by NOVAVAX or any non-fulfillment of any obligation of NOVAVAX pursuant to this Agreement or the Collateral Agreements; (ii) any claim (including, without limitation, a claim based on contract, warranty or tort) arising out of the design, assembly, processing, manufacture, or sale of any Product sold and/or manufactured after the Closing Date or any services rendered by or on behalf of NOVAVAX in respect of the Products after the Closing Date; (iii) any federal, state, local or other tax liability, or any assessment in the nature of any tax, including interest and penalties thereon, with respect to any fiscal period of NOVAVAX or portion thereof after the Closing Date or arising out of the sale of the Products or the Assets after the Closing Date; and (iv) any liability not specifically and expressly assumed by KING, whether or not known or asserted after the Closing Date, relating to or arising from the ownership, control, manufacture or sale of the Products or any of the Assets or any other state of facts which existed after the Closing Date; provided, however, that NOVAVAX shall not have any obligation to indemnify KING from and against any Indemnified Amounts: (i) until KING has incurred Indemnified Amounts in excess of a One Hundred Thousand Dollar ($100,000) threshold (after which point NOVAVAX will be obligated to indemnify KING from and against all Indemnified Amounts) or thereafter, and (ii) to the extent the Indemnified Amounts KING has incurred exceed a One Million Dollar ($1,000,000) aggregate ceiling (after which point NOVAVAX will have no obligation to indemnify KING from and against further such Indemnified Amounts). (b) NOVAVAX shall not be liable under this Section 5.02 for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder, which consent shall not unreasonably be withheld. 5.03 PAYMENTS. All amounts payable under this Article 5 shall be paid promptly after receipt by the indemnifying party of written notice from the indemnified party stating that such Indemnified Amounts have been incurred, the amount thereof and of the related indemnity payment and 16 20 substantiation of such amount and such indemnity payment; provided, however, any disputed amounts shall be due and payable promptly after such amounts are finally determined to be owing by the indemnifying party to the indemnified party. 5.04 CONDUCT OF LITIGATION. Each party indemnified under the provisions of this Agreement, upon receipt of written notice of any claim or the service of a summons or other initial legal process upon it in any action instituted against it, in respect of the agreements contained in this Agreement, shall promptly give written notice of such claim, or the commencement of such action, or threat thereof, to the party from whom indemnity shall be sought hereunder; provided, however, that the failure to provide such notice within a reasonable period of time shall not relieve the indemnifying party of any of its obligations hereunder except to the extent the indemnifying party is prejudiced by such failure. Each indemnifying party shall be entitled at its own expense to participate in the defense of such claim or action, or, if it shall elect, to assume such defense, in which event such defense shall be conducted by counsel chosen by such indemnifying party, which counsel may be any counsel reasonably satisfactory to the indemnified party against whom such claim is asserted or who shall be the defendant in such action, and such indemnified party shall bear all fees and expenses of any additional counsel retained by it or them. The indemnifying party shall provide the indemnified person with such additional information and opportunity for consultation as may reasonably be requested by it. The indemnified person shall render all assistance as the indemnifying party shall reasonably request in the defense of any such action. Notwithstanding the foregoing, if the named parties in such action (including impleaded parties) include the indemnified and the indemnifying parties, and the indemnified party shall have been advised by counsel that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of such action or that there are legal defenses available to such indemnified party different from or in addition to those available to the indemnifying party, then counsel for the indemnified party shall be entitled, if the indemnified party so elects, to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party, at the expense of the indemnifying party, if it is determined by agreement of the indemnifying party and the indemnified party or by a court of competent jurisdiction that the indemnified party is entitled to indemnification hereunder for the Indemnified Amounts giving rise to such action. If the indemnifying party shall elect not to assume the defense of such claim or action, such indemnifying party shall reimburse such indemnified party for the reasonable fees and expenses of any counsel retained by it, and shall be bound by the results obtained by the indemnified party in respect of such claim or action if it is determined by agreement of the indemnifying party and the indemnified party or by a court of competent jurisdiction that the indemnified party is entitled to indemnification hereunder for the Indemnified Amounts giving rise to such action; provided, however, that no such claim or action shall be settled without the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. ARTICLE 6 MISCELLANEOUS 17 21 6.01 ENTIRE AGREEMENT. This Agreement and the Collateral Agreements constitute the entire agreement between KING and NOVAVAX with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and thereof. This Agreement or any provision hereof cannot be amended, changed, supplemented, or waived except in a writing signed by each of the parties hereto. 6.02 COUNTERPARTS. This Agreement and any amendment or supplement hereto may be executed in several counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. 6.03 BROKERAGE AND OTHER COMMISSIONS. KING and NOVAVAX each represent and warrant to the other that all negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by each directly with the other without intervention of any broker, finder, or other intermediary and that, subject to the provisions of Article 5, each indemnifies the other and holds it harmless against any claim against the other for brokerage or other commissions relating to this Agreement or to the transactions contemplated hereby by any person claiming to have been engaged as a broker or finder by the indemnifying party. 6.04 NOTICES. All notices and other communications required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by: (a) registered or certified mail, return receipt requested; (b) a nationally-recognized courier service guaranteeing next-day delivery, charges prepaid; or (c) facsimile (with the original promptly sent in any of the foregoing manners). Any such notices shall be addressed to the receiving party at such party's address set forth below, or at such other address as may from time to time be furnished by similar notice by either party. If to KING: King Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: Chief Executive Officer Facsimile: (423) 989-8006 With a copy to: King Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 18 22 Attention: Legal Department Facsimile: (423) 989-6282 If to NOVAVAX: Novavax, Inc. 8320 Guilford Road Columbia, Maryland 21046 Attention: Chief Executive Officer Facsimile: (301) 854-3902 With a copy to: White & McDermott, P.C. 65 William Street Wellesley, Massachusetts 02481 Attn: David A. White Facsimile: (781) 237-8120 Any such notice or communication shall be effective upon such personal delivery or delivery to such courier, upon transmission by facsimile, or three (3) days after it is sent by such registered or certified mail, as the case may be. Copies shall be sent in the same manner as originals. 6.05 ASSIGNMENT. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that either party may assign its rights and obligations under this Agreement, without the prior written consent of the other party, to an Affiliate. Any purported assignment without a required consent shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve either party of its responsibility for the performance of any obligation under this Agreement. 6.06 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ALL RESPECTS UNDER AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. 6.07 HEADINGS. The table of contents and all headings used in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. 19 23 6.08 EXPENSES. All legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses. 6.09 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. 6.10 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS. KING and NOVAVAX each agree to execute and deliver such other documents, certificates, agreements, and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement. 6.11 NO IMPLIED WAIVER. No failure or delay on the part of the parties hereto to exercise any right, power, or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver; nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. All rights and remedies granted herein shall be cumulative and in addition to other rights and remedies to which the parties may be entitled at law or in equity. 6.12 FORCE MAJEURE. Any delay in the performance of any of the obligations of either party hereto (except the payment of money owed) shall not be considered a breach of this Agreement and the time required for performance shall be extended for a period equal to the period of such delay, provided that such delay is due to: acts of God, weather, fire, explosion; invasion, riot or other civil unrest; governmental laws, orders, restrictions, actions, embargoes or blockades; national or regional emergency, injunction, strikes, lock-outs, labor trouble or other industrial disturbances; inability to obtain or interruption of materials, labor, containers, fuel or transportation; or any other cause beyond the control of the affected party. The party so affected shall give prompt notice to the other party of such cause and shall use its reasonable efforts to relieve the effect of such cause as rapidly as possible. 6.13 CONFIDENTIALITY. KING and NOVAVAX have entered into a Confidentiality Agreement dated as of September 1, 2000 (the "Confidentiality Agreement"). 6.14 RELATIONSHIP. 20 24 Nothing in this Agreement shall be deemed to create an agency, joint venture, amalgamation, partnership, or similar relationship between NOVAVAX and KING. 6.15 SEVERABILITY. In case any provision of this Agreement shall be held to be invalid, illegal, or unenforceable, the validity, legality, or enforceability of the remaining provisions hereof will not in any way be affected or impaired thereby. 6.16 PRESS RELEASE. So long as this Agreement is in effect, neither of the parties hereto, nor their Affiliates, shall issue or cause the dissemination of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without consulting with and obtaining the consent of the other Party which shall not be unreasonably withheld; provided, however, that such consent shall not be required where such release or announcement is required by applicable law or legal process. On the Closing Date, the parties shall issue a joint press release regarding the sale of the Assets, and KING shall, in cooperation with NOVAVAX, inform any customer who places a purchase order with KING for the Products that the Assets have been sold to NOVAVAX. As soon as practicable after the Closing, KING shall send to all of its current wholesalers and distributors a letter, in form and substance mutually agreeable to KING and NOVAVAX, on KING letterhead informing them of the sale of the Assets to NOVAVAX. 6.17 AFFILIATES. As used in this Agreement, "Affiliate" shall mean any corporation or non-corporate entity that controls, is controlled by, or is under common control with the party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation or (a) in the absence of the ownership of at least of fifty percent (50%) of the voting stock of a corporation or (b) in the case of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable. 6.18 WAIVER OF BULK SALES. KING and NOVAVAX waive compliance with any bulk sales law or similar law in connection with the consummation of the transactions contemplated herein. 6.19 EXHIBITS AND SCHEDULES. All Exhibits and Schedules referred to herein form an integral part of this Agreement and are incorporated into this Agreement by reference. 6.20 INTERPRETATION. 21 25 The parties hereto acknowledge and agree that: (a) each party and its representatives have reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; and (b) the terms and provisions of this Agreement shall be construed fairly as to each party hereto and not in favor of or against either party regardless of which party was generally responsible for the preparation or drafting of this Agreement. [SIGNATURE PAGE FOLLOWS] 22 26 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. NOVAVAX, INC. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- KING PHARMACEUTICALS, INC. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 23 27 EXHIBIT A BILL OF SALE (Attached) 28 IRREVOCABLE BILL OF SALE KING PHARMACEUTICALS, INC., a Tennessee corporation having a principal place of business at 501 Fifth Street, Bristol, Tennessee 37620 ("KING"), for good and valuable consideration, the receipt and legal sufficiency of which hereby expressly are acknowledged, does hereby irrevocably sell, convey, assign, and transfer to NOVAVAX, INC., a Delaware corporation having a principal place of business at 8320 Guilford Road, Columbia, Maryland 21046 ("NOVAVAX"), its successors and assigns, right, title and interest, free and clear of all liens, claims, charges, or encumbrances (except as described in Schedule 1.07 of the Purchase Agreement referred to below), in and to the Tradename, the Know-How in the Territory, the NDA in the Territory, the Tradedress in the Territory, and the Inventory in the Territory, each as defined in the Agreement for Purchase and Sale of Assets Relating to AVC(TM) dated as of January ______, 2001 between KING and NOVAVAX (the "Purchase Agreement") and all pursuant to and on the terms and conditions of the Purchase Agreement. IN WITNESS WHEREOF, KING has duly executed and delivered this Irrevocable Bill of Sale as of January ________, 2001. KING PHARMACEUTICALS, INC. By: ------------------------------- Name: ----------------------------- Title: ---------------------------- EX-10.2 3 w44469ex10-2.txt COPROMOTION AGREEMENT 1 EXHIBIT 10.2 EXECUTION COPY COPROMOTION AGREEMENT BETWEEN NOVAVAX, INC. AND KING PHARMACEUTICALS, INC. JANUARY 8, 2001 2 TABLE OF CONTENTS 1. DEFINITIONS............................................................................1 2. GRANT OF RIGHTS..........................................................................2 2.1 Grant of Rights to KING..............................................................2 2.2 Grant of Rights to NOVAVAX...........................................................2 2.3 Trademark............................................................................2 3. RESPONSIBILITIES OF KING.................................................................4 3.1 Promotion by KING....................................................................4 3.2 Manufacture, Shipment, Etc. of the KING Products.....................................6 3.3 KING Detail and Sales Reports........................................................6 3.4 KING Sales Force.....................................................................7 4. RESPONSIBILITIES OF NOVAVAX..............................................................8 4.1 Promotion of Copromote Products by NOVAVAX...........................................8 4.2 Manufacture, Shipment, Etc. of the NOVAVAX Products..................................9 4.3 NOVAVAX Detail and Sales Reports....................................................10 4.4 NOVAVAX Sales Force.................................................................11 5. TRAINING AND PROMOTIONAL MATERIAL.......................................................12 5.1 Training............................................................................12 5.2 Promotional Materials...............................................................12 6. COPROMOTE PRODUCT SAMPLES...............................................................13 6.1 Supply, Storage and Distribution of Samples.........................................13 6.2 Use of Samples......................................................................13 7. CERTAIN REGULATORY MATTERS..............................................................14 7.1 Licenses............................................................................14 7.2 Regulatory Responsibility...........................................................14 7.3 Efficacy and Safety Information.....................................................15 7.4 Notice of Adverse Events............................................................16 7.5 Product Technical Complaints and Recalls............................................17 7.6 Returns.............................................................................18 7.7 Notice of Government Inspections....................................................19 7.8 Government Inquiries................................................................19 7.9 Medical Inquiries...................................................................19 8. MANAGEMENT COMMITTEE....................................................................20 8.1 Establishment of the PMC............................................................20 8.2 Purpose and Responsibilities of the PMC.............................................20 8.3 PMC Meetings........................................................................21 8.4 Vote and Approval...................................................................21 8.5 Marketing Plan and Budget...........................................................22
i 3 8.6 Additional Studies, Line Extensions and New Products................................22 8.7 Dispute Resolution..................................................................23 9. FEES AND EXPENSES.......................................................................24 9.1 Consideration Fee...................................................................24 9.2 Milestone Payments..................................................................25 9.3 Residual Payments...................................................................25 9.4 Marketing Expenses..................................................................26 9.5 Excess Detail Costs.................................................................28 9.6 Other Miscellaneous Costs and Expenses..............................................28 9.7 Costs Savings.......................................................................28 10. RECORDKEEPING AND AUDITS................................................................29 10.1 Maintenance of Books and Records....................................................29 10.2 Payment Audits......................................................................29 10.3 Compliance Audits...................................................................30 11. TERM AND TERMINATION....................................................................30 11.1 Term of Agreement...................................................................30 11.2 Termination by NOVAVAX..............................................................31 11.3 Termination by KING.................................................................31 11.4 Failure to Meet Detail Requirements................................................33 11.5 Effects of Termination..............................................................33 11.6 Actions Upon Termination............................................................34 11.7 Survival............................................................................34 11.8 Payments Upon Termination...........................................................34 12. CONFIDENTIALITY; OWNERSHIP..............................................................36 12.1 Confidential Information............................................................36 13. INDEMNIFICATION AND INSURANCE...........................................................37 13.1 Indemnification by KING.............................................................37 13.2 Indemnification by NOVAVAX..........................................................38 13.3 Claims Procedures...................................................................38 13.4 Insurance...........................................................................39 14. REPRESENTATIONS AND WARRANTIES..........................................................39 14.1 By KING.............................................................................39 14.2 By NOVAVAX..........................................................................40 15. NOTICES.................................................................................41 16. MISCELLANEOUS PROVISIONS................................................................42 16.1 Assignment; Change of Control.......................................................42 16.2 Governing Law.......................................................................43 16.3 Non-Waiver..........................................................................44 16.4 Entire Agreement....................................................................44
ii 4 16.5 Jurisdiction; Venue.................................................................44 16.6 Severability........................................................................45 16.7 Relationship of the Parties.........................................................46 16.8 Public Announcements................................................................46 16.9 Counterparts........................................................................46 16.10 Force Majeure.....................................................................46 16.11 Interpretation....................................................................46 16.12 Certain Expenses and Commissions..................................................47 16.13 Third Party Beneficiaries.........................................................47 16.14 Covenant Not to Promote Competing Product.........................................47 16.15 Headings..........................................................................47
iii 5 Execution Copy COPROMOTION AGREEMENT THIS COPROMOTION AGREEMENT (this "Agreement") is entered into and effective as of this 8th day of January, 2001 (the "Effective Date"), by and between KING PHARMACEUTICALS, INC., a Tennessee corporation ("KING"), and NOVAVAX, INC., a Delaware corporation ("NOVAVAX"). WHEREAS, KING and NOVAVAX each have a field representative sales force focused on physicians and health care practitioners who specialize in the practice of obstetrics or gynecology or who frequently prescribe hormone replacement therapy products ("OB/GYN"); WHEREAS, NOVAVAX owns or will own a patent or patents related to the NOVAVAX Products and expects to file with the FDA a New Drug Application for ESTRASORB(TM); WHEREAS, KING markets and distributes an oral contraceptive product for women containing the actives levonorgestrel and ethinyl estradiol under the registered trademark NORDETTE(R) (each a "KING Product" or collectively, the "KING Products"); WHEREAS, KING and NOVAVAX are engaged in the business of and have expertise in, among other things, the promotion of pharmaceutical products to the OB/GYN community; and WHEREAS, KING and NOVAVAX desire to work together to promote the NOVAVAX Products and the KING Products in the United States, its territories and possessions, the District of Columbia and the Commonwealth of Puerto Rico (the "Territory") upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS Capitalized terms used herein without definition shall have the respective meanings assigned thereto in Annex I attached hereto and incorporated herein for all purposes of this Agreement (such definitions to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise specified, all references herein to "Articles" or "Sections" are to Articles or Sections of this Agreement. 6 2. GRANT OF RIGHTS 2.1 GRANT OF RIGHTS TO KING. (a) NOVAVAX hereby grants to KING and its Affiliates, on an exclusive basis together with NOVAVAX and its Affiliates, the right to promote the NOVAVAX Products within the Territory during the Term of this Agreement, upon and subject to the terms and conditions set forth in this Agreement. (b) The grant of rights within the Territory set forth in Section 2.1(a) is subject to and limited only by the right of NOVAVAX and its Affiliates to promote the NOVAVAX Products within the Territory during the Term of this Agreement in accordance with the terms and conditions of this Agreement. 2.2 GRANT OF RIGHTS TO NOVAVAX. (a) KING hereby grants to NOVAVAX and its Affiliates, on an exclusive basis together with KING and its Affiliates, the right to promote the KING Products in the Territory during the Term of this Agreement, upon and subject to the terms and conditions set forth in this Agreement. (b) The grant of rights set forth in Section 2.2(a) is subject to and limited only by the right of KING and its Affiliates to promote the KING Products within the Territory during the Term of this Agreement in accordance with the terms and conditions of this Agreement. 2.3 TRADEMARK. (a) Required Use and Compliance. Each party shall promote the NOVAVAX Products only under the NOVAVAX Trademarks. KING shall not use any trademark or servicemark other than the NOVAVAX Trademarks in promoting the NOVAVAX Products without the prior approval of NOVAVAX. Each party shall promote the KING Products only under the KING Trademarks. NOVAVAX shall not use any trademark or servicemark other than the KING Trademarks in promoting the KING Products without the prior approval of KING. The NOVAVAX Trademarks and KING Trademarks are set forth on Exhibit 2.3(a). (b) Validity of Trademarks. KING acknowledges the validity of NOVAVAX's right, title and interest in and to the NOVAVAX Trademarks and KING shall not have, assert or acquire any right, title or interest in or to any of the NOVAVAX Trademarks, except as otherwise explicitly provided in this Agreement. NOVAVAX acknowledges the validity of KING's right, title and 2 7 interest in and to the KING Trademarks and NOVAVAX shall not have, assert or acquire any right, title or interest in or to any of the KING Trademarks, except as otherwise explicitly provided in this Agreement. (c) Use of Trademarks. (i) NOVAVAX Trademarks. In connection with the subject matter hereof, KING shall use the NOVAVAX Trademarks only in a manner consistent with NOVAVAX's trademark usage guidelines (the "NOVAVAX Guidelines") and shall not use any NOVAVAX Trademark in connection with any goods or products other than the NOVAVAX Products, notwithstanding that such goods or products are dissimilar to the NOVAVAX Products or have a different use. The parties shall develop the NOVAVAX Guidelines as soon as practicable after the Effective Date. KING shall use the NOVAVAX Trademarks only to the extent authorized herein. (ii) KING Trademarks. In connection with the subject matter hereof, NOVAVAX shall use the KING Trademarks only in a manner consistent with KING's trademark usage guidelines (the "KING Guidelines") and shall not use any KING Trademark in connection with any goods or products other than the KING Products, notwithstanding that such goods or products are dissimilar to the KING Products or have a different use. The parties shall develop the KING Guidelines as soon as practicable after the Effective Date. NOVAVAX shall use the KING Trademarks only to the extent authorized herein. (d) Notice of Infringement. (i) Each party shall give the other party notice of any infringement or threatened infringement of any of such other party's Trademarks used in connection with the Copromote Products. Except as otherwise provided in Section 2.3(d)(ii) below, each party shall determine in its sole discretion what action, if any, to take in response to the infringement or threatened infringement of that party's Trademark. Each party agrees to identify the primary brand Trademarks of its Copromote Products (each a "Primary Brand Trademark"). Exhibit 2.3(d) sets forth the list of Primary Brand Trademarks for the KING Products and the NOVAVAX Products as of the Effective Date. In the event that one party chooses to take enforcement action in response to the infringement or threatened infringement of its Trademark, the other party shall reasonably cooperate in such enforcement; provided, however, the enforcing party shall reimburse the other party for reasonable expenses incurred by the other party that are related to such enforcement. (ii) As to each Primary Brand Trademark only, if the party owning such a Trademark fails to take enforcement action within one hundred twenty (120) days following notice thereof in response to the infringement or threatened infringement of its Trademark, the other party shall have the right, in 3 8 its sole discretion, to conduct litigation or other enforcement proceedings at the expense of the owner of the Primary Brand Trademark, naming the Primary Brand Trademark owner as a party plaintiff. In such event, the Primary Brand Trademark owner shall reasonably cooperate in such enforcement. (iii) The parties shall cooperate in good faith with respect to all Trademark enforcement actions hereunder, and each party shall notify the other party promptly of all substantive developments with respect to such Trademark enforcement actions, including, without limitation, all material filings, court papers and other related documents. Each party shall consider the timely given, reasonable comments and advice of the other party with respect to the strategy employed and submissions made relative to any Trademark enforcement actions. The party enforcing such Trademark action shall retain for its own account any damages or other monetary relief obtained in connection therewith. 3. RESPONSIBILITIES OF KING 3.1 PROMOTION BY KING. (a) NOVAVAX Product Promotion. Commencing as of the NOVAVAX Product Initiation Date and continuing throughout the Term, KING shall use its Commercially Reasonable Efforts to market and promote the NOVAVAX Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. Without limiting the foregoing, KING agrees that at all times during the period commencing as of the NOVAVAX Product Initiation Date, KING or its Affiliates shall (i) have at least fifty (50) field sales representatives Detailing the NOVAVAX Products to OB/GYN's in the Territory, and (ii) perform Details of the NOVAVAX Products at a minimum rate of 60,000 per twelve (12) month period in the Territory. On or prior to each anniversary of the NOVAVAX Product Initiation Date, the target and minimum number of Details for the NOVAVAX Products shall be determined by the PMC. Beginning on the NOVAVAX Product Initiation Date and thereafter, KING or its Affiliates shall be responsible for performing at least fifty percent (50%) of such target Details. The number of Details required in this Section 3.1(a) shall be conducted and spaced according to the current Marketing Plan then in effect, provided, however, that the total number of Details required in any annual Marketing Plan shall not be less than fifty percent (50%) of the total number of Details required in the Marketing Plan for the previous year, unless KING can demonstrate good cause, to NOVAVAX's reasonable satisfaction, that a further reduction in the number of Details would be prudent given the then current market conditions (which determination shall not be subject to Section 8.7(b)). KING agrees, subject to NOVAVAX providing KING with a sufficient quantity of samples (as determined by the PMC) of the NOVAVAX Products, to use its Commercially Reasonable Efforts to provide, and/or to cause its Affiliates to provide, samples of the 4 9 NOVAVAX Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. (b) KING Product Promotion. Commencing as of the KING Product Initiation Date and continuing throughout the Term, KING shall use its Commercially Reasonable Efforts to market and promote the KING Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. Without limiting the foregoing, KING agrees that at all times during the period commencing as of the KING Product Initiation Date, KING or its Affiliates shall (i) have at least fifty (50) field sales representatives Detailing the KING Products to OB/GYN's in the Territory, and (ii) perform the minimum Details set by the PMC, as set forth in the current Marketing Plan then in effect. On or prior to each anniversary of the KING Product Initiation Date, the target and minimum number of Details for the KING Products shall be determined by the PMC. Beginning on the KING Product Initiation Date and thereafter, KING or its Affiliates shall be responsible for performing at least fifty percent (50%) of such target Details. The number of Details required in this Section 3.1(b) shall be conducted and spaced according to the current Marketing Plan then in effect, provided, however, that the total number of Details required in any annual Marketing Plan shall not be less than fifty percent (50%) of the total number of Details required in the Marketing Plan for the previous year, unless KING can demonstrate good cause, to NOVAVAX's reasonable satisfaction, that a further reduction in the number of Details would be prudent given the then current market conditions (which determination shall not be subject to Section 8.7(b)). KING agrees to use its Commercially Reasonable Efforts to provide, and/or to cause its Affiliates to provide, samples of the KING Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. (c) In performing its duties hereunder, KING shall, and shall cause its employees and the employees of its relevant Affiliates to, comply with all regulatory, professional and legal requirements, including, without limitation, the FDA's regulations and guidelines concerning the advertising of prescription drug products, the American Medical Associations' Guidelines on Gifts to Physicians, the PhRMA Guidelines for Marketing Practices, and the ACCME Standards for Commercial Support of Continuing Medical Education, which may be applicable to the Copromote Products and services (including without limitation the manufacturing, packaging, warehousing, handling and distribution of samples of the Copromote Products) to be provided by KING hereunder. No employee of KING or of any of its relevant Affiliates shall make any representation, statement, warranty or guaranty with respect to the Copromote Products that is not consistent with current labeling of the Copromote Products or promotional materials approved by the PMC, that is deceptive or misleading, that disparages the Copromote Products or the good name, good will and reputation of NOVAVAX or that diminishes in any material respect any NOVAVAX Trademark. KING represents and warrants that its services hereunder will be provided in a professional, ethical and competent manner. 5 10 3.2 MANUFACTURE, SHIPMENT, ETC. OF THE KING PRODUCTS. KING (and/or its Affiliates) shall have the sole responsibility for the manufacture, shipment, distribution, warehousing, billing and order confirmation of the KING Products and for the collection of receivables resulting from sales of the KING Products in the Territory. NOVAVAX may make recommendations to KING from time to time regarding the price of and pricing strategies for the KING Products during the Term, including, without limitation, price increases and decreases and the timing thereof, provided, however, that KING shall have the sole authority to determine the price of the KING Products in the Territory during the Term, including price increases and decreases and the timing thereof. KING shall manufacture or cause to be manufactured the KING Products and samples of the KING Products in accordance with all applicable laws, including, without limitation, the Act and all applicable regulations thereunder, the NDA and current Good Manufacturing Practices. KING shall use its best efforts to maintain the NDA for the KING Products in good standing with the FDA and shall enforce all intellectual property rights of each and every kind associated therewith. KING shall use its best efforts to ensure that adequate quantities of the KING Products and samples of the KING Products are available to meet the anticipated demand for the KING Products and samples of the KING Products in the Territory during the Term of this Agreement. 3.3 KING DETAIL AND SALES REPORTS. (a) NOVAVAX Products. Throughout the Term, KING shall provide NOVAVAX with a report within thirty (30) calendar days after the end of each calendar quarter, with the first such report due for the calendar quarter during which the NOVAVAX Product Initiation Date occurs, setting forth the following information regarding the efforts of KING's sales force in promoting and Detailing the NOVAVAX Products during the preceding quarter (or part thereof): (i) the number of Details made and recorded by KING's standard record keeping procedures based on data recorded by the sales force; (ii) the names, addresses and phone numbers of the OB/GYN's called upon; (iii) the names of and the percentage of OB/GYN's Detailed who were provided with samples of the NOVAVAX Products; (iv) the actual number of such samples delivered on each Detail; and (v) such other information as may be required in the then current Marketing Plan. (b) KING Products. Throughout the Term, KING shall provide NOVAVAX with a report within thirty (30) calendar days after the end of each calendar quarter, with the first such report due for the calendar quarter during which the KING Product Initiation Date occurs, setting forth the following information regarding the efforts of KING's sales force in promoting and Detailing the KING Products during the preceding quarter (or part thereof): (i) the number of Details made and recorded by KING's standard record keeping procedures 6 11 based on data recorded by the sales force; (ii) the names, addresses and phone numbers of the OB/GYN's called upon; (iii) the names of and the percentage of OB/GYN's Detailed who were provided with samples of the KING Products; (iv) the actual number of such samples delivered on each Detail; and (v) such other information as may be required in the then current Marketing Plan. (c) The reports provided by KING pursuant to Section 3.3(a) and Section 3.3(b) are referred to herein as the "KING Detail Reports". Each KING Detail Report shall be delivered in an electronic format and in hard copy form. (d) Within fifteen (15) days after the end of each month, KING shall provide to NOVAVAX a summary report setting forth (i) the gross sales of the KING Products in the Territory for such month, (ii) the gross sales of the KING Products in the Territory since January 1 of such year, (iii) the Net Sales of the KING Products in the Territory for such month and the itemized deductions taken in calculating all such Net Sales, and (iv) the Net Sales of the KING Products in the Territory since January 1 of such year. All reports required by this Section 3.3(d) shall be provided to NOVAVAX either by facsimile or transmitted electronically, in each case with a confirmation copy sent by mail. (e) KING shall furnish to NOVAVAX, within thirty (30) calendar days after the end of each Agreement Quarter and each calendar quarter for which Residual Payments are due, a report setting forth in reasonable detail the calculation of the Incremental Sales of KING Products in the Territory for such Agreement Quarter or calendar quarter in a form approved by NOVAVAX. 3.4 KING SALES FORCE. (a) Except as agreed to by the parties and subject to the terms and conditions of this Agreement, KING shall be solely responsible for the costs and expenses of establishing, maintaining and training KING's (and its Affiliates') sales force of sufficient size to perform its obligations hereunder, and conducting KING's other activities under this Agreement; provided, however, that (i) such training shall be conducted in accordance with Section 5.1 and (ii) the content and strategic direction of any training provided by KING that relates specifically to the Copromote Products shall be coordinated with the PMC. Notwithstanding the foregoing, KING shall pay incentive compensation to its sales representatives having primary responsibility for Detailing the Copromote Products with respect to sales of the Copromote Products in the Territory in accordance with KING's Sales Incentive Compensation Plan for KING's own prescription drug products, it being understood that KING shall determine the target payout for the Copromote Products in a manner consistent with the way in which it determines the target payouts for prescription drug products of comparable commercial potential. (b) To the extent practicable, all written, electronic and visual 7 12 communications provided to any of KING's (and its Affiliates') sales representatives regarding strategy, positioning or selling messages for the Copromote Products will, at the request of the PMC, be subject to review by the PMC and KING's Regulatory Affairs department in accordance with Section 5.2(a). 4. RESPONSIBILITIES OF NOVAVAX. 4.1 PROMOTION OF COPROMOTE PRODUCTS BY NOVAVAX. (a) NOVAVAX Product Promotion. Commencing as of the NOVAVAX Product Initiation Date and continuing throughout the Term, NOVAVAX shall use its Commercially Reasonable Efforts to market and promote the NOVAVAX Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. Without limiting the foregoing, NOVAVAX agrees that at all times during the period commencing as of the NOVAVAX Product Initiation Date, NOVAVAX or its Affiliates shall (i) have at least fifty (50) field sales representatives Detailing the NOVAVAX Products to OB/GYN's in the Territory, and (ii) perform Details of the NOVAVAX Products at a minimum rate of 60,000 per twelve (12) month period in the Territory. On or prior to each anniversary of the NOVAVAX Product Initiation Date, the target and minimum number of Details for the NOVAVAX Products shall be determined by the PMC. Beginning on the NOVAVAX Product Initiation Date and thereafter, NOVAVAX or its Affiliates shall be responsible for performing at least fifty percent (50%) of such target Details. The number of Details required in this Section 4.1(a) shall be conducted and spaced according to the current Marketing Plan then in effect, provided, however, that the total number of Details required in any annual Marketing Plan shall not be less than fifty percent (50%) of the total number of such Details required in the Marketing Plan for the previous year, unless NOVAVAX can demonstrate good cause, to KING's reasonable satisfaction, that a further reduction in the number of Details would be prudent given the then current market conditions (which determination shall not be subject to Section 8.7(b)). NOVAVAX agrees to use its Commercially Reasonable Efforts to provide, and/or to cause its Affiliates to provide, samples of the NOVAVAX Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. (b) KING Product Promotion. Commencing as of the KING Product Initiation Date and continuing throughout the Term, NOVAVAX shall use its Commercially Reasonable Efforts to market and promote the KING Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. Without limiting the foregoing, NOVAVAX agrees that at all times during the period commencing as of the KING Product Initiation Date, NOVAVAX or its Affiliates shall (i) have at least fifty (50) field sales representatives Detailing the KING Products to OB/GYN's in the Territory, and (ii) perform the minimum Details set by the PMC, as set forth in the current Marketing Plan then in effect. 8 13 On or prior to each anniversary of the KING Product Initiation Date, the target and minimum number of Details for the KING Products shall be determined by the PMC. Beginning on the KING Product Initiation Date and thereafter, NOVAVAX or its Affiliates shall be responsible for performing at least fifty percent (50%) of such target Details. The number of Details required in this Section 4.1(b) shall be conducted and spaced according to the current Marketing Plan then in effect, provided, however, that the total number of Details required in any annual Marketing Plan shall not be less than fifty percent (50%) of the total number of Details required in the Marketing Plan for the previous year, unless KING can demonstrate good cause, to NOVAVAX's reasonable satisfaction, that a further reduction in the number of Details would be prudent given the then current market conditions (which determination shall not be subject to Section 8.7(b)). NOVAVAX agrees, subject to KING providing NOVAVAX with a sufficient quantity of samples (as determined by the PMC) of the KING Products, to use its Commercially Reasonable Efforts to provide, and/or to cause its Affiliates to provide, samples of the KING Products to OB/GYN's in the Territory in accordance with the then current Marketing Plan. (c) In performing its duties hereunder, NOVAVAX shall, and shall cause its employees and the employees of its relevant Affiliates to, comply with all regulatory, professional and legal requirements, including, without limitation, the FDA's regulations and guidelines concerning the advertising of prescription drug products, the American Medical Associations' Guidelines on Gifts to Physicians, the PhRMA Guidelines for Marketing Practices, and the ACCME Standards for Commercial Support of Continuing Medical Education, which may be applicable to the Copromote Products and services (including without limitation the manufacturing, packaging, warehousing, handling and distribution of samples of the Copromote Products) to be provided by NOVAVAX hereunder. No employee of NOVAVAX or of any of its relevant Affiliates shall make any representation, statement, warranty or guaranty with respect to the Copromote Products that is not consistent with current labeling of the Copromote Products or promotional materials approved by the PMC, that is deceptive or misleading, that disparages the Copromote Products or the good name, good will and reputation of KING or that diminishes in any material respect any KING Trademark. NOVAVAX represents and warrants that its services hereunder will be provided in a professional, ethical and competent manner. 4.2 MANUFACTURE, SHIPMENT, ETC. OF THE NOVAVAX PRODUCTS. NOVAVAX (and/or its Affiliates) shall have the sole responsibility for the manufacture, shipment, distribution, warehousing, billing and order confirmation of the NOVAVAX Products and for the collection of receivables resulting from sales of the NOVAVAX Products in the Territory. KING may make recommendations to NOVAVAX from time to time regarding the price of and pricing strategies for the NOVAVAX Products during the Term, including, without limitation, price increases and decreases and the timing thereof, provided, 9 14 however, that NOVAVAX shall have the sole authority to determine the price of the NOVAVAX Products in the Territory during the Term, including price increases and decreases and the timing thereof. NOVAVAX shall manufacture or cause to be manufactured the NOVAVAX Products and samples of the NOVAVAX Products in accordance with all applicable laws, including, without limitation, the Act and all applicable regulations thereunder, the NDA and current Good Manufacturing Practices. NOVAVAX shall use its best efforts to maintain the NDA for the NOVAVAX Products in good standing with the FDA and shall enforce all patents and intellectual property rights of each and every kind associated therewith. NOVAVAX shall use its best efforts to ensure that adequate quantities of the NOVAVAX Products and samples of the NOVAVAX Products are available to meet the anticipated demand for the NOVAVAX Products and samples of the NOVAVAX Products in the Territory during the Term of this Agreement. 4.3 NOVAVAX Detail and Sales Reports. (a) NOVAVAX Products. Throughout the Term, NOVAVAX shall provide KING with a report within thirty (30) calendar days after the end of each calendar quarter, with the first such report due for the calendar quarter during which the NOVAVAX Product Initiation Date occurs, setting forth the following information regarding the efforts of NOVAVAX's sales force in promoting and Detailing the NOVAVAX Products during the preceding quarter (or part thereof): (i) the number of Details made and recorded by NOVAVAX's standard record keeping procedures based on data recorded by the sales force; (ii) the names, addresses and phone numbers of the OB/GYN's called upon; (iii) the names of and the percentage of OB/GYN's Detailed who were provided with samples of the NOVAVAX Products; (iv) the actual number of such samples delivered on each Detail; and (v) such other information as may be required in the then current Marketing Plan. (b) KING Products. Throughout the Term, NOVAVAX shall provide KING with a report within thirty (30) calendar days after the end of each calendar quarter, with the first such report due for the calendar quarter during which the KING Product Initiation Date occurs, setting forth the following information regarding the efforts of NOVAVAX's sales force in promoting and Detailing the KING Products during the preceding quarter (or part thereof): (i) the number of Details made and recorded by NOVAVAX's standard record keeping procedures based on data recorded by the sales force; (ii) the names, addresses and phone numbers of the OB/GYN's called upon; (iii) the names of and the percentage of OB/GYN's Detailed who were provided with samples of the KING Products; (iv) the actual number of such samples delivered on each Detail; and (v) such other information as may be required in the then current Marketing Plan. (c) The reports provided by NOVAVAX pursuant to Section 4.3(a) and 4.3(b) are referred to herein as the "NOVAVAX Detail Reports". Each 10 15 NOVAVAX Detail Report delivered pursuant hereto shall be delivered in an electronic format and in hard copy form. (d) Throughout the Term, NOVAVAX shall provide to KING a weekly report setting forth the gross sales of the NOVAVAX Products in the Territory for the previous business week. Additionally, within fifteen (15) days after the end of each month, NOVAVAX shall provide to KING a summary report setting forth (i) the gross sales of the NOVAVAX Products in the Territory for such month, (ii) the gross sales of the NOVAVAX Products in the Territory since January 1 of such year, (iii) the Net Sales of the NOVAVAX Products in the Territory for such month and the itemized deductions taken in calculating all such Net Sales, and (iv) the Net Sales of the NOVAVAX Products in the Territory since January 1 of such year. All reports required by this Section 4.3(c) shall be provided to KING either by facsimile or transmitted electronically, in each case with a confirmation copy sent by mail. (e) NOVAVAX shall furnish to KING, within thirty (30) calendar days after the end of each Agreement Quarter and each calendar quarter for which Residual Payments are due, a report setting forth in reasonable detail the calculation of the total Net Sales of NOVAVAX Products in the Territory for such Agreement Quarter or calendar quarter in a form approved by KING. 4.4 NOVAVAX SALES FORCE. (a) Except as agreed to by the parties and subject to the terms and conditions of this Agreement, NOVAVAX shall be solely responsible for the costs and expenses of establishing, maintaining and training NOVAVAX's (and its Affiliates') sales force of sufficient size to perform its obligations hereunder, and conducting NOVAVAX's other activities under this Agreement; provided, however, that (i) such training shall be conducted in accordance with Section 5.1 and (ii) the content and strategic direction of any training provided by NOVAVAX that relates specifically to the Copromote Products shall be coordinated with the PMC. Notwithstanding the foregoing, NOVAVAX shall pay incentive compensation to its sales representatives having primary responsibility for Detailing the Copromote Products with respect to sales of the Copromote Products in the Territory in accordance with NOVAVAX's Sales Incentive Compensation Plan for NOVAVAX's own products, it being understood that NOVAVAX shall determine the target payout for the Copromote Products in a manner consistent with the way in which it determines the target payouts for prescription drug products of comparable commercial potential. (b) To the extent practicable, all written, electronic and visual communications provided to any of NOVAVAX's (and its Affiliates') sales representatives regarding strategy, positioning or selling messages for the Copromote Products will, at the request of the PMC, be subject to review by the PMC and KING's Regulatory Affairs department in accordance with Section 11 16 5.2(a). 5. TRAINING AND PROMOTIONAL MATERIAL 5.1 TRAINING. (a) Each of the parties agrees to make its sales representatives available for training with respect to the marketing and sale of the Copromote Products. The parties agree that KING shall, subject to the PMC's approval, be responsible for developing and, if applicable, conducting training programs for each of KING's and NOVAVAX's sales forces. Training shall be carried out at a time which is mutually acceptable to the parties. The parties' relevant local operating entity Affiliates shall be responsible for the development and conduct of training programs, subject to the direction of KING and NOVAVAX and the oversight of the PMC, on an ongoing basis to assure a consistent, focused promotional strategy. As additional members are added to the parties' respective sales forces responsible for marketing the Copromote Products, training will be given to groups of the newly selected members. (b) Each party shall decide where the training of its sales representatives will occur and absorb the costs of transporting, housing and maintaining their respective personnel for such training. Subject to the oversight of the PMC, all sales and marketing training materials will be prepared and supplied by KING. 5.2 PROMOTIONAL MATERIALS. (a) All written sales, promotion and advertising materials ("Marketing Materials") relating to the Copromote Products shall be consistent with the Marketing Plans approved by the PMC. All Marketing Materials shall be subject to copy clearance procedures established by the parties from time to time, including review by each party. Marketing Materials prepared by either party shall be provided to the other party for legal and regulatory comment, which comment shall occur within five (5) days after such party's receipt of the Marketing Materials approved by the PMC and shall be given due consideration. (b) In all written or visual materials used in the Territory related to the Copromote Products which identify either of the parties, the parties will be presented and described to the medical communities (including, for example, the physician, pharmacy, governmental, reimbursement and hospital sectors) as joining in the promotion of the Copromote Products in the Territory. All such written and visual materials and all documentary information, promotional material, and oral presentations (where practical) regarding the promoting of the Copromote Products will state this arrangement and will 12 17 display the names and logos of the parties with equal prominence, as permitted by applicable law. 6. COPROMOTE PRODUCT SAMPLES 6.1 SUPPLY, STORAGE AND DISTRIBUTION OF SAMPLES. (a) NOVAVAX Products. NOVAVAX shall provide KING, from time to time on a schedule and in such quantities to be reasonably determined by the PMC, with samples of the NOVAVAX Products to be used by KING solely in marketing and promoting the Copromote Products in the Territory, in accordance with the then current Marketing Plan. NOVAVAX shall ship the samples to one central warehouse of KING, as designated by KING, and the risk of loss and responsibility for handling and warehousing of the samples shall pass to KING upon delivery to a carrier designated by KING. KING shall be responsible for distributing the samples to its sales representatives in a timely manner. KING shall also be responsible for securing the return of and reconciling existing sample inventories from its discontinued field sales representatives. All samples of the NOVAVAX Products provided to KING hereunder shall be accompanied by an appropriate Certificate of Analysis of the NOVAVAX Product specifications and an indication of expiration dating. (b) KING Products. KING shall provide NOVAVAX, from time to time on a schedule and in such quantities to be reasonably determined by the PMC, with samples of the KING Products to be used by NOVAVAX solely in marketing and promoting the Copromote Products in the Territory. KING shall ship the samples to one central warehouse of NOVAVAX, as designated by NOVAVAX, and the risk of loss and responsibility for handling and warehousing of the samples shall pass to NOVAVAX upon delivery to a carrier designated by NOVAVAX. NOVAVAX shall be responsible for distributing the samples to its sales representatives in a timely manner. NOVAVAX shall also be responsible for securing the return of and reconciling existing sample inventories from its discontinued field sales representatives. All samples of the KING Products provided to NOVAVAX hereunder shall be accompanied by an appropriate Certificate of Analysis of the KING Product specifications and an indication of expiration dating. 6.2 USE OF SAMPLES. (a) NOVAVAX Products. Samples of the NOVAVAX Products supplied by NOVAVAX to KING or to NOVAVAX's sales representatives for use in the Territory shall be used by KING and NOVAVAX solely in making Detail calls to OB/GYN's in the Territory pursuant to this Agreement. Upon its receipt of NOVAVAX Product samples, KING shall be responsible for accountability and compliance with the PDMA, and other applicable federal, state and local laws 13 18 and regulations relating to such samples or the distribution of same. NOVAVAX shall be responsible for accountability and compliance with the PDMA, and other applicable federal, state and local laws and regulations relating to NOVAVAX Product samples that NOVAVAX supplies for distribution by NOVAVAX's sales representatives. KING and NOVAVAX each shall be responsible for adherence by its respective sales representatives to such laws and regulations. (b) KING Products. Samples of the KING Products supplied by KING to NOVAVAX or to KING's sales representatives shall be used by KING and NOVAVAX solely in making Detail calls to OB/GYN's in the Territory pursuant to this Agreement. Upon its receipt of KING Product samples, NOVAVAX shall be responsible for accountability and compliance with the PDMA, and other applicable federal, state and local laws and regulations relating to such samples or the distribution of same. KING shall be responsible for accountability and compliance with the PDMA, and other applicable federal, state and local laws and regulations relating to KING Product samples that KING supplies for distribution by KING's sales representatives. KING and NOVAVAX each shall be responsible for adherence by its respective sales representatives to such laws and regulations. (c) Audit Rights. Each party or its appointed agents shall have the right to audit the records and/or reports for the Copromote Product samples, as required to be kept by the other party under the PDMA, during normal business hours, at convenient times and upon no less than five (5) calendar days' prior notice. 7. CERTAIN REGULATORY MATTERS 7.1 LICENSES. Each party hereto shall, at its sole cost and expense, maintain in full force and effect all necessary licenses, permits and other authorizations required by law, regulation, ordinance or statute to carry out its duties and obligations in the Territory under this Agreement. 7.2 REGULATORY RESPONSIBILITY. (a) NOVAVAX Products. All regulatory matters regarding the NOVAVAX Products shall remain under the control of NOVAVAX, subject to the participation by KING in matters related to the marketing of the NOVAVAX Products to OB/GYN's in the Territory. Notwithstanding the foregoing, NOVAVAX shall promptly provide KING with copies of all communications received from any regulatory agency or authority concerning the NOVAVAX Products or any Marketing Materials related to the NOVAVAX Products and shall submit copies of all such communications and filings to be made to any 14 19 regulatory agency or authority for prior review and comment within five (5) business days. NOVAVAX shall provide adequate notice to KING and shall include KING in all meetings with the FDA, electronic, in person, or otherwise. NOVAVAX shall give due consideration to all comments timely made by KING and shall notify KING, in writing, if it declines to address any such comments, stating the reason therefor. (b) KING Products. All regulatory matters regarding the KING Products shall remain under the control of KING, subject to the participation by NOVAVAX in matters related to the marketing of the KING Products to OB/GYN's in the Territory. Notwithstanding the foregoing, KING shall promptly provide NOVAVAX with copies of all communications received from any regulatory agency or authority concerning the KING Products or any Marketing Materials and shall submit copies of all communications and filings to be made to any regulatory agency or authority for prior review and comment within five (5) business days. KING shall provide adequate notice to NOVAVAX and shall include NOVAVAX in all meetings with the FDA, electronic, in person, or otherwise. KING shall give due consideration to all comments timely made by NOVAVAX and shall notify NOVAVAX, in writing, if it declines to address any such comments, stating the reason therefor. 7.3 EFFICACY AND SAFETY INFORMATION. (a) NOVAVAX Products. NOVAVAX shall furnish KING with efficacy and safety information in its possession as reasonably requested by KING to assist KING in promoting the NOVAVAX Products to OB/GYN's in the Territory, including without limitation relevant clinical and safety data included in the NDA for the NOVAVAX Products and additional information, if any, related to the efficacy and safety profile of the NOVAVAX Products. Except for that information that is to be disclosed to OB/GYN's in connection with conducting Details, such information shall be treated as Confidential and Proprietary Information pursuant to Section 12 of this Agreement and shall not be disclosed to third parties without NOVAVAX's prior written approval or direction. (b) KING Products. KING shall furnish NOVAVAX with efficacy and safety information reasonably requested by NOVAVAX to assist NOVAVAX in promoting the KING Products to OB/GYN's in the Territory, including without limitation relevant clinical and safety data included in the NDA for the KING Products and additional information, if any, related to the efficacy and safety profile of the KING Products. Except for that information that is to be disclosed to OB/GYN's in connection with conducting Details, such information shall be treated as confidential and proprietary information pursuant to Section 12 of this Agreement and shall not be disclosed to third parties without KING's prior written approval or direction. 15 20 7.4 NOTICE OF ADVERSE EVENTS. (a) Each party shall promptly notify the other party of any event(s) that materially affect(s) or could materially affect the marketing of the Copromote Products, including without limitation adverse drug reactions and governmental inquiries. (b) NOVAVAX Products. Serious Adverse Events for the NOVAVAX Products learned of by KING shall be submitted in writing to NOVAVAX within two (2) business days from the date of learning thereof by KING. Non-Serious Adverse Events for the NOVAVAX Products learned of by KING shall be submitted in writing to NOVAVAX no more than five (5) business days from the date of learning thereof by KING. NOVAVAX and/or its Affiliates shall have the sole responsibility for reporting and responding to such events to applicable regulatory authorities in the Territory; provided, that KING may take such actions (including issuing such reports) as it determines is required by applicable law. NOVAVAX shall promptly provide KING with copies of all periodic reports and product safety update reports relating to the NOVAVAX Products which are filed or received from third parties. Notwithstanding the foregoing, within one hundred twenty (120) days after the Effective Date, the parties shall meet and establish a standard operating procedure ("SOP") addressing the responsibilities of each party with respect to adverse event reporting, which SOP shall supercede this Section 7.4, it being understood, however, that with regard to the NOVAVAX Products, NOVAVAX shall have the responsibility of reporting all adverse events to the appropriate regulatory authorities. (c) KING Products. Serious Adverse Events for the KING Products learned of by NOVAVAX shall be submitted in writing to KING within two (2) business days from the date of learning thereof by NOVAVAX. Non-Serious Adverse Events for the KING Products learned of by NOVAVAX shall be submitted in writing to KING no more than five (5) business days from the date of learning thereof by NOVAVAX. KING and/or its Affiliates shall have the sole responsibility for reporting and responding to such events to applicable regulatory authorities in the Territory; provided, that NOVAVAX may take such actions (including issuing such reports) as it determines is required by applicable law. KING shall promptly provide NOVAVAX with copies of all periodic reports and product safety update reports relating to the KING Products which are filed or received from third parties. Notwithstanding the foregoing, within one hundred twenty (120) days after the Effective Date, the parties shall meet and establish an SOP addressing the responsibilities of each party with respect to adverse event reporting, which SOP shall supercede this Section 7.4, it being understood, however, that with regard to the KING Products, KING shall have the responsibility of reporting all adverse events to the appropriate regulatory authorities. 16 21 7.5 PRODUCT TECHNICAL COMPLAINTS AND RECALLS. (a) NOVAVAX Products. NOVAVAX shall have the sole authority and responsibility to respond to any regulatory agencies, including without limitation the FDA, to respond to NOVAVAX Product Technical Complaints and medical complaints and to handle all returns, recalls or market withdrawals of the NOVAVAX Products in accordance with applicable law, at NOVAVAX's cost and expense; provided, however, that if any such returns, recalls or market withdrawals of the NOVAVAX Products are caused solely by actions or inactions by KING constituting a breach of the provisions of this Agreement or a violation of applicable law, KING, as NOVAVAX's sole remedy, shall bear all reasonable Direct Costs associated with such actions or inactions in connection therewith, provided, however, that KING shall have no obligation to reimburse NOVAVAX for any incidental or consequential damages incurred in connection therewith, including, without limitation, any lost profits. Prior to the NOVAVAX Product Initiation Date, the PMC shall adopt an SOP for handling NOVAVAX Product Technical Complaints, medical inquiries and adverse event information received by the parties not otherwise specified in this Agreement. The PMC shall revise the SOP from time to time during the Term as the PMC deems necessary. (b) KING Products. KING shall have the sole authority and responsibility to respond to any regulatory agencies, including without limitation the FDA, to respond to KING Product Technical Complaints and medical complaints and to handle all returns, recalls or market withdrawals of the KING Products in accordance with applicable law, at KING's cost and expense; provided, however, that if any such returns, recalls or market withdrawals of the KING Products are caused solely by actions or inactions by NOVAVAX constituting a breach of the provisions of this Agreement or a violation of applicable law, NOVAVAX, as KING's sole remedy, shall bear all reasonable Direct Costs associated with such actions or inactions in connection therewith, provided, however that NOVAVAX shall have no obligation to reimburse KING for any incidental or consequential damages incurred in connection therewith, including, without limitation, any lost profits. Prior to the KING Product Initiation Date, the PMC shall adopt an SOP for handling KING Product Technical Complaints, medical inquiries and adverse event information received by the parties not otherwise specified in this Agreement. The PMC shall revise the SOP from time to time during the Term as the PMC deems necessary. (c) Each party shall promptly (but in any case, not later than 48 hours) notify the other party in writing of any order, request or directive of a court or other governmental authority to recall or withdraw a Copromote Product. NOVAVAX shall be solely responsible for determining whether to issue a recall or withdrawal and for the cost and expense of any such recall or withdrawal of the NOVAVAX Products, subject to reasonable consultation with KING. King shall be solely responsible for determining whether to issue a recall or withdrawal and for 17 22 the cost and expense of any such recall or withdrawal of the KING Products, subject to reasonable consultation with NOVAVAX. (d) Because the NOVAVAX Products are manufactured by or on behalf of NOVAVAX and the underlying NDA is owned solely by NOVAVAX or an Affiliate of NOVAVAX, KING shall send NOVAVAX Product Technical Complaints to NOVAVAX. If the NOVAVAX Product Technical Complaint cannot be categorized as a B Complaint (meaning no actual or potential harm to patient), then the NOVAVAX Product Technical Complaint will be categorized as an A Complaint. A Complaints shall be sent to NOVAVAX within twenty-four (24) hours of receipt and B Complaints shall be sent within three (3) business days of receipt, but no more than four (4) calendar days from the receipt date by KING. NOVAVAX shall promptly notify KING following receipt by NOVAVAX of any NOVAVAX Product Technical Complaints. (e) Because the KING Products are manufactured by or on behalf of KING and the underlying NDA is owned solely by KING or an Affiliate of KING, NOVAVAX shall send KING Product Technical Complaints to KING. If the KING Product Technical Complaint cannot be categorized as a B Complaint (meaning no actual or potential harm to patient), then the KING Product Technical Complaint will be categorized as an A Complaint. A Complaints shall be sent to KING within twenty-four (24) hours of receipt and B Complaints shall be sent within three (3) business days of receipt, but no more than four (4) calendar days from the receipt date by NOVAVAX. KING shall promptly notify NOVAVAX following receipt by KING of any KING Product Technical Complaints. 7.6 RETURNS. (a) Any NOVAVAX Products returned to KING shall be shipped to the facility designated by NOVAVAX, with shipping and other Direct Costs to be paid by NOVAVAX. Risk of loss or damage with respect to NOVAVAX Products shipped to NOVAVAX under this Section 7 shall pass to NOVAVAX on delivery to a carrier designated by NOVAVAX. KING shall incur no liability of any nature in the handling of such returns unless such NOVAVAX Products were handled or stored improperly by KING. (b) Any KING Products returned to NOVAVAX shall be shipped to the facility designated by KING, with shipping and other Direct Costs to be paid by KING. Risk of loss or damage with respect to the KING Products shipped to KING under this Section 7 shall pass to KING on delivery to a carrier designated by KING. NOVAVAX shall incur no liability of any nature in the handling of such returns unless such KING Products were handled or stored improperly by NOVAVAX. 18 23 7.7 NOTICE OF GOVERNMENT INSPECTIONS. (a) NOVAVAX agrees that, to the extent it becomes aware of the results, observations and/or outcome of any inspections or audits of the facilities or operations involved in the manufacture, processing, testing or packaging of the Copromote Products conducted by governmental agencies, including without limitation the FDA, NOVAVAX will notify KING of any such information as it relates to the Copromote Products within three (3) days of obtaining the information. NOVAVAX will provide KING copies of reports of quality audits conducted by NOVAVAX and will apprise KING of material manufacturing issues affecting supply of the Copromote Products. (b) KING agrees that, to the extent it becomes aware of the results, observations and/or outcome of any inspections or audits of the facilities or operations involved in the manufacture, processing, testing or packaging of the Copromote Products conducted by governmental agencies, including without limitation the FDA, KING will notify NOVAVAX of any such information as it relates to the Copromote Products within three (3) days of obtaining the information. KING will provide NOVAVAX copies of reports of quality audits conducted by KING and will apprise NOVAVAX of material manufacturing issues affecting supply of the Copromote Products. 7.8 GOVERNMENT INQUIRIES. Upon being contacted by the FDA or any other federal, state or local agency for any regulatory purpose pertaining specifically to this Agreement or to the Copromote Products, a party shall immediately notify the other party. Either party may permit unannounced FDA or similar unannounced inspections of Copromote Products or facilities and respond to the extent necessary to comply with its obligations under applicable law. Each party shall provide the other with notices of any other inspection and shall allow that party to participate to the extent necessary in the sole opinion of that party, in such inspections and responses pertaining to the Copromote Products. 7.9 MEDICAL INQUIRIES. (a) NOVAVAX Products. NOVAVAX shall handle all medical inquiries concerning the NOVAVAX Products. KING shall refer all medical information requests and/or medical inquiries to NOVAVAX in accordance with the procedures set forth in the SOP referred to in Section 7.5. (b) KING Products. KING shall handle all medical inquiries concerning the KING Products. NOVAVAX shall refer all medical information requests to the Regulatory Affairs department of KING in accordance with the procedures set forth in the SOP referred to in Section 7.5. 19 24 8. MANAGEMENT COMMITTEE 8.1 ESTABLISHMENT OF THE PMC. The parties hereto recognize that it is in the best interests of both parties to (a) maximize the sales of and profits arising from the Copromote Products in the Territory and (b) optimize the marketing of the Copromote Products in the Territory during the Term and to coordinate the activities of both parties with respect to the promotion of the Copromote Products in the Territory. Accordingly, the parties hereby establish a management committee (the "Product Management Committee" or "PMC") made up of three (3) representatives of each party. One of KING's senior representatives shall chair the PMC. Both parties shall have the right from time to time to substitute individuals, on a permanent or temporary basis, for any of its previously designated members of the PMC. The members appointed by each party shall be vested with appropriate decision-making authority and power with respect to the promotion and marketing of the Copromote Products by such party. Members of each such committee shall be employees of the parties (or their Affiliates), respectively, and shall not be outside consultants, independent contractors or outside legal counsel, but such Persons are permitted to attend meetings of the PMC. Each party shall bear its own costs associated with its participation on the PMC. 8.2 PURPOSE AND RESPONSIBILITIES OF THE PMC. The purpose of the PMC is to oversee the marketing and promotion of the Copromote Products by the parties as contemplated by this Agreement by coordinating the marketing and promotional efforts of the parties in the Territory and maximizing the sales thereof. Accordingly, in addition to the specific matters addressed elsewhere in this Agreement, and subject to the other provisions of this Agreement the PMC shall approve the following: (a) marketing and promotion activities for the Copromote Products in the Territory; (b) the annual Marketing Plan for the Copromote Products and related Budget of Net Sales and Marketing Expenses for use in the Territory; (c) the market definition against which the Copromote Products will be measured in the Territory; (d) Copromote Product production forecasts for the Territory; (e) Marketing Expenses in the Territory; 20 25 (f) targets for sales force staffing, number and frequency of quarterly and annual Details in the Territory; (g) Copromote Product positioning, strategy and objectives in the Territory; (h) determining the format and quantities of promotional sales, marketing and educational materials for the Copromote Products which will be provided to the OB/GYN's called upon in the Details by either party's sales representatives in the Territory; (i) quantities and schedule of delivery of samples of the Copromote Products to be provided by NOVAVAX to each party's sales representatives and to the OB/GYN's called upon in the Details by each party's sales force in the Territory; and (j) managed health care strategy tactics in the Territory. 8.3 PMC MEETINGS. During the Term of this Agreement, the PMC shall meet: (a) at least once each Agreement Quarter on a date and at a location to be agreed to by the PMC, and (b) upon written notice by either party to the other that a meeting is required or requested, in which case a meeting will be held within thirty (30) calendar days of such notice on a date and at a location to be agreed to by the parties, or sooner if warranted by circumstances. Notice requesting a meeting shall include adequate information describing the activity to be reviewed. Any meetings of the PMC may be held in person at a location to be agreed to by the parties, or by videoconference or teleconference. Other representatives of the parties may attend PMC meetings as consultants or advisors to the participants. At least one week prior to any meeting of the PMC, each of the parties shall provide the other party with a proposed agenda of the matters to be discussed at such meeting. The parties shall agree, at the first meeting of the PMC, upon procedures for maintaining meeting minutes. If the parties cannot agree upon a time and location, then the PMC Chairman shall designate, in his sole discretion, a reasonable time and location. 8.4 VOTE AND APPROVAL. The PMC may take action on a matter at a meeting only if a quorum exists with respect to that matter. The attendance of at least two (2) members of the PMC of each party at a meeting shall constitute a quorum for the transaction of business. Each member of the PMC shall be entitled to cast one (1) vote on any matter to be acted upon at any meeting of the PMC. All decisions made by the PMC shall require a unanimous vote by the members of the PMC present at the meeting. Any action required or permitted to be taken at any meeting of the 21 26 PMC may be taken without a meeting if the action is taken by all members of the PMC. The action must be evidenced by one or more written consents describing the action taken and signed by each member of the PMC. 8.5 MARKETING PLAN AND BUDGET. On or prior to October 31 of each year during the Term of this Agreement, the parties shall develop a Marketing Plan and the related Budget for the following calendar year and submit such Marketing Plan to the PMC for approval; provided, that the Marketing Plan with respect to the KING Products for the period beginning with the KING Product Initiation Date shall be developed by the parties and submitted for the approval of the PMC on or prior to the KING Product Initiation Date, and the Marketing Plan with respect to the NOVAVAX Products for the period beginning with the NOVAVAX Product Initiation Date shall be developed by the parties and submitted for the approval of the PMC on or prior to the NOVAVAX Product Initiation date. Each Marketing Plan shall set forth the manner in which the Copromote Products are to be promoted and Detailed in the Territory during the period to which the Marketing Plan relates and shall include, at a minimum: (a) the minimum number of quarterly and annual Details to be provided by each party and targets therefor which shall be allocated in a professionally equitable manner (the "Minimum Targeted Details"); (b) Copromote Product positioning, strategy and tactics with supporting advertising and promotional activity to be undertaken; (c) the Budget, including, without limitation, direct to consumer advertising, if any; (d) any training and/or sampling programs to be conducted; (e) medical and education programs to be conducted; (f) public relations activities; (g) medical conventions to be attended; and (h) such other information relating to the marketing of the Copromote Products as deemed advisable by the PMC. Neither party shall make any material change in any previously approved Marketing Plan without the prior written approval of the PMC. Additionally, within one hundred twenty (120) days after the Effective Date, NOVAVAX shall submit to the PMC for review and approval an initial NOVAVAX Product production forecast, and KING shall submit to the PMC for review and approval an initial KING Product production forecast. 8.6 ADDITIONAL STUDIES, LINE EXTENSIONS AND NEW PRODUCTS. (a) Any proposals for additional clinical studies of any NOVAVAX Product, including, without limitation, Phase IV studies and clinical studies for purposes of expanding the indications or otherwise changing the label for such NOVAVAX Product shall be submitted to the PMC for consideration, whether such studies are proposed by KING or NOVAVAX. (i) If KING, in its sole discretion, elects to equally share with NOVAVAX and actually pays those Direct Costs for such study for which NOVAVAX will be responsible, KING shall be entitled to receive fifty percent 22 27 (50%) of any revenues that NOVAVAX may receive in connection with such study. If KING, in its sole discretion, elects not to share in the costs of such study, NOVAVAX shall be free to proceed with such study and KING shall have no right to receive any portion of any revenue NOVAVAX receives in connection therewith so long as such revenues are clearly identifiable and separable. (ii) If NOVAVAX, in its sole discretion, elects to equally share with KING and actually pays those Direct Costs for such study for which KING will be responsible, NOVAVAX shall be entitled to receive fifty percent (50%) of any revenues that KING may receive in connection with such study. If NOVAVAX, in its sole discretion, elects not to share in the costs of such study, KING shall be free to proceed with such study and NOVAVAX shall have no right to receive any portion of any revenue KING receives in connection therewith so long as such revenues are clearly identifiable and separable. (b) Any proposals for development of additional NOVAVAX Products, including, without limitation, new formulations and line extensions, shall be submitted to the PMC for consideration, whether such development activities are proposed by NOVAVAX or KING. If KING, in its sole discretion, elects to equally share with NOVAVAX and actually pays those Direct Costs for such development activities for which NOVAVAX will be responsible, KING shall be entitled to receive fifty percent (50%) of any revenues that NOVAVAX actually receives from sales of products resulting from such development activities and any such additional products shall become NOVAVAX Products under this Agreement. If KING, in its sole discretion, elects not to share in the costs of such development activities, NOVAVAX shall be free to proceed with such development activities and KING shall have no right to receive any portion of any revenues in connection therewith so long as such revenues are clearly identifiable and separable and such additional products shall not be considered to be NOVAVAX Products under this Agreement (i.e., NOVAVAX will have the right to receive all the benefits in connection with such additional products and KING shall have no obligations in connection therewith). 8.7 DISPUTE RESOLUTION. (a) The parties recognize that disputes as to certain matters may from time to time arise during the Term of this Agreement that relate to either party's rights and/or obligations hereunder. It is the objective of the parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the parties agree to follow the procedures set forth in this Section 8.7 if and when a dispute arises under this Agreement. (b) Unless otherwise specifically recited in this Agreement, disputes between the parties under this Agreement shall be first referred to the 23 28 PMC by either party as soon as reasonably possible after such dispute has arisen. If the PMC is unable to resolve such a dispute within fifteen (15) days of being requested by a party to resolve such dispute, either party may, by written notice to the other, have such dispute referred to their respective executive officers designated below or their designees, for attempted resolution by negotiations within thirty (30) days after such notice is received. The designated officers are as follows: For NOVAVAX: President of Novavax, Inc. For KING: President of KING Pharmaceuticals, Inc. Any dispute that cannot be resolved within thirty (30) calendar days after submission to the designated officers shall be submitted for arbitration in accordance with the rules of the American Arbitration Association, and the award or decision made by the arbitrator(s) designated pursuant to the American Arbitration Association rules of arbitration shall be binding upon the parties hereto and a judgment consistent therewith may be entered in any court of competent jurisdiction; provided, however, that nothing herein contained shall preclude a party from seeking equitable remedies in a court of competent jurisdiction in order to enforce the provisions of Section 16 hereof. Any proceeding brought by NOVAVAX against KING shall be brought in a state or federal court in Tennessee. Any proceeding brought by KING against NOVAVAX shall be brought in a state or federal court in Maryland. (c) Notwithstanding Section 8.7(b), if the PMC proposes a modification to a previously approved Marketing Plan and such modification is expected to have a material adverse impact on the results of operations of one of the parties then the individuals identified in Section 8.7(b) shall mutually agree to such modifications prior to the implementation thereof. 9. FEES AND EXPENSES 9.1 CONSIDERATION FEE. (a) NOVAVAX Products. Within forty-five (45) days after the end of each calendar quarter during the Term, NOVAVAX shall pay to KING (by wire transfer of immediately available funds to an account designated by KING to NOVAVAX in writing) an amount ("NP Consideration Fee") equal to fifty percent (50%) of the Net Sales of the NOVAVAX Products in the Territory during such quarter minus fifty percent (50%) of the Net Costs of NOVAVAX Products in the Territory during such quarter; provided, however, that NOVAVAX shall be solely responsible for the Net Costs of NOVAVAX Products to the extent that such Net Costs, as a percentage of Net Sales, exceed seventeen percent (17%) 24 29 during any calendar quarter. By way of example only, Exhibit 9.1 reflects a sample calculation of the NP Consideration Fee. (b) KING Products. Within forty-five (45) days after the end of each calendar quarter during the Term, KING shall pay to NOVAVAX (by wire transfer of immediately available funds to an account designated by NOVAVAX to KING in writing) an amount ("KP Consideration Fee") equal to (i) fifty percent (50%) of the Incremental Sales for the KING Products during such quarter (calculated using the baseline sales figures on Exhibit 9.1(b)) minus (ii) fifty percent (50%) of the Incremental Costs for the KING Products during such quarter. By way of example only, Exhibit 9.1 reflects a sample calculation of the KP Consideration Fee. 9.2 MILESTONE PAYMENTS. KING shall pay NOVAVAX Five Million Dollars ($5,000,000) if (i) the NDA for ESTRASORB(TM) is accepted for filing by the FDA on or before June 30, 2001; and (ii) NOVAVAX provides KING with the Consultant Opinion Letters required to be delivered pursuant to Section 5(a) of that certain Note Purchase Agreement dated as of December 19, 2000 by and between King and Novavax (the "Note Purchase Agreement"), King shall pay NOVAVAX Two Million Five Hundred Thousand Dollars ($2,500,000) if (i) the NDA for ESTRASORB(TM) is accepted for filing by the FDA after June 30, 2001, but on or before September 30, 2001; and (ii) NOVAVAX provides KING with the Consultant Opinion Letters required to be delivered pursuant to Section 5(a) of the Note Purchase Agreement. 9.3 RESIDUAL PAYMENTS. (a) Payments by NOVAVAX. If this Agreement shall expire at the end of the Initial Term and KING shall not have elected (or shall not have the right to elect) to extend the Initial Term with respect to the NOVAVAX Products for the Extended Promotion Term, then for the twenty-four (24) month period after the date of such expiration: (i) NOVAVAX shall make residual payments (the "Residual Payments") to KING equal to twenty-five percent (25%) of Net Sales of the NOVAVAX Products during such period, and (ii) shall conduct its business involving the marketing and sale of the NOVAVAX products only in the ordinary course and shall not affect the time of any sales of the NOVAVAX Products in order to affect the amount of Net Sales for such period. Within forty-five (45) days after the end of each calendar quarter (or part thereof) during such period, NOVAVAX shall pay to KING (by wire transfer of immediately available funds to an account designated by KING to NOVAVAX in writing) an amount equal to the Residual Payments accrued but unpaid through the end of such calendar quarter. 25 30 (b) Payments by KING. For the twenty-four (24) month period after the date of expiration of this Agreement: (i) KING shall make Residual Payments to NOVAVAX equal to twenty-five percent (25%) of Incremental Sales of the KING Products during such period, and (ii) shall conduct its business involving the marketing and sale of the KING products only in the ordinary course and shall not affect the time of any sales of the KING Products in order to affect the amount of Net Sales for such period. Within forty-five (45) days after the end of each calendar quarter (or part thereof) during such period, KING shall pay to NOVAVAX (by wire transfer of immediately available funds to an account designated by NOVAVAX to KING in writing) an amount equal to the Residual Payments accrued but unpaid through the end of such calendar quarter. 9.4 MARKETING EXPENSES. (a) In accordance with Section 8.5, as part of the Marketing Plan, the parties shall develop a Budget of Marketing Expenses and submit such Marketing Plan to the PMC for approval for each calendar year during the Term. The parties acknowledge and agree that the Marketing Expenses approved by the PMC in the Budget shall be shared equally by the parties. (b) NOVAVAX Products. NOVAVAX shall initially pay for all Marketing as such Marketing Expenses are incurred for NOVAVAX Products and shall keep accurate and reasonably detailed records of such payments. NOVAVAX shall provide KING with a weekly update of an estimate of the Marketing Expenses and other PMC approved miscellaneous expenses incurred by NOVAVAX during the previous week within fifteen (15) days after the end of each month. NOVAVAX shall provide KING with a detailed statement of Marketing Expenses and other PMC-approved miscellaneous expenses incurred during such month along with an invoice for KING's share thereof, which invoice will be payable, less any credits for Marketing Expenses and other PMC-approved miscellaneous expenses incurred and paid by KING within fifteen (15) days of KING's receipt thereof. KING shall also provide NOVAVAX with a weekly update of an estimate of the Marketing Expenses and other PMC approved miscellaneous expenses incurred and paid (other than to NOVAVAX) by it during the previous week and within fifteen (15) days after the end of each month, KING shall provide NOVAVAX with a detailed statement of all Marketing Expenses and other PMC-approved miscellaneous expenses incurred by KING during such month. Within thirty (30) days after the end of each calendar quarter during the Term, NOVAVAX shall prepare a reconciliation statement of Marketing Expenses incurred by each party during such calendar quarter. If such reconciliation statement shall show that either party reasonably incurred and paid Marketing Expenses and other PMC-approved miscellaneous costs and expenses in excess of the amount payable by such party, and that the other party incurred and paid Marketing Expenses below 26 31 the amount payable by such party, then within thirty (30) days after such reconciliation statement is submitted to KING, the underpaying party shall reimburse the other party for the amount of such underpayment. Any overpayment which is not reimbursed in accordance with the foregoing sentence shall be credited to Marketing Expenses payable by the overpaying party in the following calendar year, up to an amount equal to five percent (5%) of the amount that was payable by such party pursuant to this Section 9.4(b) as applicable, in the year to which the overpayment relates, and the remainder of any such unreimbursed overpayment shall be repaid as determined by the PMC. (c) KING Products. KING shall initially pay for all Marketing as such Marketing Expenses are incurred for KING Products and shall keep accurate and reasonably detailed records of such payments. KING shall provide NOVAVAX with a weekly update of an estimate of the Marketing Expenses incurred during the previous week within fifteen (15) days after the end of each month. KING shall provide NOVAVAX with a detailed monthly statement of Marketing Expenses and other PMC-approved miscellaneous expenses related to Incremental Sales incurred during such month along with an invoice for NOVAVAX's share thereof, which invoice will be payable, less any credits for Marketing Expenses and other PMC-approved miscellaneous expenses incurred and paid by NOVAVAX within fifteen (15) days of NOVAVAX's receipt thereof. NOVAVAX shall also provide KING with a weekly update of an estimate of the Marketing Expenses and other PMC-approved miscellaneous expenses incurred by it during the previous week and within fifteen (15) days after the end of each month, NOVAVAX shall provide KING with a detailed statement of all Marketing Expenses and other PMC-approved miscellaneous expenses incurred by NOVAVAX during such month. Within thirty (30) days after the end of each calendar quarter during the Term, KING shall prepare a reconciliation statement of Marketing Expenses incurred by each party during such calendar quarter. If such reconciliation statement shall show that either party reasonably incurred and paid Marketing Expenses and other PMC-approved miscellaneous costs and expenses in excess of the amount payable by such party, and that the other party incurred and paid Marketing Expenses below the amount payable by such party, then within thirty (30) days after such reconciliation statement is submitted to NOVAVAX, the underpaying party shall reimburse the other party for the amount of such underpayment. Any overpayment which is not reimbursed in accordance with the foregoing sentence shall be credited to Marketing Expenses payable by the overpaying party in the following calendar year, up to an amount equal to five percent (5%) of the amount that was payable by such party pursuant to this Section 9.4(c) as applicable, in the year to which the overpayment relates, and the remainder of any such unreimbursed overpayment shall be repaid as determined by the PMC. 27 32 9.5 EXCESS DETAIL COSTS. If, during any calendar year during the Term, a party reasonably determines, based on the NOVAVAX Detail Reports or the KING Detail Reports, as the case may be, that the other party is failing to conduct the minimum number or percentage of Details (the "Minimum Targeted Details") for the NOVAVAX Products required to be conducted by such other party by the Marketing Plan for such year, then such party may elect to conduct a greater number of Details for the NOVAVAX Products than the Minimum Targeted Details for such party (such greater number of Details, the "Excess Details"). A party conducting Excess Details for the NOVAVAX Products shall notify the other party promptly in writing following the Agreement Quarter in which such Excess Details were conducted, and within thirty (30) days after receipt of such notice, the other party shall pay to such party an amount equal to two (2) times the then current Detail Cost multiplied by the number of such Excess Details; provided, that any payments to a party under this Section 9.5 on Details for the NOVAVAX Products in excess of one hundred five percent (105%) of the Minimum Targeted Details for such party for any calendar year shall be subject to the prior approval of the PMC. 9.6 OTHER MISCELLANEOUS COSTS AND EXPENSES. Except as otherwise expressly provided in this Agreement, KING and NOVAVAX shall each pay one-half (1/2) of all costs and expenses, which are specifically approved by the PMC; provided, however that this Section 9.6 shall not be construed to require KING or any of its Affiliates to manufacture the NOVAVAX Products or samples of the NOVAVAX Products, nor shall it be construed to require NOVAVAX or any of its Affiliates to manufacture the KING Products or samples of the KING Products. 9.7 COSTS SAVINGS. (a) If KING is able to assist NOVAVAX in reducing NOVAVAX's cost of goods of any NOVAVAX Product, then NOVAVAX shall pay to KING one half (1/2) of the resulting cost savings and the parties shall in good faith establish arrangements for making such payments; provided, however, this Section 9.7 shall not be construed or interpreted to require KING or any of its Affiliates to manufacture any NOVAVAX Product or any active ingredients or to provide any components or labeling. (b) If NOVAVAX is able to assist KING in reducing KING's cost of goods of any KING Product, then KING shall pay to NOVAVAX one half (1/2) of the resulting cost savings and the parties shall in good faith establish arrangements for making such payments; provided, however, this Section 9.7 shall not be construed or interpreted to require NOVAVAX or any of its Affiliates 28 33 to manufacture any KING Product or any active ingredients or to provide any components or labeling. 10. RECORDKEEPING AND AUDITS 10.1 MAINTENANCE OF BOOKS AND RECORDS. Each party shall maintain complete and accurate books and records in sufficient detail, in accordance with GAAP and all applicable laws, rules, ordinances and regulations, to enable verification of the performance of such party's obligations under this Agreement. Such records shall be maintained for a period of twenty-four (24) months after the end of the Term or longer if required by applicable law. 10.2 PAYMENT AUDITS. (a) Either party (herein, the "Auditing Party") may demand, no more than once during any calendar year from the KING Product Initiation Date until two (2) years following the end of the Term, an audit of the relevant books and records of the other party (herein, the "Audited Party") in order to verify the Audited Party's reports on the matters addressed in this Agreement. Upon no less than fifteen (15) days' prior written notice to the Audited Party, the Audited Party shall grant access to members of a nationally recognized independent public accounting firm selected by the Auditing Party to the relevant books and records of the Audited Party in order to conduct a review or audit thereof. Such access shall be available during normal business hours. The accountants shall report their conclusions and calculations to the Auditing Party and the Audited Party; provided, that in no event shall the accountants disclose any information of the Audited Party except to the extent necessary to verify the Audited Party's reporting and other compliance with the terms of this Agreement and, at the request of the Audited Party, such accountants will execute appropriate non-disclosure agreements. Except as hereinafter set forth, the Auditing Party shall bear the full cost of the performance of any such audit. Any information obtained from an audit under this Section 10.2 shall be deemed Confidential and Proprietary Information of the Audited Party. (b) If, as a result of any audit of the books and records of the Audited Party, it is shown that the Audited Party's payments to the Auditing Party under this Agreement with respect to the period of time audited were less than the amount which should have been paid to the Auditing Party pursuant to this Agreement, then the Audited Party shall pay to the Auditing Party the amount of such shortfall within thirty (30) days after the Auditing Party's demand therefor. If, as a result of any audit of the books and records of Audited Party, it is shown that the Audited Party's payments to the Auditing Party under this Agreement with respect to the period of time audited were 29 34 more than the amount which should have been paid to the Auditing Party pursuant to this Agreement, then the Auditing Party shall pay to the Audited Party the amount of such overpayment within thirty (30) days after the Audited Party's demand therefor. In addition, if any amount payable by the Audited Party pursuant to this Section 10.2 is more than the amount which should have originally been paid pursuant to this Agreement by an amount in excess of ten percent (10%) of the payments actually made with respect to the period in question, then the Audited Party shall also reimburse the Auditing Party for its documented reasonable out-of-pocket costs and expenses incurred in connection with the audit. 10.3 COMPLIANCE AUDITS. In addition to the access and audit rights of the parties set forth in Section 10.2, no more than once during any calendar year during the Term, each party shall, and shall cause its Affiliates to, afford to the other party reasonable access during normal business hours (and at such other times as the parties may mutually agree) to the relevant books, records and other information of such party upon reasonable prior notice from the other party may reasonably request in order to monitor such party's compliance with such party's obligations under the applicable Marketing Plan and its other non-monetary obligations under this Agreement. Such access shall be available during normal business hours. Any inspection conducted by either party pursuant to this Section 10.3 shall be at the sole cost and expense of such party. 11. TERM AND TERMINATION 11.1 TERM OF AGREEMENT. (a) The initial term of this Agreement (the "Initial Term") shall commence as of the Effective Date hereof and, unless terminated sooner or extended as provided below, shall continue until the last to expire of any patent rights covering the NOVAVAX Products which grant exclusivity to the marketing of the NOVAVAX Products (the Initial Term, as extended or sooner terminated, the "Term"). (b) If NOVAVAX (or any of its Affiliates) shall obtain any additional patent or other exclusive rights with respect to the manufacturing, sale, marketing or promotion of the NOVAVAX Products, and such rights shall have a term which extends beyond the Initial Term ("Additional Exclusivity Rights"), then NOVAVAX shall so notify KING promptly and KING may, in its sole discretion, elect to extend the Initial Term until the expiration or termination of such Additional Exclusivity Rights (the "Extended Promotion Term"); provided, however, that KING shall not be entitled to extend the Initial 30 35 Term pursuant to this Section 11.1(b) if KING shall then be in breach or default of this Agreement in any material respect. If KING shall elect to extend the Initial Term pursuant to this Section 11.1(b), then KING shall provide written notice thereof to NOVAVAX at least sixty (60) days prior to the expiration of the Initial Term, in which case the terms and conditions of this Agreement shall remain in full force and effect until the expiration of the Extended Promotion Term, unless terminated sooner as provided herein. In connection with any extension of the Initial Term pursuant to this Section 11.1(b), the parties shall in good faith enter into such amendments or modifications to this Agreement that may be necessary or appropriate to implement the terms and conditions of this Agreement, as modified or supplemented by the Additional Exclusivity Rights; provided, that the extension provided under this Section 11.1(b) shall not be subject to agreement on such amendments or modifications, and failing such agreement this Agreement shall continue in full force and effect. 11.2 TERMINATION BY NOVAVAX. (a) NOVAVAX shall have the right to terminate this Agreement except as provided in Section 11.4 below, at any time upon written notice to KING, if KING breaches in a material way any of the representations, warranties, covenants or agreements set forth in this Agreement or otherwise materially defaults in the performance of any of its duties or obligations under this Agreement, which breach or default shall not be cured within sixty (60) days after written notice is given to KING specifying the breach or default. (b) NOVAVAX shall have the right to terminate this Agreement with respect to any KING Product upon thirty (30) days' prior notice to KING if there has been a material adverse change in the market for such KING Product in the Territory such as a recall or withdrawal of such KING Product, or a safety problem related to such KING Product, which was not remedied by KING within sixty (60) days after receiving notice of such change. (c) To the extent permitted by law, NOVAVAX shall have the right to terminate this Agreement immediately upon notice to KING, if KING is declared bankrupt or insolvent where there is an assignment for the benefit of creditors, or if a receiver is appointed or proceedings commenced, (and not dismissed within ninety (90) days) voluntarily or involuntarily, under any bankruptcy or similar law. 11.3 TERMINATION BY KING. KING shall have the right to terminate this Agreement, in its sole discretion, as follows: (a) at any time on or before June 30, 2001 or immediate notice, in the event that KING, in conducting its continued due diligence on the NOVAVAX 31 36 Products, determines, in its sole discretion, that there are safety or efficacy concerns relating to the NOVAVAX Products; (b) immediately upon written notice to NOVAVAX, if (i) the FDA shall not have given written notice to NOVAVAX that the FDA has accepted the NDA for the ESTRASORB(TM) Model Claims on or prior to March 31, 2002, or (ii) KING is advised between March 31, 2002 and December 31, 2002, by a nationally recognized pharmaceuticals consulting firm, that the FDA is not expected to approve the NDA for the ESTRASORB(TM) by December 31, 2002; (c) within sixty (60) days after the third anniversary of the NOVAVAX Product Initiation Date, upon sixty (60) days' written notice to NOVAVAX if annualized Net Sales of the NOVAVAX Products, based on the run rate over the preceding six (6) months are less than Fifty Million dollars ($50,000,000); (d) except as provided in Section 11.4 below, at any time upon written notice to NOVAVAX, if NOVAVAX breaches in a material way any of the representations, warranties, covenants or agreements set forth in this Agreement or otherwise materially defaults in the performance of any of its duties or obligations under this Agreement, which breach or default shall not be cured within sixty (60) days after written notice is given to NOVAVAX specifying the breach or default; (e) upon thirty (30) days' prior notice to NOVAVAX if there has been a material adverse change in the market for a NOVAVAX Product in the Territory such as a recall or withdrawal of such NOVAVAX Product, or a safety problem related to such NOVAVAX Product; (f) with respect to any KING Product, upon thirty (30) days' prior notice to NOVAVAX if there has been a material adverse change in the market for such KING Product in the Territory such as a recall or withdrawal of such King Product, or a safety problem related to such KING Product; or (g) immediately upon notice to NOVAVAX, to the extent permitted by law, if NOVAVAX is declared bankrupt or insolvent where there is an assignment for the benefit of creditors, or if a receiver is appointed or proceedings commenced (and not dismissed within ninety (90) days), voluntarily or involuntarily, under any bankruptcy or similar law. (h) an "Event of Default" shall have occurred under that certain 4% Convertible Senior Note, dated December 19, 2000, made by NOVAVAX to KING. 32 37 11.4 FAILURE TO MEET DETAIL REQUIREMENTS. Notwithstanding any provision in this Agreement to the contrary, in the event that either party (the "Nonperforming Party") fails to perform at least ninety percent (90%) of the minimum number of Details it is required to perform during any calendar year and the other party has performed at least ninety percent (90%) of the minimum number of Details it is required to perform during such calendar year, such other party shall have sixty (60) days from its receipt of the Nonperforming Party's final Detail Report for such calendar year to notify the Nonperforming Party that it is in breach of such obligations, in which event the Nonperforming Party shall have the opportunity to cure such default by providing a sufficient number of extra Details to make up for such short fall prior to the end of the first full calendar quarter following the calendar quarter in which the other party provides such breach notice to the Nonperforming Party. In the event the Nonperforming Party fails to so cure such default, the other party may, within thirty (30) days after the end of such calendar quarter, terminate this Agreement on sixty (60) days' prior notice to the Nonperforming Party. If the other party (i) fails to give timely notice of the Nonperforming Party's breach or of termination due to the other Nonperforming Party's failure to cure such breach in accordance with this Section 11.4 or (ii) elects, in accordance with Section 9.5 hereof, to perform excess Details to make up the Nonperforming Party's shortfall of required Details, the other party shall be deemed to have waived its rights under this Section 11.4 with respect to such breach, provided, however, that any such waiver shall not be construed as a waiver of such other party's rights under this Section 11.4 as to any further breaches by the Nonperforming Party. Notwithstanding the foregoing, the parties agree that the Nonperforming Party shall not be in breach of its Detailing obligations for any calendar year hereunder if the Nonperforming Party provides at least ninety percent (90%) of the minimum number of Details it is required to perform during such calendar year. 11.5 EFFECTS OF TERMINATION. (a) Neither the termination nor expiration of this Agreement shall release or operate to discharge either party from any liability or obligation that may have accrued prior to such termination or expiration. Any termination of this Agreement as provided herein shall not be an exclusive remedy but shall be in addition to any remedies whatsoever that may be available to the terminating party. (b) Notwithstanding the giving of any notice of termination pursuant to this Section 11, each party shall continue to fulfill its obligations under this Agreement at all times until the effective date of any such termination. 33 38 11.6 ACTIONS UPON TERMINATION. (a) NOVAVAX Products. Upon the termination or expiration of this Agreement for any reason with respect to the NOVAVAX Products, KING shall immediately cease all of its promotional and marketing activities for the terminated NOVAVAX Products, discontinue any use of the NOVAVAX Trademarks related to the terminated NOVAVAX Products, and return to NOVAVAX or destroy all sales training and Marketing Materials for the terminated NOVAVAX Products containing NOVAVAX Trademarks and any remaining terminated NOVAVAX Products samples (not already distributed or destroyed with destruction certified by KING). After any termination NOVAVAX shall retain the right to use any sales training and Marketing Materials developed under the auspices of the PMC during the Term of this Agreement, provided, however, that NOVAVAX shall have no further right to use KING's name or any KING Trademark or logos in connection therewith. (b) KING Products. Upon the termination or expiration of this Agreement for any reason with respect to the KING Products, NOVAVAX shall immediately cease all of its promotional and marketing activities for the terminated KING Products, discontinue any use of the KING Trademarks related to the terminated KING Products, and return to KING or destroy all sales training and Marketing Materials for the terminated KING Products containing KING Trademarks and any remaining terminated KING Products samples (not already distributed or destroyed with destruction certified by NOVAVAX). After any termination KING shall retain the right to use any sales training and Marketing Materials developed under the auspices of the PMC during the Term of this Agreement, provided, however, that KING shall have no further right to use NOVAVAX's name or any of the NOVAVAX Trademarks or logos in connection therewith. 11.7 SURVIVAL. The representations, warranties, covenants and agreements of the parties in Sections 3.3(e), 4.3(e), 9 (to the extent applicable pursuant to Section 11.8), 10, 11, 12, 13, 14, 15 and 16 hereof shall survive any expiration or termination of this Agreement. 11.8 PAYMENTS UPON TERMINATION. (a) The expiration or termination of this Agreement pursuant to this Section 11 with respect to any Copromote Product shall not release (i) either party from any obligation to pay to the other party any amounts accrued under Section 9 of this Agreement in connection with activities completed, expenses accrued and Net Sales realized for such Copromote Product with respect to the period prior to the effective date of such expiration or termination; or (ii) if applicable, NOVAVAX from any obligation to make Residual Payments to KING; 34 39 provided, that no further amounts shall be payable under Section 9, except as provided for in this Section 11. (b) Within thirty (30) days after the expiration or termination of this Agreement, KING shall provide to NOVAVAX (i) a KING Detail Report for the month during which such expiration or termination occurs (and all KING Detail Reports for prior months that were required to be submitted to NOVAVAX pursuant to Section 3.3 but were not submitted); (ii) a statement of Net Sales for the KING Products during the period of January 1 of the calendar year in which such expiration or termination occurs through the effective date of such expiration or termination; (iii) a reasonably detailed statement of Marketing Expenses incurred by KING during such period; and (iv) a reasonably detailed statement of costs and expenses incurred by KING in performing Excess Details, if any, during such period. (c) Within thirty (30) days after the expiration or termination of this Agreement, NOVAVAX shall provide to KING (i) a NOVAVAX Detail Report for the month during which such expiration or termination occurs (and all NOVAVAX Detail Reports for prior months that were required to be submitted to KING pursuant to Section 4.3 but were not submitted); (ii) a statement of Net Sales for the NOVAVAX Products during the period of January 1 of the calendar year in which such expiration or termination occurs through the effective date of such expiration or termination; and (iii) a reasonably detailed statement of Marketing Expenses incurred by NOVAVAX during such period; and (iv) a reasonably detailed statement of costs and expenses incurred by NOVAVAX in performing Excess Details, if any, during such period. (d) Within thirty (30) days after receipt of such information from NOVAVAX and KING, the PMC shall determine the net amount due and or payable by KING and NOVAVAX, and such amount shall be paid by the parties within thirty (30) days after such PMC determination. (e) In the event of termination of this Agreement pursuant to Section 11.3(b), NOVAVAX, as KING's sole remedy for the failure to have such Model Claims approved, shall, within thirty (30) days after the effective date of such termination, pay to KING an amount equal to all Marketing Expenses paid and other PMC approved miscellaneous expenses by KING incurred under Section 9.2 and Section 9.4 hereof prior to the date of termination, less any reimbursements NOVAVAX has previously made to KING for NOVAVAX's share of such Marketing Expenses and other PMC approved miscellaneous expenses. 35 40 12. CONFIDENTIALITY; OWNERSHIP 12.1 CONFIDENTIAL INFORMATION. (a) Each party acknowledges that it may receive confidential or proprietary information of the other party in the performance of this Agreement, including without limitation information obtained or reviewed in connection with any audits or investigations performed pursuant to Section 10.2 or Section 10.3 of this Agreement. Each party shall hold confidential and shall not, directly or indirectly, disclose, publish or use for the benefit of any third party or itself, except in carrying out its duties hereunder, any confidential or proprietary information of the other party or confidential or proprietary information jointly developed by the parties, without first having obtained the furnishing party's written consent to such disclosure or use. "Confidential or Proprietary Information" shall include without limitation know-how, scientific information, clinical data, efficacy and safety data, adverse event information, formulas, methods and processes, specifications, pricing information (including discounts, rebates and other price adjustments) and other terms and conditions of sales, customer information, business plans, and all other intellectual property. This restriction shall not apply to any information within the following categories: (i) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such information or its Affiliates, sublicensees, consultants and contractors, as applicable; (ii) can be shown by written documentation to have been disclosed to or already in the possession of the receiving party or its Affiliates or sublicensees by a third party, provided such information was not obtained by such third party directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement; (iii) can be shown by written documentation to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement by personnel without access to the confidential information; (iv) is disclosed by the receiving party pursuant to interrogatories, formal requests for information or documents, subpoena, or a civil investigative demand of a court or governmental agency; provided, however, that, to the extent practicable, the receiving party notifies the other party promptly following receipt thereof so that the other may seek a protective order or other appropriate remedy to prevent or limit such disclosure, and provided further that the disclosing party furnishes only that portion of the information which it is advised by counsel is legally 36 41 required and imposes such obligations of secrecy as are possible in that regard; (v) is required to be disclosed by a party under any statutory, regulatory or similar legislative requirement or any rule of any stock exchange to which it or any Affiliate is subject; provided, however, that the non-disclosing party shall be allowed to review the proposed disclosure and the disclosing party agrees to consider in good faith any proposed revisions thereof provided to the disclosing party within two (2) business days of the non-disclosing party's receipt of the proposed disclosure and the parties shall seek confidential treatment for such disclosure as permitted by applicable law; or (vi) is required by authorities to obtain regulatory approval. (b) The obligations set forth in this Section 12 shall survive the termination or expiration of this Agreement for a period of five (5) years. The confidentiality obligations described in this Section 12 shall be in addition to the parties' obligations under the Confidentiality Agreements dated as of September 1, 2000 (the "Confidentiality Agreements"), except that to the extent there is a conflict between the Confidentiality Agreements and provisions of this Agreement, this Agreement shall govern. 13. INDEMNIFICATION AND INSURANCE 13.1 Indemnification by KING. KING shall defend, indemnify and hold NOVAVAX and its Affiliates, and their respective officers, directors, employees, successors and assigns, harmless from and against any and all claims, liabilities, losses, costs, actions, suits, damages and expenses (other than special, incidental, consequential or punitive damages, but including attorneys' fees and costs) arising out of: (a) any breach by KING of any representation, warranty or covenant contained in this Agreement; (b) the infringement or alleged infringement of any patent, trademark or other intellectual property rights of a third party by its activities with respect to the KING Products or KING Trademarks; (c) any personal injury (including death) and/or property damage resulting from the handling, possession or use of the KING Products; (d) any claims by third parties relating to the performance or nonperformance of KING's obligations under this Agreement; and (e) any other liability arising out of the manufacture, marketing, labeling, distribution or use of the KING Products; provided, however, that KING shall not be required to indemnify NOVAVAX with respect to any such claim, liability, loss, cost, action, suit, damage or expense hereunder to the extent covered by NOVAVAX's indemnification obligation in Section 13.2, or which arises from NOVAVAX's 37 42 negligent act or omission or intentional misconduct or that of any NOVAVAX affiliate. 13.2 INDEMNIFICATION BY NOVAVAX. NOVAVAX shall defend, indemnify and hold KING and its Affiliates, and their respective officers, directors, employees, successors and assigns, harmless from and against any and all claims, liabilities, losses, costs, actions, suits, damages and expenses (other than special, incidental, consequential or punitive damages, but including attorneys' fees and costs) arising out of: (a) any breach by NOVAVAX of any representation, warranty or covenant contained in this Agreement; (b) the infringement or alleged infringement of any patent, trademark or other intellectual property rights of a third party by its activities with respect to the NOVAVAX Products or Trademark in accordance with the terms and conditions of this Agreement; (c) any personal injury (including death) and/or property damage resulting from the handling, possession or use of the NOVAVAX Products; (d) any claims by third parties relating to the performance or nonperformance of NOVAVAX's obligations under this Agreement; and (e) any other liability arising out of the manufacture, marketing, labeling, distribution or use of the NOVAVAX Products; provided, however, that NOVAVAX shall not be required to indemnify KING with respect to any such claim, liability, loss, cost, action, suit, damage or expense hereunder to the extent covered by KING's indemnification obligation in Section 13.1, or which arises from KING's negligent act or omission or intentional misconduct or that of any KING Affiliate. 13.3 CLAIMS PROCEDURES. A party (the "Indemnitee") which intends to claim indemnification under this Section 13 shall notify the other party (the "Indemnitor") within a reasonable time in writing of any action, claim or liability in respect of which the Indemnitee believes it is entitled to claim indemnification, provided that the failure to give timely notice to the Indemnitor shall not release the Indemnitor from any liability to the Indemnitee to the extent the Indemnitor is not prejudiced thereby. The Indemnitor shall have the right, by notice to the Indemnitee, to assume the defense of any such action or claim within the fifteen (15) day period after the Indemnitor's receipt of notice of any action or claim with counsel of the Indemnitor's choice and at the sole cost of the Indemnitor. If the Indemnitor does not so assume the defense of such third party claim, the Indemnitee may assume such defense with reasonable counsel of its choice and at the sole cost of the Indemnitor. If the Indemnitor so assumes such defense, the Indemnitee may participate therein through counsel of its choice, but at the sole cost of the Indemnitee. The party not assuming the defense of any such claim shall render all reasonable assistance to the party assuming such defense, and all reasonable out-of-pocket costs of such assistance shall be for the account of the Indemnitor. No such claim shall be settled other than by the party defending the same, and then only with 38 43 the consent of the other party which shall not be unreasonably withheld; provided that the Indemnitee shall have no obligation to consent to any settlement of any such action or claim which imposes on the Indemnitee any liability or obligation which cannot be assumed and performed in full by the Indemnitor, and the Indemnitee shall have no right to withhold its consent to any settlement of any such action or claim if the settlement involves only the payment of money by the Indemnitor or its insurer. 13.4 INSURANCE. Each party shall maintain insurance (either through purchase of a policy form a nationally recognized third party insurer or through maintenance of a self-insurance program) against such risks and upon such terms (including coverages, deductible limits and self-insured retentions) as is customary for the activities to be conducted by such party under this Agreement and is appropriate to cover its indemnification obligations hereunder. Each party shall name the other as an additional insured on such party's relevant insurance policies, as its interests may appear, and shall furnish to the other party evidence of such insurance, upon request. 14. REPRESENTATIONS AND WARRANTIES 14.1 BY KING. KING represents and warrants to NOVAVAX that: (a) the execution, delivery and performance of this Agreement by KING does not conflict with, or constitute a breach of or under, any order, judgment, agreement or instrument to which KING is a party; and (b) the execution, delivery and performance of this Agreement by KING does not require the consent of any Person or the authorization of (by notice or otherwise) any governmental or regulatory authority; (c) the rights granted by KING to NOVAVAX hereunder do not conflict with any rights granted by KING to any third party; (d) KING has sufficient rights in and to the KING Products and all intellectual property, use, development, manufacturing, marketing, distribution and sale rights related thereto necessary or advisable for such purposes as contemplated by this agreement (the "KING Product Rights"), free and clear of any liens or encumbrances, except for any customer contracts, government contracts and contracts with hospitals or group purchasing organizations, in each case entered into in the ordinary course of business (collectively, "Product Contracts"); 39 44 (e) except for the Product Contracts, there are no agreements between KING and any Person with respect to the rights of KING in the Territory in the KING Products and the KING Product Rights; (f) KING has the right to and, as of the Effective Date, has no reason to believe it will not have a continuous and sufficient supply of the active ingredient included in the KING Products during the entire Term; (g) it has no notice that any KING Product Rights, or that the use thereof as contemplated under this Agreement, interfere or infringe on any intellectual property rights owned or possessed by any Person; (h) there are no third party pending patent applications which, if issued, may cover the use, development, manufacture, distribution or sale of the KING Products; (i) there are no claims, judgments or settlements against or owed by KING or pending or threatened claims or litigation relating to the KING Products or the KING Product Rights; (j) it has reviewed the available safety data relating to the KING Products and has no reason to believe the KING Products are not safe; (k) any KING Product samples provided to NOVAVAX hereunder have been at all times in the control of KING or its designate and meet applicable specifications contained in the NDA for the KING Product. 14.2 BY NOVAVAX. NOVAVAX represents and warrants to KING that: (a) the execution, delivery and performance of this Agreement by NOVAVAX does not conflict with, or constitute a breach of or under, any order, judgment, agreement or instrument to which NOVAVAX is a party; (b) the execution, delivery and performance of this Agreement by NOVAVAX does not require the consent of any Person or the authorization of (by notice or otherwise) any governmental or regulatory authority, (c) the rights granted by NOVAVAX to KING hereunder do not conflict with any rights granted by NOVAVAX to any third party; (d) NOVAVAX has sufficient rights in and to the NOVAVAX Products and all intellectual property, use, development, manufacturing, marketing, distribution and sale rights related thereto necessary or advisable for such purposes as contemplated by this agreement (the "NOVAVAX Product Rights"), free and clear of any liens or encumbrances; 40 45 (e) there are no agreements between NOVAVAX and any Person in with respect to the rights of NOVAVAX in the Territory in the NOVAVAX Products and the NOVAVAX Product Rights; (f) NOVAVAX has the right to and, as of the Effective Date, has no reason to believe it will not have a continuous and sufficient supply of the active ingredient included in the NOVAVAX Products during the entire Term; (g) it has no notice that any NOVAVAX Product Rights, or that the use thereof as contemplated under this Agreement, interfere or infringe on any intellectual property rights owned or possessed by any Person; (h) there are no third party pending patent applications which, if issued, may cover the use, development, manufacture, distribution or sale of the NOVAVAX Products; (i) there are no claims, judgments or settlements against or owed by NOVAVAX or pending or threatened claims or litigation relating to the NOVAVAX Products or the NOVAVAX Product Rights; (j) it has reviewed the available safety data relating to the NOVAVAX Products and has no reason to believe the NOVAVAX Products are not safe; (k) any NOVAVAX Product samples provided to KING hereunder have been at all times in the control of NOVAVAX or its designate and meet applicable specifications contained in the NDA for the NOVAVAX Product. 15. NOTICES Except as otherwise specifically provided herein, any notice or other documents to be given under this Agreement shall be in writing and shall be deemed to have been duly given if sent by registered post, nationally recognized overnight courier or confirmed facsimile transmission to a party (followed by hard copy by mail) or delivered in person to a party at the address or facsimile number set out below for such party or such other address as the party may from time to time designate by written notice to the other: If to KING: KING Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: President Facsimile: (423) 989-8055 41 46 with a copy (which shall not constitute notice) to: KING Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: Executive Vice President and General Counsel Facsimile: (423) 989-6282 If to NOVAVAX: Novavax, Inc. 8320 Guilford Road Columbia, Maryland 21046 Attn: Chief Executive Officer Telecopy: (301) 854-3902 with a copy (which shall not constitute notice) to: White & McDermott, P.C. 65 William Street, Suite 250 Wellesley, Massachusetts 02481 Attn: David A. White Telecopy: (781) 237-8120 Any such notice or other document shall be deemed to have been received by the addressee three (3) business days following the date of dispatch of the notice or other document by post or, where the notice or other document is sent by overnight courier, by hand or is given by facsimile, simultaneously with the transmission or delivery thereof. 16. MISCELLANEOUS PROVISIONS 16.1 Assignment; Change of Control. (a) Neither party shall assign or otherwise transfer this Agreement or any interest herein or right hereunder without the prior written consent of the other party, and any such purported assignment, transfer or attempt to assign or transfer any interest herein or right hereunder shall be void and of no effect, except that without the prior written consent of NOVAVAX, KING may assign its rights and obligations hereunder to an Affiliate. In the case of an assignment in accordance with this Section 16.1, the assigning party shall remain responsible for all of its obligations and agreements set forth herein, notwithstanding such assignment and such transferee or successor shall assume in writing the obligations of the party to which it is the transferee or successor. Subject to the foregoing, this Agreement 42 47 shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (b) NOVAVAX and KING acknowledge and agree that KING's obligations, commitments (financial and otherwise) and investments pursuant to the terms hereof and pursuant to various other commercial arrangements between KING and NOVAVAX are based on the premise that (i) KING expects that it shall take several years for the NOVAVAX Products to develop and mature to be viable and economically profitable pharmaceutical products, and (ii) KING believes that the best organizational and corporate structure to achieve these objectives is for NOVAVAX to remain an independent biopharmaceutical company focused on the research, development and commercialization of proprietary healthcare products for women. (c) Upon a Change of Control of NOVAVAX, King may elect, in King's sole option, any or all of the following: (i) terminate all provisions of this Agreement with respect to the KING Products, (ii) terminate all rights of NOVAVAX to promote the NOVAVAX Products in the Territory pursuant to the terms hereof or otherwise, or (iii) require NOVAVAX to (A) assign and transfer to KING all rights of ownership to any governmental or regulatory applications or approvals in the Territory issued or pending (including any correspondence with respect thereto) with respect to any NOVAVAX Products and any trademarks in the Territory with respect to any NOVAVAX Products, and (B) license to KING on an exclusive and perpetual basis solely in the Territory all intellectual property rights and Know How with respect to the NOVAVAX Products as may be necessary to make, use, promote and sell the NOVAVAX Products in the Territory; provided, however, if KING elects its rights under clause (ii) or (iii) above, KING will pay NOVAVAX a royalty of seven and one-half percent (7.5%) of the Net Sales of the NOVAVAX Products received by KING, and such royalty payment shall be subject to commercial terms substantially similar to the terms of the Exclusive License and Distribution Agreement dated as of the date hereof between KING and NOVAVAX. (d) NOVAVAX acknowledges and agrees that the agreements contained in this Section 16.1 are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, KING would not enter into this Agreement and certain other commercial arrangements with NOVAVAX. 16.2 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 43 48 16.3 NON-WAIVER. The failure of either party to enforce or to exercise, at any time or for any period of time, any term of or any right arising pursuant to this Agreement does not constitute, and shall not be construed as, a waiver of such term or right, and shall in no way affect that party's right later to enforce or exercise such term or right. 16.4 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreements contain all of the terms agreed to by the parties regarding the subject matter of this Agreement and supersede any prior agreements, understandings or arrangements between them, whether oral or in writing. This Agreement may not be amended, modified, altered or supplemented except by means of a written agreement or other instrument executed by both of the parties hereto. No course of conduct or dealing between the parties shall act as a modification or waiver of any provisions of this Agreement. 16.5 JURISDICTION; VENUE. (a) Each of NOVAVAX and KING hereby waives personal service of any process upon it in connection with any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and hereby covenants and agrees that all such service of process may be made in the manner set forth in Section 15 with the same effect as though served on it personally. (b) NOVAVAX hereby covenants and agrees that any suit, action or proceeding initiated by the Company against KING, its affiliates, subsidiaries, successors and/or assigns arising out of or relating to this Agreement 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 NOVAVAX, each of NOVAVAX and KING hereby submit to the exclusive jurisdiction and venue of the federal courts located in and state courts of the State of Tennessee and hereby waive any and all objections based on jurisdiction or venue that such party may have under applicable law or the Federal Rules of Civil Procedure. Each of the parties 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 suit, action or proceedings with respect to this Agreement 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 44 49 case of any such service upon the Tennessee Process Agent, the party effecting such service shall also deliver a copy thereof to the other parties in accordance with the notice provision set forth in Section 10.8. Each such party 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 each such party shall at all times have an agent for service for the foregoing purposes in the State of Tennessee. (c) KING hereby covenants and agrees that any suit, action or proceeding initiated by KING against NOVAVAX, its affiliates, subsidiaries, successors and/or assigns arising out of or relating to this Agreement 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 KING, each of NOVAVAX and KING hereby submit to the exclusive jurisdiction and venue of the federal courts located in and state courts of the State of Maryland and hereby waive any and all objections based on jurisdiction or venue that such party may have under applicable law or the Federal Rules of Civil Procedure. Each of the foregoing parties 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 proceedings with respect to this Agreement 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 party effecting such service shall also deliver a copy thereof to the other parties in accordance with the notice provision set forth in Section 15. Each such party 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 each such party shall at all times have an agent for service for the foregoing purposes in the State of Maryland. 16.6 SEVERABILITY. In the event that any of the provisions or a portion of any provision of this Agreement are held to be invalid, illegal or unenforceable by a court of competent jurisdiction or a governmental authority, such provision or portion of provision shall be construed and enforced as if it had been narrowly drawn so as not to be invalid, illegal or unenforceable and the validity, legality and enforceability of the enforceable portion of any such provision and the remaining provisions shall not be adversely affected thereby. 45 50 16.7 RELATIONSHIP OF THE PARTIES. The parties hereto are acting and performing as independent contractors. Nothing in this Agreement creates the relationship of partnership, joint venture, sales agency or principal and agent. Neither party is the agent of the other, and neither party may hold itself out as such to any other party. All financial obligations associated with each party's business shall be the sole responsibility of such party. 16.8 PUBLIC ANNOUNCEMENTS. The form and content of any public announcement to be made by one party regarding this Agreement, or the subject matter contained herein, shall be subject to the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed or conditioned), except as may be required by applicable law (including, without limitation, disclosure requirements of the SEC, NYSE, NASDAQ, AMEX or any other stock exchange) in which event the party making the announcement shall endeavor to give the other party reasonable advance notice and review of any such disclosure. 16.9 COUNTERPARTS. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures of each of the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument. 16.10 FORCE MAJEURE. Neither party shall be liable to the other party for any failure to perform as required by this Agreement (other than the obligation to pay money) if the failure to perform is due to circumstances reasonably beyond such party's control including, without limitation, acts of God, civil disorders or commotions, acts of aggression, fire, explosions, floods, drought, war, sabotage, embargo, utility failures, material shortages, labor disturbances, a national health emergency, or appropriations of property. A party whose performance is affected by a force majeure event shall take prompt action using its reasonable best efforts to remedy the effects of the force majeure event. 16.11 INTERPRETATION. The parties hereto acknowledge and agree that: (a) each party and its representatives have reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; and (b) the terms and provisions 46 51 of this Agreement shall be construed fairly as to each party hereto and not in favor of or against either party regardless of which party was generally responsible for the preparation or drafting of this Agreement. 16.12 CERTAIN EXPENSES AND COMMISSIONS. Except as otherwise expressly set forth in this Agreement, the parties hereto shall each pay all their costs and expenses, including legal and accounting fees, incurred in connection with the preparation, negotiation, execution and delivery of this Agreement, respective brokerage fees, commissions and finder's fees, if any, and shall indemnify and hold the other harmless from and against any and all other claims or liabilities for such costs and expenses, brokerage fees, commissions and finder's fees incurred by reason of any action taken by any such party. 16.13 THIRD PARTY BENEFICIARIES. This Agreement is not intended to confer upon any non-party rights or remedies hereunder, except as may be received or created as part of a valid assignment. 16.14 COVENANT NOT TO PROMOTE COMPETING PRODUCT. NOVAVAX shall not (or assist any third party to) manufacture, market, sell, or promote any product directly competitive with any of the Copromote Products during the Term of this Agreement, except in connection with the performance of its obligations under this Agreement and except for the manufacture, marketing, sale, or promotion of Gynodiol. 16.15 HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SIGNATURE PAGES FOLLOW 47 52 IN WITNESS WHEREOF, the parties have duly executed this Copromotion Agreement as of the first date written above. KING PHARMACEUTICALS, INC. By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- NOVAVAX, INC. By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- 53 ANNEX I DEFINITIONS "ACT" shall mean the United States Federal Food, Drug and Cosmetic Act, as it may be amended from time to time. "ADDITIONAL EXCLUSIVITY RIGHTS" shall have the meaning set forth in Section 11.1(b). "AFFILIATE(s)" shall mean, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person. A Person shall be regarded as in control of another Person if such Person owns, or directly or indirectly controls, more than fifty percent (50%) of the voting securities (or comparable equity interests) or other ownership interests of the other Person, or if such Person directly or indirectly possesses the power to direct or cause the direction of the management or policies of the other Person, whether through the ownership of voting securities, by contract or any other means whatsoever, provided, however, that, for purposes of this Agreement, the term "Affiliate" shall not include subsidiaries in which a party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the Board of Directors, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect. "AGREEMENT" shall mean this Agreement, together with all appendices, exhibits and schedules referenced herein or attached hereto, and as the same may be amended or supplemented from time to time hereafter pursuant to the provisions hereof. "AGREEMENT QUARTER" shall mean each three (3) month period commencing on the first (1st) day of January, April, July or October, as the case may be, during the Term. "AUDITED PARTY" shall have the meaning set forth in Section 10.2(a). "AUDITING PARTY" shall have the meaning set forth in Section 10.2(a). "BASELINE" shall have the meaning set forth in Exhibit 9.1(b). "BUDGET(s)" shall mean the annual budget of Net Sales and Marketing Expenses prepared and approved by the PMC in accordance with this Agreement. 54 "CHANGE OF CONTROL" shall mean any sale of voting securities or sale of assets (whether by sale, merger, consolidation, share exchange or otherwise in one transaction or a series of transactions) in or by a party hereto that, directly or indirectly, results in any third party becoming the beneficial owner, directly or indirectly, of securities or assets of such first party representing over fifty percent (50%) of the combined voting power of such Person's then outstanding securities or over fifty percent (50%) of such first party's total assets. "COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and resources normally used by a party for a product owned by it or to which it has rights, which is of similar market potential at a similar state in its development or product life, taking into account issues of safety, efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved, the profitability of the applicable products, and other relevant commercial factors. "CONFIDENTIALITY AGREEMENTS" shall have the meaning set forth in Section 12.1(b). "CONFIDENTIAL OR PROPRIETARY INFORMATION" shall have the meaning set forth in 12.1(a). "COPROMOTE PRODUCTS" shall mean collectively the KING Products and the NOVAVAX Products. "CURRENT GOOD MANUFACTURING PRACTICES" shall mean the current standards for the manufacture of biologicals, as set forth in the Act and applicable regulations and guidelines promulgated thereunder or successors thereto, as shall be in effect from time to time during the Term. "DETAIL(s)" or "DETAILING" shall mean a face-to-face contact by a sales representative with an OB/GYN during which time the promotional message involving the Copromote Products is a primary topic of discussion and the product discussed for either the longest period of time during the contact or, at a minimum, discussed no less than the second longest period of time during the contact. "DETAIL COST" shall be the cost per Detail to be established by the PMC each year and included in the Marketing Plan for such year. "DIRECT COST" shall mean all reasonable out-of-pocket costs other than direct sales force expenses directly attributable to an activity (i.e., those costs which vary with such activity), including, but not limited to, direct labor for such activity and consumable bulk and other materials, as determined in ANNEX I - 2 55 accordance with generally accepted cost accounting practices in the country of the activity, but without any allocation for fixed overhead costs allocable to the activity, including, but not limited to, direct benefit and labor expenses for technical services and support services, depreciation, maintenance and repairs and insurance costs associated with such activity. "EFFECTIVE DATE" shall have the meaning set forth in the PREAMBLE of this Agreement. "ESTRASORB" shall mean the product described in Phase III Clinical Study. "EXCESS DETAILS" shall have the meaning set forth in Section 9.5. "EXTENDED PROMOTION TERM" shall have the meaning set forth in Section 11.1(c). "FDA" shall mean the United States Food and Drug Administration or any successor entity thereto. "GAAP" shall mean United States generally accepted accounting principles. "INCREMENTAL COSTS" shall mean an amount equal to (i) the ratio of Net Costs for any given quarter to Net Sales for such quarter, multiplied by (ii) Incremental Sales for such quarter. "INCREMENTAL SALES" shall mean Net Sales for a given quarter minus the applicable "Baseline" for such quarter, as set forth on Exhibit 9.1(b). "INDEMNITEE" shall have the meaning set forth in Section 13.3. "INDEMNITOR" shall have the meaning set forth in Section 13.3. "INITIAL TERM" shall have the meaning set forth in Section 11.1(a). "KING" shall have the meaning set forth in the PREAMBLE of this Agreement. "KING DETAIL REPORT" shall have the meaning set forth in Section 3.3(c). "KING GUIDELINES" shall have the meaning set forth in Section 2.3(c). ANNEX I - 3 56 "KING PRODUCT INITIATION DATE" shall mean the first business day of the month immediately following the date on which NOVAVAX provides written notice to KING that NOVAVAX wishes to commence marketing and promotion of the KING Products pursuant to this Agreement; provided, however, that in no case shall the King Product Initiation Date be fewer than twenty (20) days following the date on which NOVAVAX provides such notice. "KING PRODUCT RIGHTS" shall have the meaning set forth in Section 14.1(d). "KING PRODUCT TECHNICAL COMPLAINTS" shall mean any complaint that questions the purity, identity, potency or quality of the KING Products, its packaging or labeling, the compliance of any batch of the KING Products with applicable laws, including the Act, or any complaint that concerns any incident that causes the KING Products or their labeling to be mistaken for, or applied to, another article or any bacteriological contamination, or any significant chemical, physical, or other change or deterioration in the KING Products, or any failure of one or more batches of the KING Products to meet the specifications therefor in the NDA. "KING PRODUCTS" shall mean NORDETTE(R). "KING TRADEMARK" shall mean the federally registered trademark NORDETTE(R), and any other related trademark or servicemark containing the word "NORDETTE", and any other trademark or service mark (whether registered or unregistered) that KING uses on or with any of the KING Products or in any promotional material related to any of the KING Products. "KNOW-HOW" shall mean all tangible and intangible technical and other information including, but not limited to ideas, conceptions, reductions-to-practice, discoveries, data, designs, chemical structures, formulae, materials, intermediates, inventions (whether patentable or not), methods, models, prototypes, samples, works (whether copyrightable or not), assays, research plans, procedures, designs, experiments, tests, results of experimentation and testing (including results of research or development), processes (including manufacturing processes, uses, specifications and techniques), laboratory records, note books, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports, manufacturing data, summaries and information contained in submissions to and from ethical committees and regulatory authorities, which relates to or concerns a Copromote Product. Know-How includes all documents and copies thereof (whether in written, machine-readable, physical or graphic form) and other things (such as prototypes, ANNEX I - 4 57 materials, samples, models, etc.) which contain, embody or refer to the Know-How. Such information, documents or things will not be excluded from being Know-How hereunder by reason of the fact that they become available to the public only through a wrongful act or omission to act of a party hereto or a sublicensee or distributor of a party hereto. The fact that an item is known to the public shall not be taken to exclude the possibility that a compilation including the item, and/or a development relating to the item, is (and remains) not known to the public. Know-How includes, but is not limited to, any and all rights that protect the Know-how, such as copyrights software, rights, trade secret rights, database rights and/or design rights. "KP CONSIDERATION FEE" shall have the meaning set forth in Section 9.1(b). "MARKETING EXPENSES" shall mean the costs and expenses directly related to the marketing and promotion of the Copromote Products in the Territory in accordance with the Marketing Plans, including without limitation costs and expense relating to: (i) general advertising, including without limitation journal advertising, direct mail and point of prescription advertising; (ii) continuing medical education programs, (iii) market research; (iv) the Direct Costs of samples of the Copromote Products; (v) Copromote Product-related publications and (vi) trade shows and conventions. "MARKETING MATERIALS" shall have the meaning set forth in Section 5.2(a). "MARKETING PLAN" shall mean an annual plan and budget for the promotion and marketing of the Copromote Products as developed pursuant to Section 8.5. "MINIMUM TARGETED DETAILS" shall have the meaning set forth in Section 9.5. "MODEL CLAIMS" shall mean final approval by the FDA of Estrasorb(TM) as an estrogen hormone replacement therapy prescription product. "NDA" shall mean the new drug applications related to the Copromote Products, submitted to the FDA pursuant to provisions of the Act and applicable regulations related thereto. "NET COSTS" shall mean costs of goods sold in accordance with GAAP, less Marketing Expenses. ANNEX I - 5 58 "NET SALES" shall mean all gross revenue actually received by a party from sales of any Copromote Products, less (a) credits for refunds and returns, (b) sales, use and similar taxes billed by such party to its customers and required to be paid to the appropriate taxing authorities by such party; (c) discounts, allowances and commissions paid or allowed by a party on sales of such Copromote Products, and (c) amounts paid by such party and billed through to such party's customers for insurance, shipping and similar charges. "NON-SERIOUS ADVERSE EVENT" shall mean any adverse drug experience associated with the use of the Copromote Products in humans, whether or not considered drug related which is not a Serious Adverse Event. "NOTE PURCHASE AGREEMENT" shall have the meaning set forth in Section 9.2. "NOVAVAX" shall have the meaning set forth in the PREAMBLE. "NOVAVAX DETAIL REPORT" shall have the meaning set forth in Section 4.3(c). "NOVAVAX GUIDELINES" shall have the meaning set forth in Section 2.3(c). "NOVAVAX PRODUCT" shall mean ESTRASORB(TM) and, subject to Section 8.6 hereof, any hormone replacement therapy pharmaceutical product marketed in the field of women's health including or using technology or Know How derived from to ESTRASORB(TM), including but not limited to products containing a combination of a NOVAVAX Product and another pharmaceutical product; provided that NOVAVAX Product shall specifically exclude any pharmaceutical or related products owned by NOVAVAX as a direct result of the consummation of the Fielding Acquisition Agreement (as defined in the Note Purchase Agreement). "NOVAVAX PRODUCT INITIATION DATE" shall mean the date on which the FDA provides written approval of the NDA for ESTRASORB(TM). "NOVAVAX PRODUCT RIGHTS" shall have the meaning set forth in Section 14.2(d). "NOVAVAX PRODUCT TECHNICAL COMPLAINTS" shall mean any complaint that questions the purity, identity, potency or quality of the NOVAVAX Products, its packaging or labeling, the compliance of any batch of the NOVAVAX Products with applicable laws, including the Act, or any complaint that concerns any incident that causes the NOVAVAX Products or their labeling to be mistaken ANNEX I - 6 59 for, or applied to, another article or any bacteriological contamination, or any significant chemical, physical, or other change or deterioration in the NOVAVAX Products, or any failure of one or more batches of the NOVAVAX Products to meet the specifications therefor in the NDA. "NOVAVAX TRADEMARK" shall mean the federally registered trademark ESTRASORB(TM), and any other related trademark or servicemark containing the word "ESTRASORB", and any other trademark or service mark (whether registered or unregistered) that NOVAVAX decides to use on or with the NOVAVAX Products or in any promotional material related to any of the NOVAVAX Products. "NP CONSIDERATION FEE" shall have the meaning set forth in Section 9.1(a). "OB/GYN" shall have the meaning set forth in the PREAMBLE of the Agreement in each case who are authorized by applicable law to prescribe the Copromote Products. "PDMA" shall mean the Prescription Drug Marketing Act, as amended, an the implementing rules and regulations thereunder. "PERSON" shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority, or any other form of entity not specifically listed herein. "PRIMARY BRAND TRADEMARK" shall have the meaning set forth in Section 2.3(d). "PRODUCT MANAGEMENT COMMITTEE" or "PMC" shall have the meaning set forth in Section 8.1. "PRODUCT TECHNICAL COMPLAINTS" shall mean any complaint that questions the purity, identity, potency or quality of the Copromote Products, its packaging or labeling, the compliance of any batch of the Copromote Products with applicable laws, including the Act, or any complaint that concerns any incident that causes the Copromote Products or their labeling to be mistaken for, or applied to, another article or any bacteriological contamination, or any significant chemical, physical, or other change or deterioration in the Copromote Products, or any failure of one or more batches of the Copromote Products to meet the specifications therefor in the NDA. ANNEX I - 7 60 "RESIDUAL PAYMENTS" shall have the meaning set forth in Section 9.3. "SERIOUS ADVERSE EVENT" shall mean any serious and unexpected adverse drug experience, as defined by FDA in 21 C.F.R. Section 314.80, associated with the use of the drug in humans, whether or not considered drug related. "SOP" shall have the meaning set forth in Section 7.4. "TERM" shall have the meaning set forth in Section 11.1(a). "TERRITORY" shall mean the United States, its territories and possessions, the District of Columbia and the Commonwealth of Puerto Rico. "TRADEMARKS" shall mean collectively the KING Trademarks and the NOVAVAX Trademarks. ANNEX I - 8 61 EXHIBIT 2.3(a) TRADEMARKS KING: KING Logo Monarch Logo NOVAVAX: NOVAVAX Logo i 62 EXHIBIT 2.3(d) PRIMARY BRAND TRADEMARKS ESTRASORB(TM) NORDETTE(R) ii 63 EXHIBIT 9.1 CONSIDERATION FEE SAMPLE CALCULATION I. NP CONSIDERATION FEE (CALCULATED AND PAID ON A QUARTERLY BASIS) NP Consideration Fee to be paid to King at follows: (50% of the Net Sales Estrasorb(TM)in the Territory) MINUS (50% of the Net Costs of Estrasorb(TM)in the Territory)* *Novavax is solely responsible for Net Costs in excess of 17% of Net Sales. EXAMPLE A: Quarterly Net Sales of Estrasorb(TM) in the Territory = $10,000,000 Quarterly Net Costs of Estrasorb(TM) in the Territory = $1,500,000 (50%)($10,000,000) = $5,000,000 (50%)($1,500,000) = $750,000 NP Consideration Fee = $5,000,000 - $750,000 NP CONSIDERATION FEE = $4,250,000 EXAMPLE B: Quarterly Net Sales of Estrasorb(TM) in the Territory = $10,000,000 Quarterly Net Costs of Estrasorb(TM) in the Territory = $2,000,000 (50%)($10,000,000) = $5,000,000 (17%)($10,000,000) = $1,700,000 (thus Novavax is responsible for all costs in excess of $1,700,000) (50%)($1,700,000) = $850,000 NP Consideration Fee = $5,000,000 - $850,000 NP CONSIDERATION FEE = $4,150,000 iii 64 II. KP CONSIDERATION FEE (calculated and paid on a quarterly basis) KP Consideration fee to be paid to Novavax as follows: 50% of Incremental Sales of Nordette(R) in the Territory MINUS 50% of Incremental Costs of Nordette(R) in the Territory. Incremental Sales = Quarterly Net Sales of Nordette(R) in the Territory MINUS "Baseline" Net Sales. Incremental Costs = (Ratio of Quarterly Net Costs of Nordette(R) in the Territory to Quarterly Net Sales of Nordette(R) in the Territory) X (Incremental Sales) EXAMPLE: Quarterly Net Sales of Nordette(R) in the Territory = $10,000,000 "Baseline" Net Sales of Nordette(R) in the Territory = $8,000,000 Quarterly Net Costs of Nordette(R) in the Territory = $2,000,000 Incremental Sales = $10,000,000 MINUS $8,000,000 = $2,000,000 Incremental Costs = (20%)($2,000,000) = $400,000 KP Consideration Fee = (50%)($2,000,000) MINUS (50%)($400,000) KP Consideration Fee = $1,000,000 MINUS $200,000 KP Consideration Fee = $800,000 iv 65 EXHIBIT 9.1(b) BASELINES FOR CALCULATING INCREMENTAL SALES NORDETTE(R)
QUARTER BASELINE - ------------------------------------------------- ----------------------------------------------- 1Q (January 1--March 31) $6,400,000 - ------------------------------------------------- ----------------------------------------------- 2Q (April 1--June 30) $7,500,000 - ------------------------------------------------- ----------------------------------------------- 3Q (July 1--September 30) $8,000,000 - ------------------------------------------------- ----------------------------------------------- 4Q (October 1--December 31) $8,100,000 - ------------------------------------------------- -----------------------------------------------
v EX-10.3 4 w44469ex10-3.txt EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT 1 EXHIBIT 10.3 EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT BETWEEN NOVAVAX, INC. AND KING PHARMACEUTICALS, INC. JANUARY 8, 2001 2 TABLE OF CONTENTS 1. DEFINITIONS........................................................1 2. APPOINTMENT AND GRANT OF RIGHTS....................................1 2.1 Appointment...................................................1 2.2 Right to Promote Products.....................................2 2.3 Trademark.....................................................2 2.4 Ownership of Property Rights..................................3 3. SUPPLY OF PRODUCTS.................................................4 3.1 Manufacture and Supply of Products............................4 3.2 Quarterly Forecasts; Purchase Orders..........................4 3.3 Delivery of Products..........................................6 3.4 Product Samples...............................................7 3.5 Labeling and Packaging Costs..................................7 4. CERTAIN REGULATORY MATTERS.........................................7 4.1 Licenses......................................................7 4.2 Regulatory Responsibility.....................................7 4.3 Efficacy and Safety Information...............................8 4.4 Notice of Adverse Events......................................8 4.5 Recalls; Product Technical Complaints.........................9 4.6 Notice of Government Inspections.............................10 4.7 Government Inquiries.........................................10 4.8 Medical Inquiries............................................10 5. FEES AND EXPENSES.................................................10 5.1 Purchase Price...............................................10 5.2 Royalty Payment..............................................11 6. INSPECTION AND WARRANTY OF PRODUCTS...............................12 6.1 Inspection by KING...........................................12 6.2 Disputes over Products.......................................12 6.3 Replacement of Products that are not Acceptable Products.....12 7. TERM AND TERMINATION..............................................13 7.1 Term of Agreement............................................13 7.2 Termination by NOVAVAX.......................................13 7.3 Termination by KING..........................................14 7.4 Effects of Termination.......................................14 7.5 Actions Upon Termination.....................................15 7.6 Survival.....................................................15 7.7 Payments Upon Termination....................................15 i 3 8. CONFIDENTIAL INFORMATION..........................................16 9. INDEMNIFICATION AND INSURANCE.....................................17 9.1 Indemnification by KING......................................17 9.2 Indemnification by NOVAVAX...................................18 9.3 Claims Procedures............................................18 9.4 Insurance....................................................19 10. REPRESENTATIONS AND WARRANTIES....................................19 10.1 By KING......................................................19 10.2 By NOVAVAX...................................................19 11. NOTICES...........................................................21 12. MISCELLANEOUS PROVISIONS..........................................22 12.1 Assignment; Change of Control................................22 12.2 Governing Law................................................23 12.3 Non-Waiver...................................................23 12.4 Entire Agreement.............................................23 12.5 Jurisdiction; Venue..........................................23 12.6 Severability.................................................25 12.7 Relationship of the Parties..................................25 12.8 Public Announcements.........................................25 12.9 Counterparts.................................................25 12.10 Force Majeure.............................................26 12.11 Interpretation............................................26 12.12 Certain Expenses and Commissions..........................26 12.13 Third Party Beneficiaries.................................26 12.14 Covenant Not to Promote Competing Product.................26 12.15 Headings..................................................27 ii 4 EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT THIS EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT (this "Agreement") is entered into and effective as of this 8th day of January, 2001 (the "Effective Date"), by and between KING PHARMACEUTICALS, INC., a Tennessee corporation ("KING"), and NOVAVAX, INC., a Delaware corporation ("NOVAVAX"). WHEREAS, KING is engaged in the business of and has expertise in, among other things, the promotion of pharmaceutical products to physicians and health care practitioners who specialize in the practice of obstetrics or gynecology or who frequently prescribe hormone replacement therapy products ("OB/GYN"), and has a field representative sales force focused on the OB/GYN community; WHEREAS, NOVAVAX owns or will own a patent or patents related to the Products (as well as other intellectual property rights in the Products) and expects to file with the FDA a New Drug Application for ESTRASORB(R); WHEREAS, KING and NOVAVAX desire for NOVAVAX to manufacture or have manufactured and supply KING with Products for promotion, distribution and sale by KING in the Territory and NOVAVAX desires to manufacture or have manufactured and supply KING with such Products on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS Capitalized terms used herein without definition shall have the respective meanings assigned thereto in Annex I attached hereto and incorporated herein for all purposes of this Agreement (such definitions to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise specified, all references herein to "Sections" are to Sections of this Agreement. 2. APPOINTMENT AND GRANT OF RIGHTS 2.1 APPOINTMENT. NOVAVAX hereby appoints KING as its exclusive distributor of the Products within the Territory during the Term of this Agreement, upon and 5 subject to the terms and conditions set forth in this Agreement. The exclusivity set forth in this Agreement shall be subject to any limitations provided under applicable law, regulation or governmental guideline including, without limitation, any published directive of the European Union. 2.2 RIGHT TO PROMOTE PRODUCTS. NOVAVAX hereby grants to KING and its Affiliates, the exclusive right and license to promote, market, distribute and sell the Products within the Territory during the Term of this Agreement, upon and subject to the terms and conditions set forth in this Agreement. NOVAVAX shall not, nor shall it permit its Affiliates, sublicensees, or any other party to, promote, market, distribute or sell the Products within the Territory during the Term of this Agreement. KING agrees to use Commercially Reasonable Efforts to obtain regulatory authority to market and sell the Products within such countries in the Territory as KING determines in its reasonable judgment is reasonable and, after obtaining such regulatory authority, to use Commercially Reasonable Efforts to promote, market, offer-to-sell and sell the Products in the Territory, in such a manner as to effectuate KING's and NOVAVAX's purposes in this Agreement. 2.3 TRADEMARK. (a) Required Use and Compliance. NOVAVAX hereby grants to KING a license to use the NOVAVAX Trademarks, which are set forth in Exhibit 2.3(a), for the duration of this Agreement solely for advertising, displaying, marketing, promoting, using, offering-for-sale, selling, distributing, importing and/or exporting the Products in accordance with this Agreement. KING shall promote the Products only under the NOVAVAX Trademarks. KING shall not use any trademark or servicemark other than the NOVAVAX Trademarks in promoting the Products without the prior written approval of NOVAVAX. In connection with the subject matter hereof, KING shall use the NOVAVAX Trademarks only in a manner consistent with NOVAVAX's trademark usage guidelines (the "NOVAVAX Guidelines") and shall not use any NOVAVAX Trademark in connection with any goods or products other than the Products, notwithstanding that such goods or products are dissimilar to the Products or have a different use. The parties shall develop the NOVAVAX Guidelines as soon as practicable after the Effective Date. KING shall use the NOVAVAX Trademarks only to the extent authorized herein. NOVAVAX shall not use, nor permit any third party to use, the NOVAVAX Primary Brand Trademarks or other NOVAVAX Trademarks used exclusively with respect to the Products in the Territory during the Term of this Agreement. (b) Validity of Trademarks. KING acknowledges the validity of NOVAVAX's right, title and interest in and to the NOVAVAX Trademarks and KING shall not have, assert or acquire any right, title or interest in or to any of 2 6 the NOVAVAX Trademarks, except as otherwise explicitly provided in this Agreement. (c) Notice of Infringement. (i) KING shall give NOVAVAX notice of any infringement or threatened infringement of any NOVAVAX Trademarks used in connection with this Agreement. Except as otherwise provided in Section 2.3(c)(ii) below, NOVAVAX shall determine in its sole discretion what action, if any, to take in response to the infringement or threatened infringement of its Trademark. In the event that NOVAVAX chooses to take enforcement action in response to the infringement or threatened infringement of its Trademark, KING shall reasonably cooperate in such enforcement; provided, however, that NOVAVAX shall reimburse KING for reasonable expenses incurred by KING that are related to such enforcement. (ii) NOVAVAX agrees to identify the primary brand Trademarks of the Products (each a "Primary Brand Trademark"). Exhibit 2.3(c)(ii) sets forth the list of Primary Brand Trademarks for the Products as of the Effective Date. As to each Primary Brand Trademark only, if NOVAVAX fails to take enforcement action within ninety (90) days following notice thereof in response to the infringement or threatened infringement of its Trademark in the Territory, then KING shall have the right, in its sole discretion, to conduct litigation or other enforcement proceedings to prevent such infringement at NOVAVAX's expense. In such event, NOVAVAX shall reasonably cooperate in such enforcement. (iii) The parties shall cooperate in good faith with respect to all Trademark enforcement actions hereunder, and each party shall notify the other party promptly of all substantive developments with respect to such Trademark enforcement actions, including, without limitation, all material filings, court papers and other related documents. Each party shall consider the timely given, reasonable comments and advice of the other party with respect to the strategy employed and submissions made relative to any Trademark enforcement actions. The party enforcing such Trademark action shall retain for its own account any damages or other monetary relief obtained in connection therewith. 2.4 OWNERSHIP OF PROPERTY RIGHTS. Each party will retain ownership of all information, data, Know-How, inventions, discoveries, programs, copyrights, improvements, devices, designs, apparatus, patents, patent applications, practices, processes, methods, products, techniques, trade secrets, ideas, or other intellectual property owned by it at the commencement of this Agreement. 3 7 3. SUPPLY OF PRODUCTS 3.1 MANUFACTURE AND SUPPLY OF PRODUCTS. (a) Subject to the provisions of this Section 3, during the Term of this Agreement, NOVAVAX shall use Commercially Reasonable Efforts to manufacture or have manufactured for and supply to KING, Products for KING's promotion, marketing, distribution, and sale of the Products in the Territory. All Products supplied under this Agreement are to be supplied in finished form, in the quantities specified in KING's purchase orders placed with NOVAVAX pursuant to Section 3.2 below and in conformity with the Specifications for the Product. (b) NOVAVAX may subcontract all or any part of its manufacturing obligations hereunder if it provides no less than six (6) months' written notice of its intent to do so to KING, and KING (i) declines to take over such manufacturing obligations and (ii) provides its consent to such subcontractor, which consent shall not be unreasonably withheld or delayed. Any such subcontractor shall be reputable and shall have sufficient expertise to perform its obligations. Notwithstanding the foregoing, NOVAVAX shall not be required to notify KING or obtain KING's consent with respect to its purchase of materials from third parties for use in its manufacture of the Products hereunder. (c) In the event that NOVAVAX is or reasonably expects to be unable to supply KING with KING's requirements of Products, based on KING's most recent Binding Quarterly Forecast, NOVAVAX shall so notify KING and KING shall, in addition to KING's other remedies, be permitted to manufacture or have manufactured that quantity of KING's requirements of Products which NOVAVAX is obligated to but is unable to supply hereunder. (d) NOVAVAX shall manufacture, package, label, and ship or cause to be manufactured, packaged, labeled and shipped the Products and samples of the Products in conformity with the Specifications for the Product and in accordance with all applicable laws, including, without limitation, the Act and all applicable regulations thereunder, the NDA and current Good Manufacturing Practices and all other applicable laws in the U.S. or in the Territory. 3.2 QUARTERLY FORECASTS; PURCHASE ORDERS. (a) KING shall provide NOVAVAX with a rolling fifteen (15) month forecast of its expected purchases of the Product, at least one full Calendar Quarter prior to the Calendar Quarter during which KING desires that NOVAVAX supply it with the Products. The forecast for the first three (3) months in each fifteen (15) month forecast shall be binding upon KING, and the forecast for the subsequent twelve (12) months shall not be binding. The 4 8 first such fifteen (15) month forecast shall be provided by KING to NOVAVAX at least one full Calendar Quarter prior to the Calendar Quarter in which the first commercial sale of the Product following regulatory approval to sell the Product in the Territory for use in humans is projected ("First Commercial Sale"). (b) Under Section 3.2(a) above, the forecast for those quarters which is binding upon KING and NOVAVAX shall be a "Binding Quarterly Forecast," and the forecasts under Section 3.2(a) which are non-binding upon KING and NOVAVAX shall be "Non-binding Forecasts." A Binding Quarterly Forecast shall be accompanied by an order for the Product reflected in the Binding Quarterly Forecast, subject to quantity modifications as set forth in Section 3.2(c) below. (c) KING may modify the order represented by a Binding Quarterly Forecast for a period of thirty (30) days after receipt of the Binding Quarterly Forecast by NOVAVAX, within the constraints set forth below. The quantity of each Product ordered by KING in any Calendar Quarter shall not be less than seventy-five percent (75%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter. Additionally, NOVAVAX shall not be obligated to supply that quantity of any Product in any Calendar Quarter that is more than one hundred twenty-five percent (125%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter, but will use its Commercially Reasonable Efforts to supply KING's orders of up to one hundred fifty percent (150%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter. (d) KING shall place purchase orders with NOVAVAX in accordance with the applicable Binding Quarterly Forecast. The orders placed by KING hereunder shall specify, in a format agreed upon by the parties, the quantities of each Product desired (consistent with Section 3.2(c) above), the place(s) to which delivery is to be made, and the manner and dates by which delivery is to be made (said delivery dates to be no earlier than ninety (90) calendar days after the purchase order date). All purchase orders shall be sent by KING to the attention of the following employee of NOVAVAX or as otherwise instructed by NOVAVAX. Name: James Mirto Title: Senior Vice President, Chief Operating Officer Address: Novavax, Inc. 8320 Guilford Road Columbia, Maryland 21046 FAX: (301) 854-3901 The terms of any purchase order or acknowledgment thereof or any other documents relating to KING's purchase of Products from NOVAVAX hereunder 5 9 shall be superceded by the terms of this Agreement. All such purchase orders shall be deemed accepted unless NOVAVAX notifies KING of its non-acceptance no later than seven (7) days after its receipt of such purchase order. 3.3 DELIVERY OF PRODUCTS. (a) Subject to the terms and conditions of this Agreement, including Section 3.2(e), NOVAVAX shall execute all accepted purchase orders consistent with this Agreement by delivery to the destination within the United States recited therein of all ordered quantities of the Products no later than the delivery dates provided in KING's purchase orders. Subject to Section 3.2(e), KING may reschedule shipment of any Product order, for not greater than 120 days, upon written notice to NOVAVAX at least sixty (60) days prior to the scheduled shipping date for such order. Title and risk of loss for each order will pass to KING when such order of Products is delivered to its destination in the United States. (b) As of the time of such delivery by NOVAVAX, each lot of the Products will conform to its Specifications. NOVAVAX shall perform release testing in a manner consistent with testing methods agreed upon by the parties or, absent any such agreement, as heretofore conducted by NOVAVAX. NOVAVAX shall provide to KING a certificate of analysis with each shipment of the Products to KING or its designated recipient stating that the Products conform to their Specifications and meet the release specifications. The certificate of analysis shall be in a format agreed upon by the parties. Upon KING's written request, NOVAVAX will also provide KING with a copy of the relevant available manufacturing and controls information for the applicable lot(s) ordered. (c) All purchase orders for the Products placed by KING shall be whole number multiples of the production batch sizes used by NOVAVAX. The parties acknowledge and agree that the quantity of the Product delivered to KING hereunder may differ by up to ten percent (10%) from the quantity requested in the purchase order. In the event that the quantity delivered hereunder differs from the quantity requested in the purchase order, KING shall pay NOVAVAX for the quantity delivered rather than the quantity requested in the purchase order. 6 10 3.4 PRODUCT SAMPLES. Except as provided in this Section 3.4, Product samples shall be deemed Products hereunder and shall be subject to the same terms and conditions of other Products. NOVAVAX shall provide KING with samples of the Products to be used by KING solely in marketing and promoting the Products in the Territory. NOVAVAX shall ship the samples to one central warehouse of KING in the United States, as designated by KING, and title and risk of loss and responsibility for handling and warehousing of the samples shall pass to KING upon delivery to such warehouse in the United States. All samples of the Products provided to KING hereunder shall be accompanied by an appropriate certificate of analysis of the Product Specifications and an indication of expiration dating. 3.5 LABELING AND PACKAGING COSTS. KING shall reimburse NOVAVAX for the direct costs of any manufacturing, packaging, and labeling materials and components paid for by NOVAVAX in reliance upon forecasts submitted by KING hereunder which become obsolete and which cannot be returned for a refund or otherwise used by NOVAVAX upon any change by KING or its Affiliate in the packaging or labeling of the Products. At its option, KING will pay for the return or destruction of the obsolete materials or components. 4. CERTAIN REGULATORY MATTERS 4.1 LICENSES. Except as otherwise set forth in this Agreement, each party hereto shall, at its sole cost and expense, maintain in full force and effect all necessary licenses, permits and other authorizations required by law, regulation, ordinance or statute to carry out its duties and obligations in the Territory under this Agreement. 4.2 REGULATORY RESPONSIBILITY. All regulatory matters regarding the Products within and arising from or related to the promotion, marketing or sales of the Products within the Territory shall be the responsibility of, and shall remain under the control of KING, subject to NOVAVAX's responsibilities in matters related to the Products outside the Territory, including without limitation NOVAVAX's responsibilities relating to the manufacturing of the Products in accordance with applicable FDA regulations and current Good Manufacturing Practices. Notwithstanding the foregoing, KING shall promptly provide NOVAVAX with copies of all communications received from any regulatory agency or authority concerning the Products or any Marketing Materials related to the Products in the Territory 7 11 and/or arising from or related to the promotion, marketing or sales of the Products within the Territory and shall submit copies of all such communications and filings to be made to any regulatory agency or authority within the Territory for prior review and comment within five (5) business days. KING shall provide adequate notice to NOVAVAX and shall include NOVAVAX in all meetings with a regulatory agency or authority within the Territory, electronic, in person, or otherwise. KING shall give due consideration to all comments timely made by NOVAVAX and shall notify NOVAVAX, in writing, if it declines to address any such comments, stating the reason therefor. 4.3 EFFICACY AND SAFETY INFORMATION. Each party shall furnish the other with efficacy and safety information in its possession as reasonably requested to assist each party in the performance of its obligations under this Agreement, including without limitation relevant clinical and safety data included in the NDA (or comparable filing in the Territory) for the Products and additional information, if any, related to the efficacy and safety profile of the Products. Except for that information that is to be disclosed to OB/GYN's in connection with conducting details, such information shall be treated as Confidential and Proprietary Information pursuant to Section 8 of this Agreement and shall not be disclosed to third parties without the prior written approval or direction of the party owning such Confidential and Proprietary Information. 4.4 NOTICE OF ADVERSE EVENTS. Each party shall promptly notify the other party of any event(s) that materially affect(s) or could reasonably be expected to materially affect the marketing of the Products, including without limitation adverse drug reactions and governmental inquiries. Serious Adverse Events for the Products learned of by KING shall be submitted in writing to NOVAVAX within two (2) business days from the date of learning thereof by KING. Non-Serious Adverse Events for the Products learned of by KING shall be submitted in writing to NOVAVAX no more than five (5) business days from the date of learning thereof by KING. KING and/or its Affiliates shall have the sole responsibility for reporting and responding to such events to applicable regulatory authorities in the Territory; provided, that NOVAVAX may take such actions (including issuing such reports) as it determines are required by applicable law. KING shall promptly provide NOVAVAX with copies of all periodic reports and product safety update reports relating to the Products which are filed or received from third parties relating to the Territory. Notwithstanding the foregoing, within one hundred twenty (120) days after the Effective Date, the parties shall meet and establish a standard operating procedure ("SOP") addressing the responsibilities of each party with respect to adverse event reporting, which SOP shall supercede this Section 4.4, it being understood, however, that KING shall have the 8 12 responsibility of reporting all adverse events to the appropriate regulatory authorities in the Territory. 4.5 RECALLS; PRODUCT TECHNICAL COMPLAINTS. (a) KING shall have the sole authority and responsibility to respond to any regulatory agencies in the Territory, to respond to Product Technical Complaints and medical complaints and to handle all recalls or market withdrawals of the Products in accordance with applicable law, at its cost and expense; provided, however, that if any such recalls or market withdrawals of the Products are caused solely by actions or inactions by NOVAVAX constituting a breach of the provisions of this Agreement or a violation of applicable law, NOVAVAX, as KING's sole remedy, shall bear all reasonable costs associated with such actions or inactions in connection therewith, provided, however, that NOVAVAX shall have no obligation to reimburse KING for any incidental or consequential damages incurred in connection therewith, including, without limitation, any lost profits. (b) Each party shall promptly (but in any case, not later than 48 hours) notify the other party in writing of any order, request or directive of a court or other governmental authority to recall or withdraw a Product. KING shall be solely responsible for determining whether to issue a recall or withdrawal (but shall comply with all applicable laws, regulations and governmental guidelines in making such determination) and for the cost and expense of any such recall or withdrawal of the Products, provided, however, that KING shall give due consideration to all comments timely made by NOVAVAX relating to the manufacturing of the Products and shall notify NOVAVAX, in writing, if it declines to address any such comments, stating the reason therefor. If a recall or market withdrawal is due to KING's failure to satisfy its obligations hereunder, then NOVAVAX shall be relieved of its obligations to supply the Product hereunder until the cause of such recall or withdrawal has been resolved to the satisfaction of the parties and the FDA. (c) In the event of any recall or product withdrawal resulting solely from NOVAVAX's wrongful or willfully negligent acts or omissions, NOVAVAX shall, as KING's sole remedy (together with the recovery set forth in Sections 4.5(a) and (d)), for such act or omission, at the election of KING, either: (i) supply Products, without charge to KING, in an amount sufficient to replace the amount of Products recalled or withdrawn; or (ii) refund to KING, or give credit to KING against outstanding receivables due from KING against the Purchase Price or Royalty Payments for Products to be delivered to KING in the future, in amounts equal to the price paid by KING to NOVAVAX for Products so recalled or withdrawn plus 9 13 the reasonable transportation costs incurred by KING and not recovered by KING in respect of such recalled or withdrawn Products. (d) In the event of any recall or withdrawal arising out of or resulting from one party's breach of this Agreement, negligence or willful misconduct , the breaching party shall also pay to the other party, the other party's reasonable out-of-pocket expenses incurred in connection with such recall or withdrawal. 4.6 NOTICE OF GOVERNMENT INSPECTIONS. Each party agrees that, to the extent it becomes aware of the results, observations and/or outcome of any inspections or audits of the facilities or operations involved in the manufacture, processing, testing or packaging of the Products conducted by governmental agencies, including without limitation the FDA, it will notify the other of any such information as it relates to the Products within three (3) days of obtaining the information. Each party will provide the other with copies of reports of quality audits conducted by it and will apprise the other of material manufacturing, marketing, promotion, sales or other issues affecting supply of the Products. 4.7 GOVERNMENT INQUIRIES. Upon being contacted by any federal, state, or local agency for any regulatory purpose pertaining specifically to this Agreement or to the Products, a party shall immediately notify the other party. Either party may permit unannounced inspections of Products or facilities by a regulatory agency with competent jurisdiction and respond to the extent necessary to comply with its obligations under applicable law. 4.8 MEDICAL INQUIRIES. KING shall handle all medical inquiries concerning the Products in or from the Territory. KING shall notify NOVAVAX of any medical information requests and/or medical inquiries. 5. FEES AND EXPENSES 5.1 PURCHASE PRICE. (a) KING shall purchase from NOVAVAX, and NOVAVAX shall sell to KING, the Products at the price equal to the Cost of Products plus ten percent (10%) (the "Purchase Price"). NOVAVAX may, from time to time, by written notice to KING, increase the purchase price for one or more Products by an amount equal to the increase in NOVAVAX's costs for labor and materials used in 10 14 connection with the manufacture, storage and/or delivery to KING of such Products; provided, however, that during the twelve (12) month period following the Effective Date, NOVAVAX shall not increase the purchase price for any Product because of any increased labor cost experienced by NOVAVAX. (b) In addition to the Purchase Price, KING shall pay all actual freight, insurance and government sales, use, excise, property, import, export or similar taxes or excises imposed on purchases for resale, and duties and other fees (except tax on income to NOVAVAX) incurred in connection with the sale and shipment of the Products to KING. (c) NOVAVAX shall keep adequate and complete records, in accordance with GAAP, of all Costs of Products. Such records shall include all information necessary to verify the total amount and computation of the Purchase Price due hereunder and NOVAVAX's compliance with the terms and conditions of this Agreement, and shall be available once per year to inspection by or on behalf of KING during normal business hours, upon reasonable notice, to verify such costs and whether an increase in such costs has occurred and to verify NOVAVAX's compliance with this Agreement. NOVAVAX shall retain such records for not fewer than twenty-four (24) months after the close of any calendar year to which they relate or such period as required by the FDA. NOVAVAX agrees to make prompt adjustment, if necessary, to compensate for any errors or omissions disclosed by such inspection. Should such inspection reveal a shortfall of more than three percent (3%) between the costs actually incurred and the Costs of Products reported to KING, the cost of such inspection shall be paid by NOVAVAX. (d) Payments to NOVAVAX for the Purchase Price of delivered Products shall be made by KING within thirty (30) days after the later of (i) the date of delivery thereof to the destination specified by KING, and (ii) the date of invoice from NOVAVAX. 5.2 ROYALTY PAYMENT. (a) In addition to the amounts paid under Section 5.1, KING agrees to pay royalties only on the Net Sales of the Products at an annual rate of seven and one-half percent (7.5%) of Net Sales of the Products in the Territory. Such royalties are payable forty-five (45) days after the end of each Calendar Quarter in which Products are sold during the Term of this Agreement. (b) KING shall keep adequate and complete records, in accordance with GAAP, showing all Net Sales of Products with respect to which royalties are due under this Agreement. Such records shall include all information necessary to verify the total amount and computation of royalties due hereunder and KING's compliance with the terms and conditions of this Agreement, and shall be available once per year to inspection by or on behalf of 11 15 NOVAVAX during normal business hours, upon reasonable notice, to verify the amounts thereof or to ascertain such amounts in the event of a failure of KING to report and to verify KING's compliance with this Agreement. KING shall retain such records for not fewer than twenty-four (24) months after the close of any calendar year to which they relate or such period as required by the FDA. KING agrees to make prompt adjustment, if necessary, to compensate for any errors or omissions disclosed by such inspection. Should such inspection reveal a shortfall of more than three percent (3%) between the royalties reported and those actually owed by KING, the cost of such inspection shall be paid by KING. 5.3 DISTRIBUTION, WAREHOUSING, BILLING, PRICING. KING (and/or its Affiliates) shall have the sole responsibility for the distribution, warehousing, billing and order confirmation of the Products after receipt at the designated destination and for the collection of receivables resulting from sales of the Products in the Territory. KING shall have the sole authority to determine the price of the Products in the Territory during the Term, including resale price increases and decreases and the timing thereof. 6. INSPECTION AND WARRANTY OF PRODUCTS 6.1 INSPECTION BY KING. Within forty-five (45) days from the date of delivery of Products to the destination specified by KING, KING may analyze such Products delivered to KING for purposes of determining whether the same meet their Specifications and were manufactured in accordance with the NDA ("Acceptable Products"). KING shall notify NOVAVAX in writing within said forty-five (45) days of any Product or portion thereof which KING is returning because it is not an Acceptable Product. 6.2 DISPUTES OVER PRODUCTS. If NOVAVAX, after good faith consultation with KING, disputes any finding by KING that a Product is not an Acceptable Product, then representative samples of such Product shall be forwarded to a third party jointly selected by NOVAVAX and KING, in their reasonable discretion, for analysis, which analysis shall be performed in compliance with applicable FDA regulations and governmental regulations in the Territory for re-testing of pharmaceutical products. The findings of such third party regarding whether the Product was an Acceptable Product shall be binding upon the parties. The cost of such analysis by such third party shall be borne by the party whose findings differed from those generated by such third party. 12 16 6.3 REPLACEMENT OF PRODUCTS THAT ARE NOT ACCEPTABLE PRODUCTS. NOVAVAX shall, as KING's option, either replace any Product order, or portion thereof, which is not an Acceptable Product, at its cost and expense, including shipping costs, or refund to KING the payments made for such returned Products. NOVAVAX shall instruct KING as to the disposition of any Product order or portion thereof determined not to be an Acceptable Product. At the sole option of NOVAVAX, said Product may be returned to NOVAVAX, at NOVAVAX's expense including shipping costs, or destroyed in an environmentally acceptable manner, in accordance with applicable governmental regulations, at NOVAVAX's expense. 7. TERM AND TERMINATION 7.1 TERM OF AGREEMENT. (a) The initial Term of this Agreement (the "Initial Term") shall commence as of the Effective Date hereof and, unless terminated sooner or extended as provided below, shall continue until the last to expire of any patent rights covering the Products which grant exclusivity to the marketing, distribution and sale of the Products (the Initial Term, as extended or sooner terminated, the "Term"). (b) If NOVAVAX (or any of its Affiliates) shall obtain any additional patent or other exclusive rights with respect to the manufacturing, sale, marketing or promotion of the Products, and such rights shall have a term which extends beyond the Initial Term ("Additional Exclusivity Rights"), then NOVAVAX shall so notify KING promptly and KING may, in its sole discretion, elect to extend the Initial Term until the expiration or termination of such Additional Exclusivity Rights (the "Extended Promotion Term"). If KING shall elect to extend the Initial Term pursuant to this Section 7.1(b), then KING shall provide written notice thereof to NOVAVAX at least sixty (60) days prior to the expiration of the Initial Term, in which case the terms and conditions of this Agreement shall remain in full force and effect until the expiration of the Extended Promotion Term, unless terminated sooner as provided herein. 7.2 TERMINATION BY NOVAVAX. (a) NOVAVAX shall have the right to terminate this Agreement at any time upon written notice to KING, if KING breaches in a material way any of the representations, warranties, covenants or agreements set forth in this Agreement or otherwise materially defaults in the performance of any of its duties or obligations under this Agreement, which breach or default shall not be cured within sixty (60) days after written notice is given to KING specifying the breach or default. 13 17 (b) To the extent permitted by law, NOVAVAX shall have the right to terminate this Agreement immediately upon notice to KING, if KING is declared bankrupt or insolvent where there is an assignment for the benefit of creditors, or if a receiver is appointed or proceedings commenced (and not dismissed within ninety (90) days), voluntarily or involuntarily, under any bankruptcy or similar law. 7.3 TERMINATION BY KING. KING shall have the right to terminate this Agreement, in its sole discretion, as follows: (a) at any time on or before June 30, 2001 or immediately upon notice, in the event that KING, in conducting its continued due diligence on the Products, determines, in its sole discretion, that there are safety or efficacy concerns relating to the Products; (b) immediately upon written notice to NOVAVAX, if (i) the FDA shall not have given written notice to NOVAVAX that the FDA has accepted the NDA for the ESTRASORB(R) Model Claims on or prior to March 31, 2002, or (ii) KING is advised between March 31, 2002 and December 31, 2002, by a nationally recognized pharmaceuticals consulting firm, that the FDA is not expected to approve the NDA for the ESTRASORB(R) by December 31, 2002 or (iii) the Product is not approved for marketing and sale for use in humans by the applicable governmental authorities in the Territory by December 31, 2004; (c) at any time upon written notice to NOVAVAX, if NOVAVAX breaches in a material way any of the representations, warranties, covenants or agreements set forth in this Agreement or otherwise materially defaults in the performance of any of its duties or obligations under this Agreement, which breach or default shall not be cured within sixty (60) days after written notice is given to NOVAVAX specifying the breach or default; (d) KING shall have the right to terminate this Agreement with respect to a specific country within the Territory upon thirty (30) days' prior notice to NOVAVAX if there has been a material adverse change in the market for any Product in such country such as a recall or withdrawal of a Product, or a safety problem related to a Product; (e) immediately upon notice to NOVAVAX, to the extent permitted by law, if NOVAVAX is declared bankrupt or insolvent where there is an assignment for the benefit of creditors, or if a receiver is appointed or proceedings commenced (and not dismissed within ninety (90) days), voluntarily or involuntarily, under any bankruptcy or similar law; and 14 18 (f) an "Event of Default" shall have occurred under that certain 4% Convertible Senior Note, dated December 19, 2000, made by NOVAVAX to KING. 7.4 EFFECTS OF TERMINATION. (a) Upon termination of this Agreement, KING shall pay NOVAVAX for all direct costs associated with raw materials or components used in manufacturing, packaging, or labeling the Products, to the extent that such materials or components were purchased in reasonable quantities based on forecasts submitted by KING hereunder, which NOVAVAX determines, in its reasonable discretion, that it cannot practicably reuse in the manufacturing, packaging, or labeling of other products. At its option, KING will pay for the return or destruction of the obsolete materials or components. (b) Neither the termination nor expiration of this Agreement shall release or operate to discharge either party from any liability or obligation that may have accrued prior to such termination or expiration. Any termination of this Agreement as provided herein shall not be an exclusive remedy but shall be in addition to any remedies whatsoever that may be available to the terminating party. (c) Notwithstanding the giving of any notice of termination pursuant to this Section 7, each party shall continue to fulfill its obligations under this Agreement at all times until the effective date of any such termination. 7.5 ACTIONS UPON TERMINATION. (a) Except as set forth in Section 7.5(b) below, upon the termination or expiration of this Agreement for any reason, KING shall immediately cease all of its promotional and marketing activities for the terminated Products, discontinue any use of the NOVAVAX Trademarks related to the terminated Products, and, at NOVAVAX's election, return to NOVAVAX or destroy all sales training and Marketing Materials for the terminated Products containing NOVAVAX Trademarks and any remaining terminated Product samples (not already distributed or destroyed with destruction certified by KING). (b) Notwithstanding Section 7.5(a), KING may continue to market, promote, distribute and sell the Product using the NOVAVAX Trademarks in accordance with the terms of this Agreement until the earlier of such time as KING's inventory of the Product existing at the time of termination is depleted or the dating on such Product has expired. 15 19 7.6 SURVIVAL. The representations, warranties, covenants and agreements of the parties in Sections 7, 8, 9, 10, 11 and 12 hereof shall survive any expiration or termination of this Agreement. 7.7 PAYMENTS UPON TERMINATION. (a) The expiration or termination of this Agreement pursuant to this Section 7 with respect to any Product shall not release (i) either party from any obligation to pay to the other party any amounts accrued under Section 5 of this Agreement in connection with activities completed, expenses accrued and Net Sales realized for such Product with respect to the period prior to the effective date of such expiration or termination; provided, that no further amounts shall be payable under Section 5, except as provided for in this Section 7. 8. CONFIDENTIAL INFORMATION 8.1 DUTY OF CONFIDENTIALITY. Each party acknowledges that it may receive confidential or proprietary information of the other party in the performance of this Agreement, including without limitation information obtained or reviewed in connection with any audits or investigations performed pursuant to Section 5.1(c) or Section 5.2(b) of this Agreement. Each party shall hold confidential and shall not, directly or indirectly, disclose, publish or use for the benefit of any third party or itself, except in carrying out its duties hereunder, any Confidential or Proprietary Information of the other party or Confidential or Proprietary Information jointly developed by the parties, without first having obtained the furnishing party's written consent to such disclosure or use. "Confidential or Proprietary Information" shall include without limitation Know-How, scientific information, clinical data, efficacy and safety data, adverse event information, formulas, methods and processes, Specifications, pricing information (including discounts, rebates and other price adjustments) and other terms and conditions of sales, customer information, business plans, and all other intellectual property. This restriction shall not apply to any information within the following categories: (i) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such information or its Affiliates, sublicensees, consultants and contractors, as applicable; (ii) can be shown by written documentation to have been disclosed to or already in the possession of the receiving party or its Affiliates or sublicensees by a third party, provided such information was 16 20 not obtained by such third party directly or indirectly from the other party under this Agreement; (iii) can be shown by written documentation to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement by personnel without access to the Confidential Information; (iv) is disclosed by the receiving party pursuant to interrogatories, formal requests for information or documents, subpoena, or a civil investigative demand of a court or governmental agency; provided, however, that, to the extent practicable, the receiving party shall notify the other party promptly following receipt thereof so that the other may seek a protective order or other appropriate remedy to prevent or limit such disclosure, and provided further that the disclosing party furnishes only that portion of the information which it is advised by counsel is legally required and imposes such obligations of secrecy as are possible in that regard; (v) is required to be disclosed by a party under any statutory, regulatory or similar legislative requirement or any rule of any stock exchange to which it or any Affiliate is subject; provided, however, that the non-disclosing party shall be allowed to review the proposed disclosure and the disclosing party agrees to consider in good faith any proposed revisions thereof provided to the disclosing party within two (2) business days of the non-disclosing party's receipt of the proposed disclosure and the parties shall seek confidential treatment for such disclosure as permitted by applicable law; or (vi) is required by authorities to obtain regulatory approval to market, promote, or sell the Products in the Territory. 8.2 SURVIVAL. The obligations set forth in this Section 8 shall survive the termination or expiration of this Agreement for a period of five (5) years. The confidentiality obligations described in this Section 8 shall be in addition to the parties' obligations under the Confidentiality Agreement dated as of September 1, 2000 (the "Confidentiality Agreement"), except that to the extent there is a conflict between the Confidentiality Agreement and provisions of this Agreement, this Agreement shall govern. 17 21 9. INDEMNIFICATION AND INSURANCE 9.1 INDEMNIFICATION BY KING. KING shall defend, indemnify and hold NOVAVAX and its Affiliates, and their respective officers, directors, employees, successors and assigns, harmless from and against any and all claims, liabilities, losses, costs, actions, suits, damages and expenses (other than special, incidental, consequential or punitive damages, but including attorneys' fees and costs) arising out of: (a) any breach by KING of any representation, warranty or covenant contained in this Agreement; and (b) any claims by third parties relating to the performance or nonperformance of KING's obligations under this Agreement; provided, however, that KING shall not be required to indemnify NOVAVAX with respect to any such claim, liability, loss, cost, action, suit, damage or expense hereunder to the extent the same is otherwise covered by NOVAVAX's indemnification obligation in Section 9.2, or which arises from NOVAVAX's negligent act or omission or intentional misconduct or that of any NOVAVAX Affiliate. 9.2 INDEMNIFICATION BY NOVAVAX. NOVAVAX shall defend, indemnify and hold KING and its Affiliates, and their respective officers, directors, employees, successors and assigns, harmless from and against any and all claims, liabilities, losses, costs, actions, suits, damages and expenses (other than special, incidental, consequential or punitive damages, but including attorneys' fees and costs) arising out of: (a) any breach by NOVAVAX of any representation, warranty or covenant contained in this Agreement; (b) the infringement or alleged infringement of any patent, trademark or other intellectual property rights of a third party by its activities with respect to the Products or Trademarks in accordance with the terms and conditions of this Agreement; (c) any personal injury (including death) and/or property damage resulting from the handling, possession or use of the Products in accordance with NOVAVAX's written instructions therefor that have been provided to KING; (d) any claims by third parties relating to the performance or nonperformance of NOVAVAX's obligations under this Agreement; and (e) any other liability arising out of the manufacture, marketing, labeling, distribution or use of the Products in accordance with NOVAVAX's written instructions therefor that have been provided to KING; provided, however, that NOVAVAX shall not be required to indemnify KING with respect to any such claim, liability, loss, cost, action, suit, damage or expense hereunder to the extent covered by KING's indemnification obligation in Section 9.1, or which arises from KING's negligent act or omission or intentional misconduct or that of any KING Affiliate or which arises from any modification of the Products. 9.3 CLAIMS PROCEDURES. A party (the "Indemnitee") which intends to claim indemnification 18 22 under this Section 9 shall notify the other party (the "Indemnitor") within a reasonable time in writing of any action, claim or liability in respect of which the Indemnitee believes it is entitled to claim indemnification, provided that the failure to give timely notice to the Indemnitor shall not release the Indemnitor from any liability to the Indemnitee to the extent the Indemnitor (including its right to defend) is not prejudiced thereby. The Indemnitor shall have the right, by notice to the Indemnitee, to assume the defense of any such action or claim within the fifteen (15) day period after the Indemnitor's receipt of notice of any action or claim with counsel of the Indemnitor's choice and at the sole cost of the Indemnitor. If the Indemnitor does not so assume the defense of such third party claim, then the Indemnitee may assume such defense with reasonable counsel of its choice and at the sole cost of the Indemnitor. If the Indemnitor so assumes such defense, then the Indemnitee may participate therein through counsel of its choice, but at the sole cost of the Indemnitee. The party not assuming the defense of any such claim shall render all reasonable assistance as is requested to the party assuming such defense, and all reasonable out-of-pocket costs of such assistance shall be for the account of the Indemnitor. No such claim shall be settled other than by the party defending the same, and then only with the consent of the other party which shall not be unreasonably withheld; provided that the Indemnitee shall have no obligation to consent to any settlement of any such action or claim which imposes on the Indemnitee any liability or obligation which cannot be assumed and performed in full by the Indemnitor, and the Indemnitee shall have no right to withhold its consent to any settlement of any such action or claim if the settlement involves only the payment of money by the Indemnitor or its insurer. 9.4 INSURANCE. Each party shall maintain insurance (either through purchase of a policy from a nationally recognized third party insurer or through maintenance of a self-insurance program) against such risks and upon such terms (including coverages, deductible limits and self-insured retentions) as is customary for the activities to be conducted by such party under this Agreement and is appropriate to cover its indemnification obligations hereunder. Each party shall name the other as an additional insured on such party's relevant insurance policies, as its interests may appear, and shall furnish to the other party evidence of such insurance, upon request. 19 23 10. REPRESENTATIONS AND WARRANTIES 10.1 BY KING. KING represents and warrants to NOVAVAX that: (a) the execution, delivery and performance of this Agreement by KING does not conflict with, or constitute a breach of or under, any order, judgment, agreement or instrument to which KING is a party; and (b) the execution, delivery and performance of this Agreement by KING does not require the consent of any Person or the authorization of (by notice or otherwise) any governmental or regulatory authority, except as otherwise expressly provided in this Agreement. 10.2 BY NOVAVAX. NOVAVAX represents and warrants to KING that: (a) the execution, delivery and performance of this Agreement by NOVAVAX does not conflict with, or constitute a breach of or under, any order, judgment, agreement or instrument to which NOVAVAX is a party; (b) the execution, delivery and performance of this Agreement by NOVAVAX does not require the consent of any Person or the authorization of (by notice or otherwise) any governmental or regulatory authority, except as expressly provided in this Agreement; (c) the rights granted by NOVAVAX to KING hereunder do not conflict with any rights granted by NOVAVAX to any third party; (d) subject to KING's responsibilities as set forth in this Agreement, NOVAVAX has sufficient rights in and to the Products and all intellectual property, use, development, manufacturing, marketing, distribution and sale rights related thereto necessary or advisable for such purposes as contemplated by this agreement (the "Product Rights"), free and clear of any liens or encumbrances; (e) there are no agreements between NOVAVAX and any Person with respect to the rights of NOVAVAX in the Territory in the Products and the Product Rights; (f) NOVAVAX has the right to and, as of the Effective Date, has no reason to believe it will not have a continuous and sufficient supply of the active ingredient included in the Products during the entire Term; 20 24 (g) it has no notice that any Product Rights, or that the use thereof as contemplated under this Agreement, interfere or infringe on any intellectual property rights owned or possessed by any Person; (h) there are no third party pending patent applications which, if issued, may cover the use, development, manufacture, distribution or sale of the Products; (i) there are no claims, judgments or settlements against or owed by NOVAVAX or pending or threatened claims or litigation relating to the Products or the Product Rights; (j) it has reviewed the available safety data relating to the Products and has no reason to believe the Products are not safe; (k) as of the time the Products are delivered to KING's designated destination hereunder and subject to KING's compliance with its obligations hereunder, all such Products supplied hereunder conform to the Specifications, will be manufactured in accordance with the NDA, and will not be adulterated or misbranded. (l) it has not and will not use in any capacity the services of any persons debarred under 21 U.S.C. Section 335(a) or 355(b) in connection with the manufacture of the Products; and (m) any Product samples provided to KING hereunder have been at all times in the control of NOVAVAX or its designate and meet applicable Specifications contained in the NDA for the Product. 11. NOTICES Except as otherwise specifically provided herein, any notice or other documents to be given under this Agreement shall be in writing and shall be deemed to have been duly given if sent by registered post, nationally recognized overnight courier or confirmed facsimile transmission to a party (followed by hard copy by mail) or delivered in person to a party at the address or facsimile number set out below for such party or such other address as the party may from time to time designate by written notice to the other: If to KING: KING Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: President Facsimile: (423) 989-8055 21 25 with a copy (which shall not constitute notice) to: KING Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: Executive Vice President and General Counsel Facsimile: (423) 989-6282 If to NOVAVAX: Novavax, Inc. 8320 Guilford Road Columbia, Maryland 21046 Attn: Chief Executive Officer Telecopy: (301) 854-3902 with a copy (which shall not constitute notice) to: White & McDermott, P.C. 65 William Street, Suite 250 Wellesley, Massachusetts 02481 Attn: David A. White Telecopy: (781) 237-8120 Any such notice or other document shall be deemed to have been received by the addressee three (3) business days following the date of dispatch of the notice or other document by post or, where the notice or other document is sent by overnight courier, by hand or is given by facsimile, simultaneously with the transmission or delivery thereof. 12. MISCELLANEOUS PROVISIONS 12.1 ASSIGNMENT; CHANGE OF CONTROL. (a) Neither party shall assign or otherwise transfer this Agreement or any interest herein or right hereunder without the prior written consent of the other party, and any such purported assignment, transfer or attempt to assign or transfer any interest herein or right hereunder shall be void and of no effect, except that without the prior written consent of NOVAVAX, KING may assign its rights and obligations hereunder to an Affiliate. In the case of an assignment in accordance with this Section 12.1, the assigning party shall remain responsible for all of its obligations and agreements set forth herein, notwithstanding such assignment and such transferee or successor shall assume in writing the obligations of the party to which it is the transferee or successor. Subject to the foregoing, this Agreement 22 26 shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (b) NOVAVAX and KING acknowledge and agree that KING's obligations, commitments (financial and otherwise) and investments pursuant to the terms hereof and pursuant to various other commercial arrangements between KING and NOVAVAX are based on the premise that (i) KING expects that it shall take several years for the NOVAVAX Products to develop and mature to be viable and economically profitable pharmaceutical products, and (ii) KING believes that the best organizational and corporate structure to achieve these objectives is for NOVAVAX to remain an independent biopharmaceutical company focused on the research, development and commercialization of proprietary healthcare products for women. (c) Upon a Change of Control of NOVAVAX, King may elect, in King's sole option, to require NOVAVAX to (i) assign and transfer to KING all rights of ownership to any governmental or regulatory applications or approvals in the Territory issued or pending (including any correspondence with respect thereto) with respect to any NOVAVAX Products and any trademarks associated with any NOVAVAX Products in the Territory, and (ii) license to KING on an exclusive and perpetual basis solely in the Territory all intellectual property rights and Know How with respect to the NOVAVAX Products as may be necessary to make, use, promote and sell the NOVAVAX Products in the Territory; provided, however, if KING elects to exercise its rights set forth above, KING will pay NOVAVAX a royalty of seven and one-half percent (7.5%) of the Net Sales of the NOVAVAX Products received by KING, and such royalty payment shall be subject to the terms contained herein. (d) NOVAVAX acknowledges and agrees that the agreements contained in this Section 12.1 are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, KING would not enter into this Agreement and certain other commercial arrangements with NOVAVAX. 12.2 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 23 27 12.3 NON-WAIVER. The failure of either party to enforce or to exercise, at any time or for any period of time, any term of or any right arising pursuant to this Agreement does not constitute, and shall not be construed as, a waiver of such term or right, and shall in no way affect that party's right later to enforce or exercise such term or right. 12.4 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreements contain all of the terms agreed to by the parties regarding the subject matter of this Agreement and supersede any prior agreements, understandings or arrangements between them, whether oral or in writing. This Agreement may not be amended, modified, altered or supplemented except by means of a written agreement or other instrument executed by both of the parties hereto. No course of conduct or dealing between the parties shall act as a modification or waiver of any provisions of this Agreement. 12.5 JURISDICTION; VENUE. (a) Each of NOVAVAX and KING hereby waives personal service of any process upon it in connection with any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and hereby covenants and agrees that all such service of process may be made in the manner set forth in Section 11 with the same effect as though served on it personally. (b) NOVAVAX hereby covenants and agrees that any suit, action or proceeding initiated by NOVAVAX against KING, its affiliates, subsidiaries, successors and/or assigns arising out of or relating to this Agreement 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 NOVAVAX, each of NOVAVAX and KING hereby submit to the exclusive jurisdiction and venue of the federal courts located in and state courts of the State of Tennessee and hereby waive any and all objections based on jurisdiction or venue that such party may have under applicable law or the Federal Rules of Civil Procedure. Each of the parties 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 suit, action or proceedings with respect to this Agreement 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, the party effecting such service shall also deliver a copy thereof to the other parties in 24 28 accordance with the notice provision set forth in Section 11. Each such party 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 each such party shall at all times have an agent for service for the foregoing purposes in the State of Tennessee. (c) KING hereby covenants and agrees that any suit, action or proceeding initiated by KING against NOVAVAX, its affiliates, subsidiaries, successors and/or assigns arising out of or relating to this Agreement 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 KING, each of NOVAVAX and KING hereby submit to the exclusive jurisdiction and venue of the federal courts located in and state courts of the State of Maryland and hereby waive any and all objections based on jurisdiction or venue that such party may have under applicable law or the Federal Rules of Civil Procedure. Each of the foregoing parties 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 proceedings with respect to this Agreement 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 party effecting such service shall also deliver a copy thereof to the other parties in accordance with the notice provision set forth in Section 11. Each such party 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 each such party shall at all times have an agent for service for the foregoing purposes in the State of Maryland. 12.6 SEVERABILITY. In the event that any of the provisions or a portion of any provision of this Agreement are held to be invalid, illegal or unenforceable by a court of competent jurisdiction or a governmental authority, such provision or portion of provision shall be construed and enforced as if it had been narrowly drawn so as not to be invalid, illegal or unenforceable and the validity, legality and enforceability of the enforceable portion of any such provision and the remaining provisions shall not be adversely affected thereby. 12.7 RELATIONSHIP OF THE PARTIES. The parties hereto are acting and performing as independent contractors. Nothing in this Agreement creates the relationship of partnership, 25 29 joint venture, sales agency or principal and agent. Neither party is the agent of the other, and neither party may hold itself out as such to any other party. All financial obligations associated with each party's business shall be the sole responsibility of such party. 12.8 PUBLIC ANNOUNCEMENTS. The form and content of any public announcement to be made by one party regarding this Agreement, or the subject matter contained herein, shall be subject to the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed or conditioned), except as may be required by applicable law (including, without limitation, disclosure requirements of the SEC, NYSE, NASDAQ, AMEX or any other stock exchange) in which event the other party shall endeavor to give the other party reasonable advance notice and review of any such disclosure. 12.9 COUNTERPARTS. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures of each of the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument. 12.10 FORCE MAJEURE. Neither party shall be liable to the other party for any failure to perform as required by this Agreement (other than the obligation to pay money) if the failure to perform is due to circumstances reasonably beyond such party's control including, without limitation, acts of God, civil disorders or commotions, acts of aggression, fire, explosions, floods, drought, war, sabotage, embargo, utility failures, material shortages, labor disturbances, a national health emergency, or appropriations of property. A party whose performance is affected by a force majeure event shall take prompt action using its reasonable best efforts to remedy the effects of the force majeure event. 12.11 INTERPRETATION. The parties hereto acknowledge and agree that: (a) each party and its representatives have reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; and (b) the terms and provisions of this Agreement shall be construed fairly as to each party hereto and not in favor of or against either party regardless of which party was generally responsible for the preparation or drafting of this Agreement. 26 30 12.12 CERTAIN EXPENSES AND COMMISSIONS. Except as otherwise expressly set forth in this Agreement, the parties hereto shall each pay all their costs and expenses, including legal and accounting fees, incurred in connection with the preparation, negotiation, execution and delivery of this Agreement, respective brokerage fees, commissions and finder's fees, if any, and shall indemnify and hold the other harmless from and against any and all other claims or liabilities for such costs and expenses, brokerage fees, commissions and finder's fees incurred by reason of any action taken by any such party. 12.13 THIRD PARTY BENEFICIARIES. This Agreement is not intended to confer upon any non-party rights or remedies hereunder, except as may be received or created as part of a valid assignment. 12.14 COVENANT NOT TO PROMOTE COMPETING PRODUCT. NOVAVAX shall not (and shall not assist any third party to) manufacture, market, sell, or promote in the Territory any product directly competitive with any of the Products during the Term of this Agreement. 12.15 HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. [SIGNATURE PAGES FOLLOW] 27 31 IN WITNESS WHEREOF, the parties have duly executed this Exclusive License and Distribution Agreement as of the first date written above. KING PHARMACEUTICALS, INC. By: --------------------------------------- Name: ------------------------------------- Title: ------------------------------------ NOVAVAX, INC. By: --------------------------------------- Name: ------------------------------------- Title: ------------------------------------ 32 ANNEX I DEFINITIONS "ACT" shall mean the United States Federal Food, Drug and Cosmetic Act, as it may be amended from time to time[, and corresponding laws in the Territory]. "ADDITIONAL EXCLUSIVITY RIGHTS" shall have the meaning set forth in Section 7.1(b). "AFFILIATE(s)" shall mean, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person. A Person shall be regarded as in control of another Person if such Person owns, or directly or indirectly controls, more than fifty percent (50%) of the voting securities (or comparable equity interests) or other ownership interests of the other Person, or if such Person directly or indirectly possesses the power to direct or cause the direction of the management or policies of the other Person, whether through the ownership of voting securities, by contract or any other means whatsoever, provided, however, that, for purposes of this Agreement, the term "Affiliate" shall not include subsidiaries in which a party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the Board of Directors, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect. "AGREEMENT" shall mean this Agreement, together with all appendices, exhibits and schedules referenced herein or attached hereto, and as the same may be amended or supplemented from time to time hereafter pursuant to the provisions hereof. "BINDING QUARTERLY FORECAST" shall have the meaning set forth in Section 3.2. "CALENDAR QUARTER" shall mean each three (3) month period commencing on the first (1st) day of January, April, July or October, as the case may be, during the Term. "CHANGE OF CONTROL" shall mean any sale of voting securities or sale of assets (whether by sale, merger, consolidation, share exchange or otherwise in one transaction or a series of transactions) in or by a party hereto that, directly or indirectly, results in any third party becoming the beneficial owner, directly or indirectly, of securities or assets of such first party representing over fifty percent (50%) of the combined voting power of such Person's then outstanding securities or over fifty percent (50%) of such first party's total assets. 33 "COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and resources normally used by a party for a product owned by it or to which it has rights, which is of similar market potential at a similar state in its development or product life, taking into account issues of safety, efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved, the profitability of the applicable products, and other relevant commercial factors. "CONFIDENTIALITY AGREEMENTS" shall have the meaning set forth in Section 8. "CONFIDENTIAL OR PROPRIETARY INFORMATION" shall have the meaning set forth in Section 8. "COST OF PRODUCTS" shall mean an amount equal to the fully allocated costs of the Products incurred by NOVAVAX in connection with manufacturing the Products, and NOVAVAX' performance of this Agreement, in accordance with GAAP. "CURRENT GOOD MANUFACTURING PRACTICES" shall mean the current standards for the manufacture of biologicals, as set forth in the Act and applicable regulations and guidelines promulgated thereunder or successors thereto, as shall be in effect from time to time during the Term. "EFFECTIVE DATE" shall have the meaning set forth in the PREAMBLE of this Agreement. "ESTRASORB" shall mean the product described in Phase III Clinical Studies. "EXTENDED PROMOTION TERM" shall have the meaning set forth in Section 7.1(b). "FDA" shall mean the United States Food and Drug Administration or any successor entity thereto. "GAAP" shall mean United States generally accepted accounting principles. "INDEMNITEE" shall have the meaning set forth in Section 9.3. "INDEMNITOR" shall have the meaning set forth in Section 9.3. ANNEX I - 2 34 "INITIAL TERM" shall have the meaning set forth in Section 7.1(a). "KING" shall have the meaning set forth in the PREAMBLE of this Agreement. "KNOW-HOW" shall mean all tangible and intangible technical and other information including, but not limited to ideas, conceptions, reductions-to-practice, discoveries, data, designs, chemical structures, formulae, materials, intermediates, inventions (whether patentable or not), methods, models, prototypes, samples, works (whether copyrightable or not), assays, research plans, procedures, designs, experiments, tests, results of experimentation and testing (including results of research or development), processes (including manufacturing processes, uses, specifications and techniques), laboratory records, note books, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports, manufacturing data, summaries and information contained in submissions to and from ethical committees and regulatory authorities, which relates to or concerns a Product. Know-How includes all documents and copies thereof (whether in written, machine-readable, physical or graphic form) and other things (such as prototypes, materials, samples, models, etc.) which contain, embody or refer to the Know-How. Such information, documents or things will not be excluded from being Know-How hereunder by reason of the fact that they become available to the public only through a wrongful act or omission to act of a party hereto or a sublicensee or distributor of a party hereto. The fact that an item is known to the public shall not be taken to exclude the possibility that a compilation including the item, and/or a development relating to the item, is (and remains) not known to the public. Know-How includes, but is not limited to, any and all rights that protect the Know-how, such as copyrights software, rights, trade secret rights, database rights and/or design rights. "MODEL CLAIMS" shall mean final approval by the FDA of Estrasorb as an estrogen hormone replacement therapy prescription product. "NDA" shall mean the new drug applications related to the Products, submitted to the FDA pursuant to provisions of the Act and applicable regulations related thereto. "NET SALES" shall mean all gross revenue actually received by a party from sales of the Products, less (a) credits for refunds and returns, (b) sales, use and similar taxes billed by such party to its customers and required to be paid to the appropriate taxing authorities by such party; (c) discounts, allowances and commissions paid or allowed by a party on sales of the ANNEX I - 3 35 Products, and (c) amounts paid by such party and billed through to such party's customers for insurance, shipping and similar charges. "NON-BINDING FORECASTS" shall have the meaning set forth in Section 3.2. "NON-SERIOUS ADVERSE EVENT" shall mean any adverse drug experience associated with the use of the Products in humans, whether or not considered drug related, which is not a Serious Adverse Event. "NOVAVAX" shall have the meaning set forth in the PREAMBLE. "NOVAVAX GUIDELINES" shall have the meaning set forth in Section 2.3(a). "NOVAVAX TRADEMARK" shall mean the federally registered trademark ESTRASORB(R), and any other related trademark or servicemark containing the word "ESTRASORB", and any other trademark or service mark (whether registered or unregistered) that NOVAVAX decides to use on or with the Products or in any promotional material related to any of the Products. "OB/GYN" shall have the meaning set forth in the PREAMBLE of the Agreement in each case who are authorized by applicable law to prescribe the Products. "PDMA" shall mean the Prescription Drug Marketing Act, as amended, and the implementing rules and regulations thereunder. "PERSON" shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority, or any other form of entity not specifically listed herein. "PRIMARY BRAND TRADEMARK" shall have the meaning set forth in Section 2.3(c). "PRODUCT" shall mean ESTRASORB(TM) and any hormone replacement therapy pharmaceutical product marketed in the field of women's health including or using technology or Know-How derived from to ESTRASORB(TM), including but not limited to products containing a combination of a Product and another pharmaceutical product; provided that Product shall specifically exclude any pharmaceutical or related products owned by NOVAVAX as a direct result of the consummation of the Fielding Acquisition Agreement. ANNEX I - 4 36 "PRODUCT INITIATION DATE" shall mean the date on which the FDA provides written approval of the NDA for ESTRASORB(R). "PRODUCT RIGHTS" shall have the meaning set forth in Section 10.2(d). "PRODUCT TECHNICAL COMPLAINTS" shall mean any complaint that questions the purity, identity, potency or quality of the Products, its packaging or labeling, the compliance of any batch of the Products with applicable laws, including the Act, or any complaint that concerns any incident that causes the Products or their labeling to be mistaken for, or applied to, another article or any bacteriological contamination, or any significant chemical, physical, or other change or deterioration in the Products, or any failure of one or more batches of the Products to meet the Specifications therefor in the NDA. "PURCHASE PRICE" shall have the meaning set forth in Section 5.1(a). "ROYALTY PAYMENT" shall have the meaning set forth in Section 5.2. "SERIOUS ADVERSE EVENT" shall mean any serious and unexpected adverse drug experience, as defined by FDA in 21 C.F.R. Section 314.80, associated with the use of the drug in humans, whether or not considered drug related. "SOP" shall have the meaning set forth in Section 4.4. "SPECIFICATIONS" shall mean the specifications for the Product set forth in the NDA for the Product, as such NDA may be amended from time to time. "TERM" shall have the meaning set forth in Section 7.1(a). "TERRITORY" shall mean anywhere in the world except the United States, its territories and possessions, the District of Columbia, the Commonwealth of Puerto Rico, Canada, Italy, the Netherlands, Greece, Switzerland and Spain. "TRADEMARKS" shall mean the NOVAVAX Trademarks. ANNEX I - 5 37 EXHIBIT 2.3(a) TRADEMARKS NOVAVAX: NOVAVAX Logo i 38 EXHIBIT 2.3(c)(ii) PRIMARY BRAND TRADEMARKS ESTRASORB(TM) ii EX-99.1 5 w44469ex99-1.txt PRESS RELEASE 1 EXHIBIT 99.1 [NOVAVAX LETTERHEAD] COMPANY CONTACTS: John A. Spears President & CEO Jim Mirto Chief Operating Officer NOVAVAX, INC. 301-854-3900 INVESTORS/MEDIA: Olga Fleming/Lisa Bradlow WEBER SHANDWICK WORLDWIDE 646-658-8000 NOVAVAX AND KING PHARMACEUTICALS SIGN U .S. CO-PROMOTION AGREEMENT FOR ESTRASORB(TM) - NOVAVAX TO CO-PROMOTE AN ADDITIONAL WOMEN'S HEALTH PRODUCT CURRENTLY MARKETED BY KING IN THE U.S. - - NOVAVAX TO ACQUIRE AVC PRODUCT FROM KING - COLUMBIA, MD, JANUARY 8, 2001 - NOVAVAX, INC. (AMEX: NOX) today announced the signing of a 50/50 co-promotion agreement with King Pharmaceuticals, Inc. (NYSE: KG) for ESTRASORB(TM), Novavax's topical, transdermal estrogen replacement therapy, in the United States. All patients enrolled in the Phase III pivotal trial of ESTRASORB have recently completed dosing, and Novavax expects to file a New Drug Application (NDA) for ESTRASORB in the first half of 2001. In addition, Novavax and King will combine U.S. sales efforts to immediately begin co-promoting one of King's products already on the market, Nordette(R), a birth control pill. Novavax also announced that it will acquire AVC(TM) Cream and Suppositories from King for $3.3 million, which is currently being marketed by King for the treatment of vaginal bacterial infections. As previously announced, in December 2000, King completed a $25 million convertible debenture investment in Novavax. Under the terms of the agreement, both Novavax and King will be involved in the marketing and promotion of ESTRASORB in the United States and will share in the revenues and expenses equally. Novavax will be responsible for manufacturing and distributing the product. In addition, Novavax will receive a milestone payment from King of $5 million upon filing the ESTRASORB NDA prior to June 30, 2001. The co-promotion agreement relating to Nordette provides for Novavax and King to share equally in all revenues and expenses above an established baseline. Nordette generated sales in the U.S of approximately $34 million during 1999; AVC sales during 2000 were $1.3 million. "We are excited to be extending our relationship with King to co-promote ESTRASORB, which has the potential to be the first-to-market topical estrogen replacement therapy that addresses the uncomfortable symptoms associated with post-menopause," stated John A. Spears, President and CEO of Novavax. "Our agreement with King marks a significant event in the company's history, and the combined force will create a formidable presence in the women's healthcare market place. The advantages of this agreement are clear. Novavax, which recently acquired Fielding Pharmaceuticals' proven sales force with an established reputation with obstetricians and gynecologists, will gain support from King's women's health sales staff. The combination will enable Novavax and King to expand the reach of the promotional programs at an accelerated pace and offer greater opportunity to achieve strong market penetration for ESTRASORB and Nordette. This co-promotion agreement will also allow us to expand the products' sales potential without losing the financial benefits of marketing the product on our own." John M. Gregory, Chairman and Chief Executive Officer of King, stated, "We are very pleased to collaborate with Novavax in the development and potential commercialization of ESTRASORB. This exciting new women's health product, if approved, will compete in the $1.2 billion estrogen replacement therapy market and potentially provide an excellent addition to our expanding women's health product line." -more- 2 NOVAVAX AND KING PHARMACEUTICALS SIGN U.S. CO-PROMOTION AGREEMENT FOR ESTRASORB(TM) PAGE 2 Mr. Spears also stated, "We are also very pleased to add two women's health products to our portfolio, which build upon our existing product line. Nordette(R) and AVC(TM) Cream and Suppositories are products with established sales that we believe have the potential to grow through our Fielding sales force effort. With these products, Novavax now has a broad portfolio of women's health products available for sale, allowing us to broaden the spectrum of treatment we can provide to female patients. "Overall, our corporate accomplishments over the last 60 days allow us to begin the New Year as a more focused company, providing us with a strong product, marketing, sales and financial foundation. We certainly look forward to the opportunities that lie ahead as we work with King to strengthen our position as a specialty pharmaceutical company focused on women's health," concluded Mr. Spears. ABOUT KING PHARMACEUTICALS King, headquartered in Bristol, Tennessee, is a vertically integrated pharmaceutical company that manufactures, markets, and sells primarily branded prescription pharmaceutical products. King seeks to capitalize on niche opportunities in the pharmaceutical industry created by cost containment initiatives and consolidation among large global pharmaceutical companies. King's strategy is to acquire branded pharmaceutical products and to increase their sales by focused promotion and marketing and through product life cycle management. ABOUT NOVAVAX Novavax, Inc. is a biopharmaceutical drug delivery company engaged in the research and development of differentiated drug products primarily in the fields of women's health and infectious diseases. The Company is applying its proprietary lipid vesicle encapsulation technologies, including Novasome(R) lipid vesicles and micellar nanoparticles, to develop product candidates for the topical and oral delivery of generic and non-generic drugs, peptides, proteins and oligonucleotides. The Company's Novasome technology is also being developed as an adjuvant delivery system for enhanced vaccine efficacy. Novavax has several product candidates in pre-clinical and human clinical trials, including ESTRASORB(TM), a topical cream for estrogen replacement therapy, which has completed the Phase III clinical trial. Novavax's Biomedical Services Division is engaged in contract research and development and Phase I/II vaccine manufacturing of human vaccines for government laboratories and other vaccine companies. The senior management of Novavax will be conducting a conference call on TUESDAY, JANUARY 9, 2001 AT 4:30 P.M. EASTERN TIME to discuss today's announcement. In order to participate in the conference call: - - Please call (719) 457-2653 five minutes prior to the 4:30 P.M. start time. OR - - Log on to www.vcall.com and click on the company's name to access the call (NOVAVAX). Internet participants are encouraged to log on to the site 15 minutes prior to the call to register and download any necessary software. There will also be a replay available until January 12, 2001 by calling (719) 457-0820 and referencing pass code number 699319. Statements made in this press release that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's SEC report on Form 10K for the year ended December 31, 1999 incorporated herein by reference. Statements made herein should be read in conjunction with the company's Form 10K. Copies of these filings may be obtained by contacting the company at 8320 Guilford Road, Columbia, MD 21046 Tel 301-854-3900 or the SEC. # # # -----END PRIVACY-ENHANCED MESSAGE-----