Exhibit 10.1
EXECUTION COPY
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF
THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL
PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED.
THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
LICENSE AND DEVELOPMENT AGREEMENT
     This agreement (“Agreement”) entered into this [   ]th day of
[                    ], 2006 (the “Effective Date”) by and between NOVAVAX,
INC., a Delaware corporation having an address at 508 Lapp Road Malvern,
Pennsylvania 19355 (hereinafter referred to as “NOVAVAX” or "Party”) and ESPRIT
Pharma, Inc., a Delaware corporation having an address at 2 Tower Center
Boulevard, East Brunswick, NJ 08816, (hereinafter referred to as “ESPRIT” or
“Party”). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed in ARTICLE 1 (Definitions).
WITNESSETH
     WHEREAS, NOVAVAX is the owner of a Investigative Drug Application
No. 63957, as well as U.S. Patent No. 5,629,021, Canadian Patent No. 2,211,262,
Mexican Patent No. 198,438 other patents and patent applications, and know-how
relating micellar nanoparticle technology.
     WHEREAS, ESPRIT wishes to acquire an exclusive license under such patents
and patent applications from NOVAVAX, and NOVAVAX is willing to grant such
license to ESPRIT under the terms and conditions of this Agreement.
     WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties have entered into the Supply Agreement relating to the supply of
Licensed Product and the provision of related services by NOVAVAX to ESPRIT.

 

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     NOW, THEREFORE, in consideration of the above premises and the covenants
contained herein, the parties agree as follows:
ARTICLE 1. DEFINITIONS
     As used in this Agreement, the following terms, when used with initial
capital letters, shall have the following meanings, the singular shall include
the plural and vice-versa:
     1.1. “Affiliate” means any entity that directly or indirectly controls, is
controlled by, or is under common control with a Party, and for such purpose
“control” shall mean (i) directly or indirectly owning, controlling or holding
more than fifty percent (50%) of the securities or other ownership interests
representing the equity, the voting stock or general partnership interest in an
entity or (ii) the possession, direct or indirect, of the power to direct or
cause the direction of the management or the policies of the entity, whether
through the ownership of voting securities, by contract or otherwise. Any such
corporation, entity or business structure shall only be considered an Affiliate
for so long as such ownership or control exists.
     1.2. “Business Day” means any day other than Saturday, Sunday, holiday or
any other day on which banks in New York, New York are permitted or required to
be closed. Unless otherwise specified herein, “day” will mean calendar day.
     1.3. “Calendar Quarter” means each of the periods of time between January
and March, April and June, July and September, and October and December.
     1.4. “Calendar Year” means the period of time commencing on 1 January and
ending on the following 31 December.
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     1.5. “Commercial Sale” and words of similar import means, an arm’s length
transaction and shipment by ESPRIT, its Affiliates or each of its Sublicensees
of a Licensed Product to an independent Third Party in a country of the
Territory.
     1.6. “Competing Product” has the meaning set forth in Section 5.3.1
(Notice).
     1.7. “Confidential Information” has the meaning set forth in Section 6.1
(Confidential Information).
     1.8. “Dollar” means the legal currency of the U.S.
     1.9. “Effective Date” has the meaning set forth in the first paragraph of
this Agreement.
     1.10. “ESPRIT Improvement” means any and all Improvements created,
conceived or first reduced to practice by ESPRIT, or its Affiliates, agents,
subcontractors or Sublicensees, alone or with others (excluding NOVAVAX).
     1.11. “ESPRIT Improvement Intellectual Property” means Intellectual
Property in ESPRIT Improvements, including without limitation ESPRIT Improvement
Patents.
     1.12. “ESPRIT Improvement Patents” means patents and patent applications
that describe and claim ESPRIT Improvements.
     1.13. “ESPRIT Sole Technology” means Intellectual Property that is first
conceived and first reduced to practice during the term of this Agreement solely
by personnel employed by or on behalf of ESPRIT or its Affiliates, agents,
subcontractors or Sublicensees.
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     1.14. “ESPRIT Technology” means ESPRIT Improvement Intellectual Property,
ESPRIT Sole Technology, ESPRIT’s interest in any Joint Improvement Intellectual
Property, and any other Intellectual Property owned or controlled by ESPRIT that
would, but for the license granted to NOVAVAX in this Agreement, be infringed by
NOVAVAX’s performance of its obligations under this Agreement or the Supply
Agreement.
     1.15. “FDA” means the United States Food and Drug Administration and
successor bodies.
     1.16. “FD&C Act” means the United States Food, Drug and Cosmetic Act, as
amended, and the rules and regulations of the FDA promulgated thereunder.
     1.17. “Field” means the use, manufacture or sale of topically- or
transdermally-administered products containing no other active ingredient other
than testosterone for the treatment of hypoactive sexual disorder of human
females.
     1.18. “First Commercial Sale” means, with respect to any Licensed Product,
the first Commercial Sale in a country of the Territory following the receipt of
Regulatory Approval in such country.
     1.19. “Fiscal Year” means the period of time commencing on the Monday
following the Sunday closest to the end of the calendar month of December and
terminating on the Sunday closest to the end of the immediately succeeding
December.
     1.20. “Formulation” has the meaning set forth in Section 8.1.1 (Ownership
and Authority).
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     1.21. “GAAP” means U.S. generally accepted accounting principles,
consistently applied.
     1.22. “Improvement” means any change, improvement, development, or
modification of a Licensed Product with respect to formulation technology, any
component/material utilized in the formulation technology, or the method or
process of making or using a Licensed Product utilizing the formulation
technology, that (a) is made, conceived of, or reduced to practice by either
Party or their Affiliates, agents, subcontractors or Sublicensees, alone or with
others, or as a result of work performed on a Licensed Product during the term
of this Agreement and (b) is covered by or derived or resulting from the
practice of Licensed Patents, patents, patent applications and other
Intellectual Property rights in or that cover any of the foregoing.
     1.23. “Improvement Patent” means patents and patent applications that
describe and claim Improvements.
     1.24. “IND” means an “Investigational New Drug” application (as defined in
the FD&C Act and applicable FDA rules and regulations) and any supporting data
and information.
     1.25. “Intellectual Property” means any intellectual property rights,
including without limitation, patents, patent applications, inventions, and
know-how.
     1.26. “Joint Improvement” means any and all Improvements created,
conceived, or first reduced to practice during the term of this Agreement by
NOVAVAX, or its Affiliates, agents, subcontractors or Sublicensees, and ESPRIT,
or its Affiliates, agents, subcontractors or
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Sublicensees. Joint Improvement shall not include any Improvement that is a
NOVAVAX Improvement or an ESPRIT Improvement.
     1.27. “Joint Improvement Intellectual Property” means Intellectual Property
in Joint Improvements.
     1.28. “Joint Improvement Patents” means patents and patent applications
that describe and claim Joint Improvements.
     1.29. “Launch” means the date of the First Commercial Sale of any Licensed
Product in the Territory.
     1.30. “Licensed Know-How” means, to the extent relating and necessary to
the manufacture of a Licensed Product, all information or special knowledge on
the part of NOVAVAX as of the Effective Date not generally known to the public,
including but not limited to inventions, discoveries, reports, protocols,
processes, apparati, techniques, methods, models, screens, assays, products,
regulatory submissions, and technical information, together with all experience,
data, formulas, procedures and results, and including all chemical,
pharmacological, toxicological, clinical, analytical, quality control, and
safety data (including but not limited to data from use of the Licensed
Product), and any other materials or compositions relating to the formulation or
manufacture of a Licensed Product or being useful in the manufacture, use, sale
or Registration of a Licensed Product as reasonably determined by NOVAVAX.
Licensed Know-How also includes the NOVAVAX Improvement Intellectual Property as
set forth in Section 5.1.5 (NOVAVAX Improvement Intellectual Property) hereof to
the extent not disclosed in any
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patent or published patent application of the Licensed Patents; except to the
extent that the disclosure of such information or special ability is prohibited
by law, rule, regulation, order, treaty, contract, agreement, or other
obligation. Licensed Know-How shall constitute Confidential Information of
NOVAVAX in accordance with Section 6.1 (Confidential Information).
     1.31. “Licensed Patent” means U.S. Patent No. 5,629,021, Canadian Patent
No. 2,211,262, Mexican Patent No. 198,438, including any other of their
respective counterparts in the Territory, as well as all continuations,
continuations-in-part, divisions, renewals, reissues, reexaminations,
extensions, and patents of addition and patents of importation of the foregoing
containing a Valid Claim that would be infringed by the use or sale of a
Licensed Product by ESPRIT, its Affiliates or its permitted Sublicensees, in the
Territory, but for the licenses granted herein. In addition, Licensed Patents
shall include NOVAVAX Improvement Patents, NOVAVAX’s interests in Joint
Improvement Patents and any other patents owned by NOVAVAX that are necessary
for ESPRIT to practice the patents described in the preceding sentence.
     1.32. “Licensed Product” means the topically- or transdermally-administered
product and containing no other active ingredient other than testosterone for
the treatment of hypoactive sexual disorder of human females that is currently
in clinical trials under NOVAVAX’s IND No. 63957. Licensed Products include
Improvements made by NOVAVAX related to, without limitation, formulation and/or
packaging for the Licensed Product.
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     1.33. “Licensed Technology” means Licensed Patents, any patent applications
and Licensed Know-how.
     1.34. “NDA” means a “New Drug Application” (as defined in 21 C.F.R.
Part 314).
     1.35. “Net Sales” means, on a country-by-country basis (a) for any bona
fide arm’s length transaction in which Licensed Products are Commercially Sold
separately by ESPRIT, its Affiliates, or its Sublicensees to Third Parties
(rather than bundled with any other products or services), the amount invoiced
for the sale of Licensed Products in finished packaged form, and (b) for all
other transactions in which Licensed Products are sold, used or otherwise
disposed of by ESPRIT, its Affiliates or its Sublicensees (including in barter
or similar transactions, or transactions that are not at arm’s length to a Third
Party, or transactions in which Licensed Products are not sold separately), the
average invoiced sales price for Products in arms-length transactions in the
applicable country; less, in the case of clause (a) and (b) above (i) all normal
and customary trade and quantity discounts, (ii) allowances, chargebacks,
wholesaler fees and deductions, retailer fees and deductions, rebates, including
government and managed care rebates, and credits determined in accordance with
GAAP, and returns and replacements determined in accordance with GAAP, less any
freight charges paid by Third Parties for delivery and less excise, value added
and other taxes and or/duties applicable to sales of Licensed Products which the
selling party has to pay or absorb on such sales. Further, Net Sales shall not
include normal and customary promotional samples, including, subject to the
foregoing, any samples affixed to or accompanying other products of ESPRIT or
any of its Affiliates, coupons or other promotional incentives.
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     1.36. “NOVAVAX Improvement” means any and all Improvements created,
conceived or first reduced to practice by NOVAVAX, or its Affiliates, agents,
subcontractors or Sublicensees, alone or with others (excluding ESPRIT).
     1.37. “NOVAVAX Improvement Intellectual Property” means Intellectual
Property in NOVAVAX Improvements.
     1.38. “NOVAVAX Improvement Patents” means patents and patent applications
that describe and claim NOVAVAX Improvements.
     1.39. “Person” means an individual, corporation, partnership or other
entity.
     1.40. “PDUFA” means the Prescription Drug User Fee Act, as amended, and the
rules and regulations of the FDA promulgated thereunder.
     1.41. “Phase II Clinical Study” means a human clinical study on a
sufficient number of patients designed to establish the optimal dose of a
pharmaceutical product to be used in a Phase III Clinical Study of such product
and to support Registrations and Regulatory Approval of such product. A Phase II
Clinical Study shall be deemed to have commenced when the first patient is dosed
in such Phase II Clinical Study. A Phase II Clinical Study shall also include
any Phase II/Phase III study conducted in lieu of a Phase II study, whether or
not such study is a traditional Phase III study.
     1.42. “Phase III Clinical Study” means a human clinical study on a
sufficient number of patients that is designed to establish that a
pharmaceutical product is safe and efficacious for its intended use, and to
define warnings, precautions and adverse reactions that are associated
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with the product in the dosage ranges to be prescribed and to support
Registrations and Regulatory Approval of such product or label expansion of such
product. A Phase III Clinical Study shall be deemed to have commenced when the
first patient is dosed in such Phase III Clinical Study.
     1.43. “Registration” means a filing with a governmental authority for the
purpose of obtaining legal and Regulatory Approval to conduct clinical trials
for a product or to commence selling and marketing a product, including an NDA
or IND filing or its equivalent in the Territory, including, without limitation,
pricing and reimbursement approval.
     1.44. “Regulatory Approval” means the license or marketing approval
necessary as a prerequisite for marketing and selling a Licensed Product in a
particular country in the Territory.
     1.45. “Steering Committee” means the body organized and acting pursuant to
Section 3.1.2 (Steering Committee) hereof.
     1.46. “Sublicense” means a sublicense of the license to ESPRIT under
Section 2.1 (License Under NOVAVAX Technology) granted by ESPRIT in accordance
with the terms of this Agreement. When used as a verb “Sublicense” means to
grant a Sublicense.
     1.47. “Sublicensee” means a Person who has been granted a Sublicense by
ESPRIT in accordance with the terms of this Agreement.
     1.48. “Supply Agreement” means a separate agreement to be executed and
delivered concurrently with this Agreement under which NOVAVAX shall supply
Licensed Product to ESPRIT.
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     1.49. “Territory” means the United States, its territories (including
Puerto Rico), Mexico and Canada.
     1.50. “Third Party” means any Person other than a Party to this Agreement
or an Affiliate of a Party or Sublicensee.
     1.51. “Valid Claim” means a claim or pending claim in any unexpired,
enforceable, issued patent, or pending patent application within the Licensed
Patent or Improvement Patent which has not been held invalid by a non-appealed
or unappealable decision by a court or other appropriate body of competent
jurisdiction, and which is not admitted to be invalid through disclaimer or
dedication to the public.
     1.52. “Work Plan” means the work plan for the Licensed Product to be
developed within seventy-five (75) days of the Effective Date under this
Agreement in the Field, as such work plan may be modified or updated from time
to time in accordance with Section 3.1.1 (Development Program).
     1.53. “Year” shall mean the period of time commencing on the calendar day
of the First Commercial Sale of a Licensed Product in any country in the
Territory and ending three hundred and sixty four (364) days thereafter.
ARTICLE 2. GRANT OF RIGHTS
     2.1. License Under NOVAVAX Technology. Subject to the terms and conditions
hereof, NOVAVAX hereby grants to ESPRIT, commencing on the Effective Date, an
exclusive
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license under the Licensed Technology to make and have made, import, use, sell,
offer for sale, and have sold the Licensed Product in the Territory in the
Field.
     2.2. Sublicenses. ESPRIT shall have the right to sublicense commencing on
the Effective Date the rights granted under Section 2.1 (License Under NOVAVAX
Technology) of this Agreement on terms substantially similar to those contained
herein to a controlled Affiliate of ESPRIT and to non-Affiliated Third Parties,
provided that any such sublicense to non-Affiliated Third Parties would require
the prior written approval of NOVAVAX which will not be unreasonably withheld or
delayed; and provided, further that ESPRIT shall require its permitted
Sublicensees to comply with all of the obligations of ESPRIT contained in this
Agreement and ESPRIT shall be responsible for the performance by such
Sublicensees of such obligations.
     2.3. License under ESPRIT Technology. ESPRIT hereby grants to NOVAVAX a
royalty-free, exclusive license, except as to ESPRIT, its Affiliates and
Sublicensees, under the ESPRIT Technology solely in order to permit NOVAVAX to
perform the services and/or obligations of NOVAVAX under this Agreement and the
Supply Agreement. In addition, ESPRIT hereby grants to NOVAVAX an exclusive,
perpetual, irrevocable, worldwide, paid-up, royalty-free license, with rights to
sublicense, under all of ESPRIT’s rights under ESPRIT Improvement Intellectual
Property and ESPRIT’s interests in Joint Improvement Intellectual Property for
use outside the Field.
     2.4. Product Quality. ESPRIT shall assure at all times that the quality of
the Licensed Products is of a standard of quality consistent pharmaceutical
industry standards in the U.S.
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ESPRIT additionally shall assure at all times that the Licensed Products are
distributed, marketed, advertised, promoted and sold in accordance with all
applicable laws and regulations. In addition, after termination or expiration of
the Supply Agreement, ESPRIT shall assure at all times that the Licensed
Products are sourced, manufactured, and labeled in accordance with all
applicable laws and regulations.
     2.5. No Implied Rights. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a Party hereto, as a result of this
Agreement, obtain any ownership interest or license in or other right to any
technology, know-how, patents, patent applications, products, or biological
materials of the other Party, including, but not limited to, items owned,
controlled or developed by the other Party, at any time pursuant to this
Agreement. This Agreement does not create, and shall under no circumstances be
construed or interpreted as creating, an obligation on the part of either Party
to grant any license to the other Party other than as expressly set forth
herein. Any further contract or license agreement between the Parties shall be
in writing.
     2.6. Reserved Interests. All rights and interests not expressly granted to
ESPRIT are reserved by NOVAVAX (the “Reserved Interests”) for itself, its
Affiliates and partners (other than ESPRIT) and other licensees and
Sublicensees, including, but not limited to, the rights to use and grant
licenses under the Licensed Technology or any other technology or intellectual
property owned or controlled by NOVAVAX to make, have made, use, offer to sell,
sell, have sold and import products (other than a license under Licensed
Technology for Licensed Products in the Field, for so long as ESPRIT has an
exclusive license under Licensed Technology for
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Licensed Products in the Field). It shall not be a breach of this Agreement for
NOVAVAX, acting directly or indirectly, to exploit its Reserved Interests in any
manner anywhere in the Territory, provided, however, that under no circumstances
shall NOVAVAX utilize its Reserved Interests to directly or indirectly make,
have made, use, offer to sell, sell, have sold or import Licensed Products or
related Improvements in the Territory in the Field during the term of this
Agreement.
ARTICLE 3. LICENSED PRODUCT DEVELOPMENT AND COMMERCIALIZATION
     3.1. Development.
     3.1.1. Development Program. ESPRIT shall be solely responsible for
developing and obtaining Regulatory Approval for the Licensed Product in the
Field, at ESPRIT’s sole cost and expense. NOVAVAX shall cooperate to the extent
necessary in support of ESPRIT’s efforts to obtain such Regulatory Approval.
ESPRIT shall develop and receive Regulatory Approval for the Licensed Product in
the Territory and shall engage in a development program (the “Development
Program”) to develop and obtain Regulatory Approval the Licensed Product for the
Field in accordance with the Work Plan. The Parties shall develop a
mutually-agreeable commercially reasonable and detailed work plan (the “Work
Plan”) setting forth development timelines and budgets for the Development
Program within *** of the Effective Date. Without limiting the generality of the
foregoing, ESPRIT shall use commercially reasonable efforts to conduct
pre-clinical and clinical trials for the Licensed Product, file Registrations
and diligently pursue Regulatory Approvals of the Licensed Product in the
Territory, and in such regard
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shall devote such resources and exercise such diligent efforts as are reasonable
in view of the size of the market and potential market for the Licensed Products
and in no event less than those devoted by companies of similar size and type
for products with the same commercial potential, all within the agreed upon
timelines set forth in the Work Plan. In conducting the Development Program,
ESPRIT shall consult with NOVAVAX on a regular basis in order to proceed with
the development efforts as quickly as practicable. Any material change in the
Work Plan shall be mutually agreed upon by NOVAVAX and ESPRIT.
     3.1.2. Development Milestone. Without limiting the generality of
Section 3.1.1 (Development Program), and subject to the occurrence of a Force
Majeure Event (as defined in section 12.1), NOVAVAX shall be entitled to
terminate this Agreement pursuant to Section 9.2 (Termination for Breach) if
ESPRIT has failed to meet any of the following development milestones, as such
may be extended pursuant to the then current Work Plan or other mutual agreement
of the parties, not to be unreasonably withheld or delayed (the “Development
Milestones”), provided further, that, for the avoidance of doubt, any such
failure will be subject to a cure period prior to termination in accordance with
Section 9.2:
     (a) Submission of a Phase II clinical study briefing package to the FDA
within *** from the Effective Date;
     (b) Administration of the first dose of the test product in humans within
*** from a successful FDA meeting including permission to a start a Phase
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II double-blind dose ranging study (“Phase II Study”) with FDA agreement on the
measuring instrument to determine patient reported outcomes;
     (c) Summarize Phase II Study results and select a dose and submit a
protocol to the FDA for a Phase III clinical study within *** of the date of
last patient completing the double- blind portion of the Phase II Study; and
     (d) Administration of the first dose of test product in humans for a
randomized double-blind placebo controlled Phase III pivotal trial within ***
from the date of approval of a special protocol assessment.
Notwithstanding the foregoing provisions of this Section 3.1.2, the Parties
acknowledge that (i) there is uncertainty in the scientific community generally
regarding the efficacy outcome measurements and methodology for products for the
treatment of sexual disorder in human females and also with respect to what FDA
will find acceptable, and designing such a study may take longer than expected,
despite ESPRIT’s commercially reasonable efforts, and (ii) the FDA’s actions or
inaction may be beyond the reasonable control of ESPRIT that make it impractical
for ESPRIT to obtain one or more Development Milestones despite ESPRIT’s
commercially reasonable efforts. If the Development Milestones have not been
achieved due to either (x) delays in submitting the Phase II Clinical Study
briefing package to the FDA due to ongoing development and implementation of
efficacy outcome measurements and methodology or (y) any action or inaction by
the FDA, but ESPRIT has continued to use commercially reasonable efforts to
develop and obtain Regulatory Approval for the Licensed Product in accordance
with Section 3.1.1 (Development Program) and if the Development
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Program is still ongoing and progressing to completion within a reasonable
timeframe, then NOVAVAX shall not be entitled to terminate this Agreement
because of such failure, and the Parties shall negotiate in good faith to extend
the Development Milestone deadlines as is reasonable in light of such continued
development or FDA action or inaction as the case may be. In the event the
parties are unsuccessful in re-negotiating the Development Milestones, then
either Party shall be entitled to Terminate this Agreement on *** written notice
to the other Party and in the event of such Termination under this
Section 3.1.2, the provisions of Section 9.4 shall apply .
     3.1.3. Steering Committee. To plan, manage and oversee work on the
Development Program and to approve, update and modify the Work Plan as may be
necessary, NOVAVAX and ESPRIT shall promptly after the Effective Date organize a
steering committee (the “Steering Committee"), consisting of three (3) members
from NOVAVAX and three (3) members from ESPRIT. ESPRIT shall have the right to
appoint one of its members to be the chairperson of the Steering Committee. The
Parties shall each have the right, upon notifying the other, to change its
members of the Steering Committee at any time during the Term of this Agreement
and to invite such non-Steering Committee members to a meeting of the Steering
Committee as such Party shall reasonably determine. The Parties shall hold
meetings of the Steering Committee as mutually agreed by the Parties (but in no
event less than once per Calendar Quarter) to review the Development Program and
to discuss future activities under this Agreement; provided, however, that each
Party shall have the right to call additional meetings of the Steering Committee
in order to discuss new material events upon twenty (20) days’ prior
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written notice (one of which may require an in person meeting). Not later than
ten (10) days prior to each of the four regularly scheduled Steering Committee
meetings, ESPRIT shall prepare a report for the Steering Committee detailing the
progress of the Development, Program including successes, difficulties,
milestone achievements and a comparison of the status of the Development Program
as compared to the timeline contained in the Work Plan. Such report shall also
contain any recommendations for updates or modifications to the Work Plan.
Consultants and non-Steering Committee member employees of the Parties may
attend meetings of the Steering Committee as required to further the Development
Program only upon written notice to the Party not bringing the consultants and
non-Steering Committee members. Unless otherwise mutually agreed by the Parties,
the Steering Committee meetings shall be in-person and shall alternate between
ESPRIT’s designated facility and NOVAVAX’s designated facility. The first
meeting shall be held at ESPIRT’s designated facility. Minutes of all such
meetings setting forth decisions of the Steering Committee relative to the
Development Program shall be prepared. Responsibility for the minutes shall
alternate between NOVAVAX and ESPRIT, with NOVAVAX being responsible for the
minutes of the first meeting; provided that minutes shall not become official
until approved by each of the Parties. Any vote of the Steering Committee shall
include at least one (1) representative of each of NOVAVAX and ESPRIT. The
Steering Committee shall make all decisions only by consensus. Any
non-concurrence of the Steering Committee relating to any issue, question or
dispute shall be elevated to the Head of Research and Development of ESPRIT and
to the Head of Research and Development of NOVAVAX
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for resolution and failing resolution by such individuals, to the President and
Chief Executive Officer of NOVAVAX and President and Chief Operating Officer of
ESPRIT for resolution, recognizing that, in the event of continuing
disagreement, the final decision and ultimate resolution shall rest with ESPRIT.
     3.1.4. Written Records. ESPRIT shall record, to the extent practical, all
technical information relating to its research and development activities under
the Development Program in written form, which writing shall be signed, dated
and witnessed, consistent with ESPRIT’s standard practices and what is normal
and customary in the industry in the United States or as may be required by
applicable law or regulation. To the extent practical, such written records
shall be kept separately from written records documenting ESPRIT’s other
research and development. All such written records shall be maintained in a form
that ESPRIT reasonably believes is sufficient to satisfy regulatory authorities.
Each Party shall require its employees and consultants to disclose to it any
discoveries or inventions relating to Licensed Product and made in the course of
its activities under the Development Program in writing promptly after
conception, and each Party shall, subsequent to any such disclosures to it by
its employees or consultants, promptly disclose such discoveries and inventions
to the other Party. Without limiting the generality of the foregoing, not later
than ten (10) days prior to each of the four regularly scheduled Steering
Committee meetings of each Calendar Year during the development of the Licensed
Products, ESPRIT shall prepare and submit to the Steering Committee a report
summarizing all such development activities and identifying all significant
results or developments during such period. Such quarterly reports shall
include, without
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limitation, a description of any significant deviations from the Work Plan and
proposed actions with respect to such deviations. Such reports shall be subject
to the confidentiality provisions of ARTICLE 6 (Confidentiality and Publicity)
hereof.
     3.1.5. Development Responsibilities. The Parties currently contemplate that
ESPRIT shall be solely responsible for the Development Program. If during the
course of the Development Program, the Steering Committee unanimously agree that
it would be advantageous for NOVAVAX to assume responsibility for some portion
of the Development Program, at ESPRIT’s expenses, including labor and
administrative charges, then the Parties will agree upon a commercially
reasonable procedure for ESPRIT to reimburse NOVAVAX for its costs and expenses
in performing such work. NOVAVAX will also be bound to maintain records relating
to such work being delegated to NOVAVAX herein and such records will be made
available to ESPRIT on a timely basis upon request.
     3.2. Regulatory Approvals.
     3.2.1. Responsibility for Registration During Development. Except as
provided in Section 3.2.2 (Transfer of IND to ESPRIT), ESPRIT shall be
responsible for the preparation, filing and prosecution of all Registrations in
the Territory, including, without limitation, U.S. Registrations with the FDA,
which are required to commercially sell or use the Licensed Products in the
Territory. ESPRIT shall use commercially reasonable efforts to seek to obtain
Regulatory Approvals for the Registrations in accordance with the Work Plan.
This will include, without limitation, maintaining IND
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No. 63957 (once such IND is transferred to ESPRIT in accordance with
Section 3.2.2 (Transfer of IND to ESPRIT)), periodic FDA consultations during
the clinical development of the Licensed Product, and filing and maintaining the
NDA for the Licensed Product. With regard to the U.S., ESPRIT and NOVAVAX shall
be entitled to interface with the FDA relating to clinical trials and other
aspects of the Licensed Product’s development and commercialization; provided
that NOVAVAX shall be the exclusive interface with the FDA relating to the
manufacture of the Licensed Product until the transfer of the IND to ESPRIT.
ESPRIT shall promptly provide NOVAVAX with a copy of any Registrations that have
been or are proposed to be filed by ESPRIT with the FDA or any comparable
regulatory authority in the Territory, as well as copies of correspondence
between NOVAVAX and the FDA or such other regulatory authority relating to the
Licensed Product. ESPRIT will be responsible for all costs of insurance that are
customary and, in NOVAVAX’s reasonable judgment, are necessary, in connection
with clinical trials of the Licensed Product. Maintenance of the Registrations
and Regulatory Approvals will be ESPRIT’s sole responsibility. Without limiting
the generality or effect of the foregoing, ESPRIT will be responsible for all
PDUFA fees, including establishment fees and product fees, associated with any
NDA for the Licensed Product. However the establishment fees will be allocated
on a pro rata basis agreed upon by the parties in the event other FDA approved
product(s) are manufactured by Novavax at the Cardinal Red Lion facility. ESPRIT
shall also provide NOVAVAX with reports concerning the status of the
Registrations for the Licensed Products in the Territory and
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the estimated date of receipt of final Regulatory Approval of the Registrations
of the Licensed Products.
     3.2.2. Transfer of IND to ESPRIT. At a commercially reasonably time
approved by the Steering Committee given NOVAVAX’s responsibilities for initial
chemistry, manufacturing and controls under the Supply Agreement, each Party
shall, using commercially reasonable efforts, take all steps necessary to
transfer IND No. 63967 from NOVAVAX to ESPRIT, at ESPRIT’s cost and expense,
including, without limitation, filing of any documents or instruments with the
FDA required to effect such transfer. Without limiting the generality of the
foregoing, at the direction of the Steering Committee, NOVAVAX shall provide
ESPRIT with a letter addressed to the FDA authorizing and requesting IND
No. 63967 be transferred, in its entirety, to the name of ESPRIT, and ESPRIT
shall send a letter to the FDA accepting the IND. ESPRIT shall, thereafter, be
responsible for fulfilling any and all regulatory requirements with respect to
the Licensed Products that are imposed as the owner thereof including, without
limitation, the filing of documents and payment of fees to the FDA in order to
affect the transfer of such IND.
     3.2.3. Access to Data and Regulatory Approvals and Registrations. NOVAVAX
will be entitled to copy and reference any Registration or Regulatory Approval
(including any NDA) and any safety database or other safety information related
to the Licensed Products for any purpose, except that NOVAVAX will not use such
information with respect to the development of a Licensed Product in the
Territory in the
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Field so long as the exclusive license granted in Section 2.1 (License Under
NOVAVAX Technology) remains in effect. ESPRIT will be entitled to copy and
reference for any purpose any Registration or Regulatory Approval and any safety
database or other safety information related to the Licensed Products as being
developed, marketed and sold by NOVAVAX or its designee outside the Territory.
     3.3. Commercialization. ESPRIT shall control and make all decisions
regarding the strategy and tactics of marketing, selling and otherwise
commercializing the Licensed Product in the Territory, including, without
limitation, the methods of sale and distribution, organization and management of
sales and marketing, appointment of distributors, and other terms and conditions
of such sales and marketing, and shall exercise commercially reasonably efforts
to market, sell and otherwise commercialize the Licensed Product in the
Territory. Upon the Launch of a Licensed Product in a country of the Territory,
ESPRIT, either itself or through its Affiliates or Sublicensees, shall market,
distribute and sell the Licensed Products in such country of the Territory and
shall exercise such diligence in this regard as shall be commercially reasonable
in light of the size of the market and potential market for the Licensed Product
and in a manner consistent with which it markets other ESPRIT products of
comparable market size in such country of the Territory. ESPRIT shall bear all
expenses relating to the marketing, selling and other commercialization of
License Products in the Territory, including any post-Regulatory Approval
clinical studies, such as any “Phase IV” or lowest effective dose study;
provided that NOVAVAX will be entitled to review and provide comments relating
to the protocols of any such study.
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     3.3.1. Medical Inquiries. ESPRIT shall respond to medical questions or
inquiries relating to the Licensed Product and shall instruct its sales force to
direct medical inquiries either to its own medical personnel or to the ESPRIT
toll-free number referred to in Section 3.3.2 (Toll-Free Number), within a
reasonable time from the Effective Date. ESPRIT shall designate an individual to
serve as medical liaison in order to ensure consistency in the handling of
medical inquiries. The medical liaison will regularly review Licensed Product
inquiries and responses and will also be available for responding to non-routine
inquiries should these arise.
     3.3.2. Toll-Free Number. ESPRIT shall maintain a toll-free telephone number
to provide information in response to inquiries from health care professionals
and consumers. This number shall be noted in all appropriate advertising and
promotional materials, except that NOVAVAX may, at its own option and expense,
use a different number in advertising and promotional materials that it develops
for use outside of the Territory.
ARTICLE 4. PAYMENTS
     4.1. Development Milestone Payments. In partial consideration of the
license granted hereunder, ESPRIT shall make the following one time,
nonrefundable, non-creditable payments in Dollars to NOVAVAX by wire transfer
within *** of the satisfaction of each of the following conditions:

          Condition   Payment  
***
    $***  
The earlier of (a) *** or (b) ***
    $***  

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     4.2. Royalties. ESPRIT will, or will cause its designated Affiliates, to
pay NOVAVAX quarterly royalties on the Net Sales of Licensed Products in the
Territory during the term of this Agreement, subject to Section 4.3 (Excluded
Sales) below. Such royalty payments shall be based upon Net Sales of Licensed
Products according to the following schedule:

              Percentage of Net Sales for Country   Calendar Year
United States
    *** %
Canada
    *** %
Mexico
    *** %

     4.3. Excluded Sales. No royalties due under this ARTICLE 4 (Payments) shall
be payable on sales transactions as among ESPRIT, any of its Affiliates and
Sublicensees. The final vendee sale to a Third Party alone shall be used for the
purposes of determining the royalty payments due hereunder. Only one royalty
payment shall be payable on the sale of each Licensed Product. Licensed Products
shall be sold only for cash consideration and there shall be no discounting of
price to the disadvantage of the price of Licensed Products that are included in
or made part of any bundling of Licensed Products with any existing or future
product(s) of ESPRIT or its Affiliates as part of a sale to Third Parties.
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     4.4. Royalty Period. ESPRIT shall not be obligated to pay any royalty
payments based upon sales of a given Licensed Product in a country of the
Territory after the expiration of the last to expire Licensed Patent or
Improvement Patent having at least one (1) Valid Claim that would be infringed
by the sale of that Licensed Product by ESPRIT, its Affiliates or its
Sublicensees in that country but for the licenses granted herein.
     4.5. Payments. All royalties shall be calculated and payable on a Calendar
Quarter basis as of the end of the each Calendar Quarter, and royalties shall be
paid within *** days following the end of such Calendar Quarter. All royalties
shall be calculated on a Licensed Product by Licensed Product basis. Each
royalty payment and Milestone Payment shall be accompanied by a written report
indicating the amount of Net Sales during such Calendar quarter or applicable
period together with a calculation of the royalties and Sales Milestone Payments
due. ESPRIT shall deliver the written report for each such Calendar Quarter or
applicable period, regardless of whether when any royalty payments or Milestone
Payments are required to be paid in that Calendar Quarter or applicable period,
commencing in the first Calendar Year following Launch.
     4.6. Audits. NOVAVAX shall have the right, at its own expense, for the
period during which a royalty or Milestone Payment is due to NOVAVAX, to have a
firm of independent certified public accountants, to whom ESPRIT has no
reasonable objection and subject to customary confidentiality restrictions,
solely to examine the relevant books and records of account of ESPRIT relating
to the Licensed Product during reasonable business hours and no more than ***
during each Fiscal Year, to determine whether appropriate payment (including,
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without limitation, payment pursuant to Sections 4.1 (Development Milestone
Payments) and 4.2 (Royalties)) has been made by ESPRIT hereunder. The accountant
shall disclose to NOVAVAX only information relating to the accuracy of the
royalty and Milestone Payment reports and the royalty payments and Milestone
Payments made according to this Agreement. The information received by the
accountant, except for information necessary for disclosure to NOVAVAX to
establish the accuracy of such reports, shall be held confidential. If such
accounting firm concludes that additional royalties or Milestone Payments were
owed during such period, ESPRIT shall pay the additional royalties within thirty
(30) days of the date NOVAVAX delivers to ESPRIT such accounting firm’s written
report so concluding. ESPRIT will be provided an opportunity to review the
findings of the accountant during the aforementioned thirty (30) period to
validate such findings. If the amount of such additional royalties or Milestone
Payments owed exceeds *** of the amount of royalty payments or Milestone
Payments actually made by ESPRIT for such period, ESPRIT shall reimburse NOVAVAX
for the commercially reasonable fees and expenses of the accounting firm
incurred in the conduct of the applicable audit.
     4.7. Currency Conversion. The remittance of Milestone Payments or royalties
payable on sales outside the U.S. will be payable to NOVAVAX in Dollars
according to the official rate of exchange of the currency of the country from
which the royalties are payable as quoted by The Wall Street Journal, New York
edition, for the last day of the Calendar Quarter or other applicable period for
which the royalty payment is made. If the transfer or the conversion into U.S.
Dollars in any such instance is not lawful or possible, the payment of such part
of the Milestone Payment of royalties as is necessary shall be made by the
deposit thereof, in whatever currency is allowable and acceptable by NOVAVAX, to
the credit and account of NOVAVAX or
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its nominees in any commercial bank or trust company of its choice located in
that country. ESPRIT shall give prompt notice of such deposit to NOVAVAX.
     4.8. Payment Mechanics. All royalties, Milestone Payments and other
payments required under this Agreement shall be paid in Dollars in accordance
with the instructions provided by NOVAVAX in immediately available funds by wire
transfer to a bank or other institution designated in writing by NOVAVAX from
time to time.
     ARTICLE 5. INTELLECTUAL PROPERTY AND REGULATORY MATTERS
     5.1. Intellectual Property Ownership.
     5.1.1. Existing Intellectual Property. Any Intellectual Property rights
owned or controlled by either Party prior to the Parties entering into this
Agreement shall remain the property of such Party, subject only to the rights
and licenses granted herein.
     5.1.2. NOVAVAX Intellectual Property. Any Intellectual Property that is
first conceived and first reduced to practice during the term of this Agreement
solely by personnel employed by or on behalf of NOVAVAX shall remain the
property of NOVAVAX, subject to the rights and licenses granted herein.
     5.1.3. ESPRIT Sole Technology. Any Intellectual Property that is first
conceived and first reduced to practice during the term of this Agreement solely
by personnel employed by or on behalf of ESPRIT shall remain the property of
ESPRIT, subject to the rights and licenses granted herein (“ESPRIT Sole
Technology”).
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     5.1.4. Joint Intellectual Property. Any Intellectual Property that is first
conceived or first reduced to practice during the term of this Agreement by
personnel employed by or on behalf of ESPRIT and personnel employed by or on
behalf of NOVAVAX (other than the Intellectual Property described in
Section 5.1.2 (NOVAVAX Intellectual Property) and Section 5.1.3 (ESPRIT Sole
Technology)) shall be and shall remain the joint property of NOVAVAX and ESPRIT,
subject to the rights and licenses granted herein (“Joint Intellectual
Property”). The parties agree to keep the Joint Intellectual Property in
confidence on a basis consistent with ARTICLE 6 (Confidentiality and Publicity)
and not to publicly disclose the same except in accordance with ARTICLE 6
(Confidentiality and Publicity).
     5.1.5. NOVAVAX Improvement Intellectual Property. NOVAVAX Improvement
Intellectual Property shall constitute Licensed Technology throughout the term
of this Agreement to the extent that such Intellectual Property is relevant to
the use, sale or Registration of a Licensed Product and to the extent that the
licensing of such Intellectual Property by NOVAVAX to ESPRIT pursuant to the
terms of this Agreement would not be prohibited by law, rule, regulation, order,
treaty, contract, agreement, or other obligation.
5.2. Patent Prosecution.
     5.2.1. Generally. Subject to Section 5.2.4 (Abandoned Patent Applications)
of this Agreement, NOVAVAX shall have sole authority and agrees to prosecute or
cause to be prosecuted to allowance or final rejection the patent applications
(including any reissue
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patent applications or reexamination patent applications) included in the
Licensed Patents that are owned or controlled by NOVAVAX, in whole or in part,
including the Joint Improvement Intellectual Property (hereinafter collectively
“Patent Applications”), in the countries in which the Licensed Patents are being
prosecuted or maintained as of the Effective Date. NOVAVAX shall issue as a
patent each such Patent Application prosecuted to allowance at NOVAVAX’s sole
expense. NOVAVAX shall pay all attorneys fees and other costs associated with
the preparation, filing, and prosecution of such Patent Applications in the
Territory included in the Licensed Patents.
     5.2.2. Copies. NOVAVAX agrees to promptly provide (if not already provided
and on an ongoing basis, as the case may be) ESPRIT with copies of:
     (a) All Patent Applications included in the Licensed Patents;
     (b) All prior art searches it has performed (or has had performed) related
to such Patent Applications; and
     (c) All correspondence to and from the U. S. Patent and Trademark Office
and foreign patent offices relating to such Patent Applications.
     5.2.3. Comments by ESPRIT. ESPRIT shall have the right to consult with
NOVAVAX from time to time and on a reasonable basis regarding the content of the
Patent Applications included in the Licensed Patents, as well as the prior art
searches and correspondence related thereto, and to comment thereon. NOVAVAX
shall consider all such comments offered by ESPRIT, it being agreed, however,
that all final decisions
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respecting conduct of the prosecution of said patent applications shall rest
solely in the discretion of NOVAVAX.
     5.2.4. Abandoned Patent Applications. NOVAVAX shall promptly notify ESPRIT
in the event NOVAVAX decides at any time to abandon or discontinue prosecution
of any one or more of the Patent Applications included in the Licensed Patents.
Such notification will be given as early as possible which in no event will be
less than forty-five (45) days prior to the date on which such Patent
Application(s) will become abandoned. ESPRIT shall have the option, exercisable
upon written notification to NOVAVAX, to assume full responsibility for the
prosecution of the affected Patent Application(s), in which event such affected
Patent Application(s) shall, at ESPRIT’s option, be promptly exclusively
licensed royalty-free to ESPRIT and its Sublicensees to make and have made,
import, sell, offer to sell, and have sold Licensed Product in the Territory in
the Field.
     5.2.5. Maintenance Fees. NOVAVAX shall pay all official taxes, annuities
and fees required to keep in force all Patent Applications and patents, which
are included in the Licensed Patents, and shall submit evidence, upon written
request, to ESPRIT that said government fees have been timely paid. In the event
NOVAVAX decides not to pay the maintenance fee due on any one or more of said
patents or Patent Applications, NOVAVAX will give ESPRIT written notice of such
decision at least sixty (60) days in advance of the payment date. ESPRIT shall
thereupon have the option to pay the maintenance fees due on the affected
patents or Patent Applications, in which case the
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affected Patent(s) or Patent Application(s) shall, at ESPRIT’s option, be
promptly exclusively licensed on an exclusive, royalty free, perpetual and fully
paid up basis to ESPRIT to make and have made, import, sell, offer to sell, and
have sold Licensed Product in the Territory in the Field.
     5.2.6. Disclosure. Each Party shall promptly disclose to the other any
Improvements made, conceived or reduced to practice by the disclosing Party or
its Affiliates, agents, subcontractors or Sublicensees.
     5.3. Enforcement of Patents
     5.3.1. Notice. If, during the term of this Agreement, NOVAVAX or ESPRIT
becomes aware of infringing sales of product in the Field competitive with
Licensed Products by a Third Party in a given Calendar Quarter in a country of
the Territory that are greater than *** of ESPRIT’s Commercial Sales of such
Licensed Products, by Dollar or equivalent legal currency of the given country
in the Territory, of Licensed Products in the Field in the same country of the
Territory and in the same Calendar Quarter (a “Competing Product”) that
constitute infringement by a Third Party of any issued patent included in the
Licensed Patents, that Party shall promptly notify the other Party in writing to
that effect. ESPRIT shall have the right, but not the obligation, to bring suit
against any infringer of a patent relating at its own cost and expense.
     5.3.2. NOVAVAX’S Initial Right. NOVAVAX shall have the initial right, but
not the obligation, to initiate or prosecute an infringement or other
appropriate suit or
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action against any Third Party infringer of a Licensed Patent at its own
expense. ESPRIT has the right to join such suit or action at its own expense.
If, (a) after the expiration of ninety (90) days from said notice, NOVAVAX has
not obtained a discontinuance of such infringement or brought suit against the
Third Party infringer, and (b) the infringing product is a Competing Product,
ESPRIT shall have the right, but not the obligation, to bring suit (at ESPRIT’S
sole expense) against such Third Party infringer, provided that if NOVAVAX is
joined to the suit, NOVAVAX will pay for its own litigation expenses.
     5.3.3. Recovery. If, prior to the expiration of ninety (90) days from given
notice under Section 5.3.1 (Notice), NOVAVAX obtains a discontinuance of such
infringement or brings suit against the Third Party infringer, and ESPRIT does
not join the suit, then NOVAVAX shall retain all damages or other monies awarded
or received in settlement of such suit. ESPRIT will cooperate with NOVAVAX in
any such suit and shall have the right to consult with NOVAVAX and be
represented by its own counsel at its own expense. If, prior to the expiration
of ninety (90) days from given notice under Section 5.3.1 (Notice), NOVAVAX
brings suit against the Third Party infringer, and ESPRIT exercises its right to
join the suit, then each Party shall have the right to be represented by
independent counsel in such litigation at its own expense and neither Party
shall incur any liability to the other Party as a consequence of such litigation
or any unfavorable decision resulting therefrom, including any decision holding
the patent invalid or unenforceable. Furthermore, any amounts recovered as a
result of any infringement action taken by the Parties hereunder shall be split
equally.
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     5.3.4. ESPRIT’s Second Right. If, after the expiration of said ninety
(90) days from the date of given notice under Section 5.3.1 (Notice), NOVAVAX
has not obtained a discontinuance of such infringement by a Competing Product or
brought suit against such Third Party infringer, and ESPRIT decides to exercise
its right, after such ninety (90) notice period, to bring suit against such
infringer and join NOVAVAX as a party plaintiff, then NOVAVAX will reasonably
cooperate with ESPRIT in any suit for infringement of a patent of the Licensed
Patents brought by ESPRIT against a Third Party, and shall have the right to
consult with ESPRIT and to participate in and be represented by independent
counsel in such litigation at its own expense. Neither Party shall incur any
liability to the other as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding the patent invalid
or unenforceable. Furthermore, any amounts recovered as a result of any
infringement action taken by the Parties hereunder shall be split equally.
     5.3.5. Settlement. Neither NOVAVAX nor ESPRIT may agree to settle pursuant
to Section 5.3.2 (NOVAVAX’s Initial Right), Section 5.3.3 (Recovery) or
Section 5.3.4 (ESPRIT’s Second Right) without the prior written consent of the
other Party, which shall not be unreasonably withheld or delayed.
     5.3.6. Payments. Notwithstanding anything to the contrary contained herein,
royalties, Milestone Payments and all other payments hereunder shall continue
unabated in accordance with the terms and conditions of this Agreements during
the pendency
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(including all appeals) of any action contemplated by Sections 5.3.1 (Notice)
through and including Section 5.3.6 (Payments).
     5.4. Infringement of Third Party Intellectual Property
     5.4.1. Notice and Discussion. In the event NOVAVAX or ESPRIT receive notice
or otherwise become actually aware of any facts that that ESPRIT’s making, using
or selling of a Licensed Product in the Field infringes, will infringe or is
alleged by a Third Party to infringe a Third Party patent, the Party becoming
aware of same shall promptly notify the other. NOVAVAX and ESPRIT shall
thereafter attempt to agree upon a course of action, which may include:
(a) modifying of a Licensed Product or its use and manufacture so as to be
non-infringing; or (b) obtaining a license or assignment from said Third Party.
     5.4.2. Negotiations. ESPRIT and NOVAVAX shall have the right to negotiate
with said Third Party for such license or assignment to the Third Party patent.
In the event that such negotiation results in a consummated agreement, then
ESPRIT shall pay any lump sum payment and/or royalties to be paid thereunder
provided NOVAVAX has had an opportunity to review and consent to such license
agreement, which shall not be unreasonably withheld or delayed. Any of such lump
sum payments or royalties to be paid by ESPRIT and its Sublicensees under such
ESPRIT negotiated agreement shall be creditable against royalties then due
NOVAVAX hereunder. In no event shall ESPRIT be entitled to credit against any
royalty payments owed to the extent that any infringement claim by a Third Party
is not based solely upon a Licensed Product described in the
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above-mentioned IND (No. 63957) or where the infringement claim is not based
solely on ESPRIT’s use of the Licensed Technology.
     5.4.3. Defense. In the event that ESPRIT is charged with patent
infringement by a Third Party as a result of ESPRIT’s making, using, and/or
selling a Licensed Product and it cannot settle or has not settled such
infringement pursuant to the terms above, ESPRIT shall have the right to defend
against such charge of infringement. NOVAVAX shall have the opportunity to fully
participate in such defense at its own expense. If as a result of a final
unappealable judgment in the litigation or settlement thereof with the Third
Party as described in the immediately preceding two sentences, ESPRIT is
required to pay royalties or other monies to such Third Party (“Third Party
Payment”), ESPRIT may thereafter offset such Third Party Payment (including
running royalties and any and all lump sum payments) against any royalties due
but not yet paid hereunder to NOVAVAX, unless such infringement claim by a Third
Party is not based solely upon a Licensed Product described in the
above-mentioned NDA or where the infringement claim is not based solely on
ESPRIT’s use of the Licensed Technology. Any damages or other monies awarded or
received in settlement of such litigation against such adverse party shall be
shared in accordance with Sections 5.3.3 (Recovery) and 5.3.4 ESPRIT’s (Second
Right).
     5.4.4. Payments. Other than as expressly set forth to the contrary in
Section 5.4.3 (Defense), royalties and all other payments hereunder shall
continue unabated in accordance with the terms and conditions of this Agreements
during the pendency
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(including all appeals) of any action contemplated by Sections 5.4.1 (Notice and
Discussion) through and including Section 5.4.4 (Payments).
ARTICLE 6. CONFIDENTIALITY AND PUBLICITY
     6.1. Confidential Information. All information disclosed by one Party to
the other(s) or developed by the parties pursuant to the terms of this Agreement
(the “Confidential Information”) shall be maintained strictly confidential and
used only for the purposes of this Agreement in accordance with this ARTICLE 6
(Confidentiality and Publicity) (“Purposes”). Each Party may also disclose the
other’s information to an Affiliate, agent or consultant, who is under a written
obligation of confidentiality and non-use at least substantially equivalent to
the obligations of this ARTICLE 6 (Confidentiality and Publicity), with the
exceptions that (i) ESPRIT may disclose such information to its Affiliates who
agree to maintain such information in confidence and to use such information
only for the Purposes and (ii) the Parties shall each be free to disclose the
existence of this Agreement and the nature of the licenses granted hereunder to
its Affiliates and other prospective licensees and sub-licensees, investors or
prospective investors, lenders and other potential funding sources, or to a
Third Party in connection with a merger or acquisition or proposed merger or
acquisition, subject to an obligation of confidentiality and non-use, provided
that such Party shall have used commercially reasonable efforts to obtain a
written confidentiality agreement from such Third Party contemplated by this
sentence. Each Party shall guard any confidential information of the other Party
with the same level of diligence as it normally guards any of its own most
valuable internal confidential, proprietary information. Each Party shall be
responsible for the breach of any of the provisions
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of this ARTICLE 6 (Confidentiality and Publicity) by a person or entity to whom
such Party discloses information contemplated hereby.
Notwithstanding the foregoing, each Party shall be relieved of the
confidentiality and limited use obligations of this Agreement if:
     (a) the information was previously known to the receiving Party as
evidenced by the prior written records of such Party without disclosure by the
disclosing Party;
     (b) the information is or becomes generally available to the public through
no fault of the receiving Party;
     (c) the information is acquired in good faith in the future by the
receiving Party from a Third Party not under an obligation of confidence to the
disclosing Party with respect to such information; or
     (d) the information is independently developed by the receiving Party
without reliance on, reference to, or knowledge of, the information disclosed by
the disclosing Party.
The parties understand and agree that it shall be the receiving Party’s burden
of proof to show the applicability of any of the exceptions set forth in clauses
(a), (b) (c) or (d) above.
     6.2. Exceptions. Notwithstanding the above obligations of confidentiality
and non-use a Party may:
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     (a) disclose information to a regulatory agency that is necessary to obtain
regulatory approval in a particular jurisdiction;
     (b) disclose information to a government agency if the disclosure is
necessary to protect the health and safety of the Party’s workers or the public
or as required by law; or
     (c) disclose information as and to the extent required to comply with
applicable laws and regulations, including the rules and regulations of the U.S.
Securities and Exchange Commission.
In making such disclosures as set forth in this Section 6.2 (Exceptions), the
disclosing Party shall use reasonable efforts to promptly first notify the owner
of the confidential information so as to allow the owner of the confidential
information an opportunity to seek a protective order or otherwise limit any
such disclosure. In any event, the disclosing Party shall use reasonable efforts
to only disclose such information as is required to be disclosed pursuant to the
law, regulation, rule or order, and shall use its reasonable efforts to obligate
the recipient to secrecy on the same terms as set forth herein. Each Party shall
restrict the disclosure of confidential information of the other so that only
the persons that need to know it shall be informed and the disclosure be limited
to only such portions as necessary for the purposes of this Agreement.
     6.3. Use of Names. Each Party shall not state or imply, in any publication,
advertisement, sales promotional material, or other medium:
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     (a) the name of the other Party or the name(s) of any employee(s) of the
other Party; or
     (b) the name of any Affiliate of the other Party or the name(s) of any
employee(s) of such Affiliate
without the prior written consent of the other Party.
     6.4. Disclosure of Agreement. Except for the filing of a copy of this
Agreement with the Securities and Exchange Commission or other securities
commission of such other jurisdictions whose laws may apply to either Party to
the extent required by law and such other public announcements as may hereafter
become required by law, regulation or rule due to changes from the facts and
circumstances in existence as of the Effective Date, no Party hereunder shall
disclose this Agreement or make any public announcement or filing concerning
this Agreement or the subject matter hereof without the prior written consent of
the other. In the event that pursuant to the foregoing a Party shall file a copy
of this Agreement with the Securities and Exchange Commission or other
securities commission of such other jurisdictions whose laws may apply to either
Party, it shall use reasonable efforts seek confidential treatment for all
portions thereof reasonably requested by the other Party. Any proposed
announcement or filing by a Party shall be made available to the other Party in
advance of publication or filing, as the case may be, for review and comment. If
a Party decides to make an announcement or disclosure required by law or as
otherwise permitted under this Section 6.4 (Disclosure Agreement) of this
Agreement, it will provide the other Party with at least ten (10) Business Days,
where possible, advance written notice of the text of any such written
announcement or
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disclosure or content of any non-written disclosure or announcement, except to
the extent applicable law requiring disclosure would not permit such advance
notice (such as in the case of certain securities filings), in which case the
disclosing Party will give the maximum notice possible under the circumstances,
so that the other Party will have an opportunity to comment upon the
announcement or disclosure.
     6.5. Publication. Except for permissible publications under this ARTICLE 6
(Confidentiality and Publicity), neither Party will publish any information
based upon or derived from the work performed under this Agreement without the
prior review and consent of the Parties pursuant to this Section 6.5
(Publication).
     6.6. Other Confidentiality Obligations. With respect to information
disclosed on or after the Effective Date between ESPRIT and NOVAVAX under the
provisions of this Agreement, the provisions of this Agreement shall govern and
prevail. In the event of any conflict between this Agreement and any other
pending confidentiality agreement between ESPRIT and NOVAVAX, with respect to
information disclosed on or after the Effective Date, the terms of this
Agreement shall govern and prevail.
ARTICLE 7. ADVERSE EVENTS AND RECALLS
     7.1. Adverse Events. In the event that an adverse drug experience
associated with the Licensed Product arises in connection with Licensed Product,
each Party shall immediately inform the other Party by telephone communication
within one (1) day of its own receipt of notice of such adverse reaction. The
informing Party will then promptly forward to the other
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Party all written documentation relating to such adverse reaction, including a
detailed description of such event. ESPRIT expressly disclaims that NOVAVAX acts
as an agent, designee, or representative of ESPRIT for purposes of informing
ESPRIT of such adverse reaction. NOVAVAX expressly disclaims that ESPRIT acts as
an agent, designee, or representative of NOVAVAX for purposes of informing
NOVAVAX of such adverse drug experience. If ESPRIT receives a written
communication from the FDA (or non-U.S. equivalents) relating to the Licensed
Products which relates to the development, marketing, safety or efficacy of the
Licensed Products, and which would materially affect the time for receipt of the
Regulatory Approval of such Licensed Products or the ability of the Parties to
develop or market such Licensed Products, ESPRIT shall promptly provide NOVAVAX
with a copy of such communication and shall consult with NOVAVAX while taking
into account NOVAVAX’S recommendations and comments, to the extent reasonable,
in responding to any communications with the FDA or other applicable regulatory
authority. If NOVAVAX receives a written communication from the FDA or any
foreign equivalent of the FDA in a country outside of the Territory which
relates to the development, marketing, safety or efficacy of the Licensed
Products, and which would affect the receipt of regulatory approval of the
Registrations for the Licensed Products in the Territory, NOVAVAX shall promptly
provide ESPRIT with a copy of such communication.
     7.2. Recalls. In the event that either Party determines that an event,
incident or circumstance has occurred which may result in the need for a recall
or other removal of any Licensed Product, or any lot or lots thereof, from the
market, it shall promptly advise and consult with the other Party with respect
thereto. The parties shall jointly make the final determination to
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recall or otherwise remove a Licensed Product or any lot or lots thereof from
the market which consent of NOVAVAX shall not be unreasonably withheld or
delayed. ESPRIT shall be responsible for the costs of any recall except if such
recall is solely the result of any failure of NOVAVAX to manufacture Licensed
Product in accordance with written specifications agreed upon by the parties
under the Supply Agreement.
ARTICLE 8. WARRANTIES, REPRESENTATIONS AND ACKNOWLEDGEMENTS
     8.1. NOVAVAX Representations and Warranties
     8.1.1. Ownership and Authority. NOVAVAX expressly warrants and represents
that (a) it exclusively owns all of the rights, title and interest in and to the
Licensed Patents identified on Schedule 1 existing as of the date hereof, and
(b) it has the full corporate right and authority to enter into this Agreement
and all necessary consents and notices have been obtained or made as the case
may be to carry out the transactions contemplated herein. NOVAVAX further
represents and warrants that as of the Effective Date no academic institution,
member of an academic institution, corporation, local, state or federal
government, or any other Third Party holds any property rights in the Licensed
Patents identified on Schedule 1, or to its knowledge other Licensed Technology,
that pertains to a Licensed Product existing as of the date hereof. Further,
NOVAVAX represents that the patent applications and patents of Schedule 1 are
all the current existing Licensed Patents reasonably relevant to the Licensed
Product in the Territory having the formulation described on Schedule 2 attached
hereto (the “Formulation”).
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     8.1.2. No Outstanding Encumbrances. NOVAVAX expressly warrants and
represents that, there are no outstanding encumbrances or agreements, either
written, or to its knowledge if oral or implied, on the Licensed Technology that
are inconsistent with the obligations undertaken by NOVAVAX herein, and that it
has not granted and will not grant during the term of this Agreement or any
renewal hereof, any license or other privilege under the Licensed Technology
with respect to the exclusive rights granted hereunder for a Licensed Product in
the Territory in the Field which conflicts, or which could reasonably be
expected to conflict, with the terms and conditions of this Agreement.
     8.1.3. Disclosures. NOVAVAX expressly warrants and represents that, to its
knowledge, it has disclosed to ESPRIT all reasonably relevant and material
regarding pre-clinical and clinical studies and the Licensed Product in its
possession or control which NOVAVAX is not otherwise prohibited from disclosing
pursuant to law, regulation, order, treaty, agreement, contract or other
obligation.
     8.1.4. Third Parties. NOVAVAX expressly warrants and represents that it is
not required to obtain the consent of any Third Party to grant the rights
granted herein to ESPRIT. NOVAVAX further expressly warrants and represents that
the rights granted herein do not conflict with any existing or pending written
agreement (or to its knowledge, any existing or pending oral or implied
agreement) of NOVAVAX with a Third Party pertaining to use of the Licensed
Technology for a Licensed Product in the Territory.
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     8.1.5. Infringement. NOVAVAX expressly warrants and represents that: a) it
has not been notified in writing of any claims of infringement from any Third
Party with respect to the Licensed Product as it currently exists, and, to its
knowledge, no Third Party has threatened to make any such claim; and b) that, to
its knowledge, it solely owns all of the data and results from any and all
preclinical and clinical development and testing of the Licensed Product that it
conducted or authorized to have conducted prior to the Effective Date of this
Agreement, and that NOVAVAX has used reasonable efforts to disclose all of the
data from such preclinical and clinical development and testing to ESPRIT in
connection with this Agreement. NOVAVAX represents that it has not received
written notice of any issued patent owned by a Third Party which would be
infringed by the making, using, and selling of a Licensed Product having the
Formula in the countries of the Territory utilizing the Licensed Patents of
NOVAVAX as currently in existence as of the date hereof in any in those
countries of the Territory.
     8.1.6. Necessary Steps. NOVAVAX represents and warrants that, to its
knowledge, it has undertaken all necessary legal and factual steps to ensure
that NOVAVAX is able to license the Licensed Technology to ESPRIT in accordance
with this Agreement to ESPRIT.
     8.2. ESPRIT Representations and Warranties. ESPRIT expressly warrants and
represents that (a) it has the full corporate right and authority to enter into
this Agreement and to carry out the transactions contemplated herein; (b) it has
obtained all consents necessary to enter into and perform its obligations under
this Agreement; (c) its entry into and performance of this
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Agreement do not conflict with any existing or pending written agreement (or to
its knowledge, any existing or pending oral or implied agreement) of ESPRIT with
a Third Party pertaining the subject matter contained herein; and (d) it is not
aware of any fact or circumstance which would indicate that NOVAVAX is in breach
of any of the representations in Sections 8.1.1 (Ownership and Authority)
through and including Section 8.1.2 (No Outstanding Encumbrances).
     8.3. DISCLAIMER. THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY OR ANY WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE, VALIDITY, OR NON-INFRINGEMENT, ALL OF WHICH ARE HEREBY SPECIFICALLY
EXCLUDED AND DISCLAIMED.
     8.4. LIMITATION OF LIABILITY. EXCEPT FOR THEIR RESPECTIVE OBLIGATIONS UNDER
ARTICLE 10 (INDEMNIFICATION) ARISING OUT OF THIRD PARTY CLAIMS, SUITS OR DEMANDS
OR FOR ANY BREACH OF CONFIDENTIALITY OBLIGATIONS OWED UNDER THIS AGREEMENT OR
FOR ANY MISAPPROPRIATION OR INFRINGEMENT OF ANY INTELLECTUAL PROPERTY LICENSED
UNDER THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
PUNITIVE, SPECIAL, INCIDENTAL, OR INDIRECT DAMAGES UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER.
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ARTICLE 9. TERM AND TERMINATION
     9.1. Term. The term of this Agreement shall commence on the Effective Date
and shall expire upon the expiration of the last-to-expire Licensed Patent or
when terminated in accordance with any of the provisions herein. Upon expiration
of the term of this License Agreement, ESPRIT shall have a fully paid-up license
to make, have made, use and sell Licensed Products under the Licensed Technology
in the Field in the Territory. If this Agreement is terminated prior to the end
of the Term, all licenses granted to ESPRIT hereunder shall cease and all such
licensed rights shall revert to NOVAVAX.
     9.2. Termination for Breach. Upon any breach of, or default under, any
material provision of this Agreement by a Party, including, without limitation,
nonpayment of amounts owed hereunder by ESPRIT for any reason whatsoever except
as specifically provided for in this Agreement, the other Party may terminate
this Agreement in whole or in part by giving ninety (90) days’ written notice
(the “Notice Period”) to the breaching Party; provided however, that the
breaching Party shall have seventy-five (75) days to cure any such breach prior
to the commencement of the Notice Period. Said notice shall become effective at
the end of such Notice Period, unless during said Notice Period the breaching
Party shall cure such breach or default within the applicable cure period.
Notwithstanding anything to the contrary contained herein, payment defaults will
have a notice and cure period of five business (5) days.
     9.3. Additional Termination Rights of ESPRIT; ESPRIT shall have the right
to terminate this Agreement, and subject to the provisions of Section 9.4, but
otherwise, without liability, upon thirty (30) days prior notice to NOVAVAX (i)
***, that (x) *** or (y) ***. In such
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event, ESPRIT shall submit sufficient supporting documentation evidencing ***,
prepared by an independent certified public accountant acceptable to NOVAVAX,
and submitted to NOVAVAX for review. If NOVAVAX agrees that the Post Phase II
Development Costs are in excess of *** then Esprit may, provide notice of
termination to NOVAVAX in accordance with this Section 9.3. If the Parties do
not agree on the right of ESPRIT to terminate under this Section 9.3, then the
matter shall be reviewed by the JSC and escalated to the highest levels of
review, and failing mutual resolution, then the provisions of Article 11
regarding Dispute Resolution and Arbitration shall govern. In the event of any
termination under this Section 9.3, Section 9.4 shall apply.
     9.4. Effect of Termination by ESPRIT or NOVAVAX under Section 3.1.2, Effect
of Additional Termination Rights of ESPRIT under Section 9.3 and Effect of
Termination for Breach by ESPRIT. Except as otherwise expressly set forth
herein, upon termination by NOVAVAX or ESPRIT under Section 3.1.2 (Development
Milestones), upon Termination by NOVAVAX under Section 9.2 (Termination for
Breach) or upon termination by ESPRIT under Section 9.3 (Additional Termination
Rights of ESPRIT) :
     (a) all licenses granted to ESPRIT hereunder shall cease and all such
licensed rights shall revert to NOVAVAX;
     (b) ESPRIT shall, and it hereby does effective only upon termination by
NOVAVAX or ESPRIT under Section 3.1.2 (Development Milestones), upon termination
by NOVAVAX as set forth above in Section 9.2 (Termination for Breach), or upon
termination by ESPRIT as set forth above in Section 9.3 (Additional Termination
Rights of ESPRIT) grant to NOVAVAX an exclusive
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(even as to ESPRIT), worldwide, irrevocable, perpetual, fully-paid up license,
under ESPRIT Improvements and ESPRIT’s interest in the Joint Improvements, with
the right to grant Sublicenses, to make and have made, import, use, sell, offer
for sale, and have sold Licensed Product in the Field.
     (c) ESPRIT shall promptly deliver to NOVAVAX all of the following
documents: (1) all confidential information and materials related to any
Licensed Product provided by NOVAVAX pursuant to this Agreement, and (2) any NDA
or any other filing with any governmental or regulatory authority worldwide in
connection with any Licensed Product, and all related data, documents, reports,
files (including the related drug master file), filings and correspondence with
any governmental or regulatory authority, adverse event reports, clinical trial
results, any IND and supporting data and information, and all other documents or
information, in whatever form, relating to the manufacture, use and sale of the
Licensed Products;
     (d) if ESPRIT has applied for or obtained any regulatory approvals in any
country for any Licensed Product, then ESPRIT shall, to the extent legally
permissible, take all additional action reasonably necessary to assign all of
its right, title and interest in and transfer possession and control to NOVAVAX
of such applications or regulatory approvals; and
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     (e) any regulatory filings for any Licensed Product which have been
submitted in ESPRIT’s name, subject to FDA approval, will be transferred to
NOVAVAX’s name.
     9.5. Effect of Termination for Breach by NOVAVAX. Except as otherwise
expressly set forth herein, upon termination by ESPRIT under Section 9.2
(Termination for Breach) ESPRIT shall be free of any obligation to make any
unaccrued payments to NOVAVAX relating to the terminated license pursuant to
ARTICLE 4 (Payments).
     9.6. Termination for Bankruptcy. NOVAVAX or ESPRIT may terminate this
Agreement should the other Party commit an act of bankruptcy, be declared
bankrupt, voluntarily file or have filed against it a petition for bankruptcy or
reorganization unless such petition is dismissed within sixty (60) days of
filing, enter into a procedure of winding up to dissolution or should a trustee
or receiver be appointed for its business assets or operations. All rights and
licenses granted under or pursuant to this Agreement are, and shall otherwise be
deemed to be, for the purposes of Section 365(n) of Title 11, U.S. Code
(“Bankruptcy Code”) license rights to “intellectual property” as defined under
Section 101 (35A) of the Bankruptcy Code. The parties agree that each Party, as
a licensee of such right, under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.
     9.7. Certain Effects of Termination; Payments and Dispute Resolution. In
the event of termination of this Agreement for any reason, all licenses granted
to ESPRIT hereunder shall cease and all licensed rights shall revert to NOVAVAX,
and ESPRIT shall not be relieved of the duty and obligation to pay in full,
payments due, accrued, and unpaid at the effective date
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of such termination, nor shall any such termination relieve either Party of any
obligation arising hereunder prior to such termination. Notwithstanding the
foregoing, from the date either Party notifies the other Party that it wishes to
commence a proceeding in accordance with the dispute resolution procedures set
forth in ARTICLE 11 (Arbitration) until the date such proceeding has been
concluded, the running of the time period referred to in this paragraph for
curing a breach shall be suspended with respect to the subject matter of the
dispute, claim or controversy.
     9.8. Sell Off Right. Upon termination of any license granted herein, in
part or in whole as to any Licensed Product, ESPRIT shall have the right to sell
off any of such Licensed Product in its inventory for a period of 180 days
following the effective date of such termination provided that ESPRIT pays to
NOVAVAX any royalties otherwise calculated in accordance with this Agreement.
     9.9. Survival of Provisions Upon Termination. (a) In the event of
termination of this Agreement by NOVAVAX under Section 9.2 (Termination for
Breach), the provisions of Section 2.3 (License Under ESPRIT Technology) and the
provisions listed in subsection (b) below shall survive the termination of this
Agreement to the extent provided for herein, and (b) the following provisions
shall survive the termination or expiration of this Agreement to the extent of
any claims thereunder arising out of facts or circumstances arising or existing
prior to the date of such termination of expiration : ARTICLE 6 (Confidentiality
and Publicity), ARTICLE 10 (Indemnification), ARTICLE 11 (Arbitration) and
ARTICLE 12 (Miscellaneous), and Sections 2.3 (License under ESPRIT Technology),
3.2.3 (Access to Data and Regulatory Approvals and Registrations), 4.6 (Audits),
8.3 (Disclaimer), 8.4 (Limitation of Liability), 9.3
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(Effect of Termination for Breach by ESPRIT), 9.5 (Effect of Termination by
ESPRIT or NOVAVAX under Section 3.1.2, Effect of Termination by ESPRIT under
Section 9.3 or Termination for Breach by ESPRIT.), 9.5 (Effect of Termination
for Breach by NOVAVAX), 9.7 (Certain Effects of Termination; Payments and
Dispute Resolution), 9.8 (Sell Off Right) and 9.9 (Survival of Provisions Upon
Termination).
ARTICLE 10. INDEMNIFICATION
     10.1. Generally. NOVAVAX and ESPRIT will each defend as the case maybe
(each an "Indemnifying Party”), at its own expense, indemnify and hold harmless
the other Party and its Affiliates (each an “Indemnified Party”) from and
against any and all damages, liabilities, losses, costs, and expenses, including
attorneys fees (collectively, “Liabilities"), arising out of any claim, suit or
proceeding brought against the Indemnified Party (each a “Claim”) to the extent
such Claim is based upon a claim arising out of or relating to (i) any breach or
violation of, or failure to perform, any covenant or agreement made by such
Indemnifying Party in this Agreement, unless waived in writing by the
Indemnified Party; (ii) any breach of the representations or warranties made by
such Indemnifying Party in this Agreement; or (iii) the negligence or willful
misconduct of the indemnifying Party, except, under clause (ii), to the extent
arising out of the breach, violation, failure, negligence or willful misconduct
of the Indemnified Party.
     10.2. Product Liability. Except as otherwise provided herein, ESPRIT (as
the Indemnifying Party) will defend, at its own expense, indemnify and hold
harmless NOVAVAX and its Affiliates (as the Indemnified Parties) from and
against all Liabilities arising out of any
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Claim to the extent such Claim is based upon a claim arising out of or relating
to any personal injury or death of any Person as a result of the use of any
Licensed Product sold by ESPRIT, its Affiliates or Sublicensees, except to the
extent such Claim is due to the manufacture of Licensed Products supplied by
NOVAVAX other than in accordance with specifications as provided in the Supply
Agreement or the negligent, grossly negligent, or intentional act or omission of
NOVAVAX and its Affiliates. Similarly, NOVAVAX (as the Indemnifying Party) will
defend, at its own expense, indemnify and hold harmless the ESPRIT and its
Affiliates (as Indemnified Parties) from and against any and all Liabilities
arising out of any Claim brought against ESPRIT or any such Affiliate to the
extent such Claim is based upon a claim arises out of a Third Party claim or
suit or demand based on bodily injury or property damage resulting from the
manufacture of Licensed Product supplied by NOVAVAX other than in accordance
with specifications as provided in the Supply Agreement, unless such claim is
due to the negligent, grossly negligent or intentional act or omission of
ESPRIT.
     10.3. Claims. If any Claim is made by a Third Party (a “Third Party Claim”)
against an Indemnified Party that, if sustained, would give rise to Liability to
an Indemnifying Party under this Agreement, the Indemnified Party shall promptly
cause notice of the claim to be delivered to the Indemnifying Party along with
all of the facts, information or materials relating to such claim of which the
Indemnified Party is aware; provided, however, that failure to give such
notification shall not affect the indemnification provided for hereunder except
to the extent that the Indemnifying Party shall have been actually prejudiced as
a result of such failure. The Indemnified Party shall deliver to the
Indemnifying Party, within five days after the Indemnified Party’s receipt
thereof, copies of all notices and documents (including court papers) received
by
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the Indemnified Party relating to such Third Party Claim. If a Third Party Claim
is made against an Indemnified Party, the Indemnifying Party will be entitled to
participate in the defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party will not be
liable to the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof, unless the Third Party
Claim involves potential conflicts of interest or substantially different
defenses for the Indemnified Party and the Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense (except as provided in the immediately preceding sentence), separate
from the counsel employed by the Indemnifying Party, it being understood that
the Indemnifying Party shall control such defense. The Indemnifying Party shall
be liable for the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party has not
assumed the defense of any Third Party Claim that, if sustained, would give rise
to a Liability of the Indemnifying Party under this Agreement. The parties shall
cooperate in the defense or prosecution of any Third Party Claim. Such
cooperation shall include the retention and (upon the Indemnifying Party’s
request) the provision to the Indemnifying Party of records and information that
are reasonably relevant to such Third Party Claim, and reasonable efforts to
make employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the Indemnifying Party shall have assumed the defense of a Third Party Claim,
the Indemnified Party shall not admit any Liability with respect
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to, or settle or compromise a Third Party Claim without the Indemnifying Party’s
prior written consent (which consent shall not be unreasonably withheld). The
Indemnifying Party may pay, settle or compromise a Third Party Claim (i) with
the written consent of the Indemnified Party, not to be unreasonably withheld or
delayed or (ii) without the written consent of the Indemnified Party, so long as
such settlement includes (A) an unconditional release of the Indemnified Party
from all Liability in respect of such Third Party Claim and (B) does not subject
the Indemnified Party to any injunctive relief or other equitable remedy. In the
event an Indemnified Party has a claim against an Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall promptly cause
notice of such claim to be delivered to the Indemnifying Party. If the
Indemnifying Party disputes such claim, the Indemnifying Party and the
Indemnified Party shall attempt in good faith for a period of 10 days to settle
any such dispute. If the parties are unable to resolve such dispute, the
Indemnified Party may pursue any and all courses of action available against the
Indemnifying Party.
     10.4. Limits to Obligations. An Indemnifying Party’s (including
Sublicensees) obligations under this ARTICLE 10 (Indemnification) shall not
extend to any Claims for Liability arising from the Indemnified Party’s failure
to comply with the terms and conditions of this Agreement or arising from the
negligence, gross negligence, intentional wrongful act or omission of the
Indemnified Party, its agents or employees.
ARTICLE 11. ARBITRATION
     Any controversy or claim arising out of or relating to this Agreement shall
be resolved by arbitration before a panel of three arbitrators in accordance
with the Commercial Arbitration
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Rules of the American Arbitration Association (“AAA”) then pertaining (available
at www.adr.org), except where those rules conflict with this provision, in which
case this provision controls. Any court with jurisdiction shall enforce this
clause and enter judgment on any award. The arbitrators shall be selected within
twenty Business Days from filing of a demand for arbitration from the AAA’s
National Roster of Arbitrators pursuant to agreement or through selection
procedures administered by the AAA. Within 45 days of filing of a demand for
arbitration, the parties shall reach agreement upon and thereafter follow
procedures, including limits on discovery, assuring that the arbitration will be
concluded and the award rendered within no more than eight months from selection
of the arbitrators or, failing agreement, procedures meeting such time limits
will be designed by the AAA and adhered to by the parties. The arbitration shall
be held in New York, New York, Borough of Manhattan and the arbitrators shall
apply the substantive law of New York, except that the interpretation and
enforcement of this arbitration provision shall be governed by the Federal
Arbitration Act. Prior to commencement of arbitration, emergency relief is
available from any court to avoid irreparable harm. THE ARBITRATOR SHALL NOT
AWARD EITHER PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES, OR
ATTORNEYS FEES OR COSTS, OTHER THAN IN CONNECTION WITH A BREACH BY EITHER PARTY
OF ITS CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT OR AS DAMAGES FOR ANY
MISAPPROPRIATION OF INFRINGEMENT OF INTELLECTUAL PROPERTY LICENSED UNDER THIS
AGREEMENT. Prior to commencement of arbitration, the parties must attempt to
mediate their dispute using a professional mediator from AAA, the CPR Institute
for Dispute Resolution, or like organization selected by agreement or, absent
agreement, through
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selection procedures administered by the AAA. Within a period of forty-five
(45) days after the request for mediation, the parties agree to convene with the
mediator, with business representatives present, for at least one session to
attempt to resolve the matter. In no event will mediation delay commencement of
the arbitration for more than forty-five (45) days absent agreement of the
parties or interfere with the availability of emergency relief.
ARTICLE 12. MISCELLANEOUS
     12.1. Force Majeure. Any delays in or failures of performance by a Party
under this Agreement shall not be considered a breach of this Agreement if and
to the extent caused by acts of God; acts, changes in the regulations or laws of
any government; strikes or other concerted acts of workers (other than strikes
or acts of such Party’s own workers); fires; floods; explosions; riots; wars;
rebellions; and sabotage (a “Force Majeure Event”); and any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence. In the event that a Party’s performance of payment obligations is
suspended for more than one hundred and twenty (120) days because of a Force
Majeure Event, the other Party has the right to terminate this Agreement upon
written notice to the non-performing Party.
     12.2. Assignment. This Agreement, or any of the rights and obligations
created herein, including but not limited to the licenses granted under ARTICLE
2 (Grant of Rights), shall not be assigned or transferred, in whole or in part,
by either Party hereto without the prior written consent of the other Party
which will not be unreasonably withheld or delayed; provided, however, that
either Party may, without such consent, assign the Agreement and its rights and
obligations hereunder (A) to a wholly owned operating Affiliate of such Party or
(B) in
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connection with the transfer or sale of all or substantially all of its assets
to a Third Party so long as: (i) each Party will provide the other Party with at
least ten (10) days prior written notice thereof; and (ii) in the event of such
a transfer by NOVAVAX, any permitted assignee shall assume all obligations of
its assignor under the Agreement in a writing delivered to the other Party. Any
attempted assignment or transfer of such rights or obligations without such
consent, except as provided herein, shall be void. This Agreement shall binding
upon any purchaser of all or substantially all of the assets of the either
Party, as the case may be. This Section 12.2 (Assignment) shall not be deemed to
otherwise prohibit or otherwise apply to a change in control of NOVAVAX (whether
by merger of sale of capital stock or otherwise) at the shareholder or Board of
Director levels or otherwise.
     12.3. No Waiver. The waiver by a Party, whether express or implied, of any
provisions of this Agreement, or of any breach or default of a Party, shall not
be construed to be a continuing waiver of such provision, or of any succeeding
breach or default or of a waiver of any other provisions of this Agreement.
     12.4. Choice of Law. All matters affecting the interpretation, validity,
and performance of this Agreement shall be governed by the laws of the State of
New York, U.S.A., without regard to its choice or conflict of law principles.
     12.5. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction. The parties shall replace such
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ineffective provision for such jurisdiction with a valid and enforceable
provision which most closely approaches the NOVAVAX, intent, and purpose of this
Agreement, and in particular, the provision to be replaced.
     12.6. Independent Contractors. ESPRIT and NOVAVAX are independent
contractors and shall not be deemed to be partners, joint venturers or each
other’s agents, and neither shall have the right to act on behalf of the other
except as expressly provided hereunder or otherwise expressly agreed to in
writing.
     12.7. Entire Agreement. It is the mutual desire and intent of the parties
to provide certainty as to their future rights and remedies against each other
by defining the extent of their mutual undertakings as provided herein. The
parties have in this Agreement incorporated all representations, warranties,
covenants, commitments and understandings on which they have relied in entering
into this Agreement and, except as provided for herein, neither Party has made
any covenant or other commitment to the other concerning its future action.
Accordingly, this Agreement (together with the schedules attached hereto
(i) constitute the entire agreement and understanding between the parties with
respect to the matters contained herein, and there are no promises,
representations, conditions, provisions or terms related thereto other than
those set forth in this Agreement, and (ii) supersede all previous
understandings, agreements and representations between the parties, written or
oral relating to the subject matter hereof. The parties hereto may from time to
time during the continuance of this Agreement modify, vary or alter any of the
provisions of this Agreement, but only by written agreement of all parties
hereto.
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     12.8. Notice to Parties. All communications, reports, payments and notices
required by this Agreement shall be addressed to the Partied(s) at their
respective address(s) set forth below or to such other address as requested by a
Party by notice in writing to the other parties.

         
 
  If to NOVAVAX:   Attention: Chief Executive Officer
 
      NOVAVAX, Inc.
 
      508 Lapp Road
 
      Malvern, PA 19355
 
       
 
  With a copy to:   Attention: Legal Department
 
      NOVAVAX, Inc.
 
      508 Lapp Road
 
      Malvern, PA 19355
 
       
 
  If to ESPRIT:   Attention: Chief Executive Officer
 
      ESPRIT Pharma, Inc.
 
      Two Tower Blvd.
 
      East Brunswick, NJ 08816
 
       
 
  With a copy to:   Steven M. Bosacki, General Counsel
 
      ESPRIT Pharma, Inc.
 
      Two Tower Blvd.
 
      East Brunswick, NJ 08816

     All such notices, reports, payments and communications shall be made by
First Class mail; postage prepaid, and shall be considered made as of the date
of deposit with the United States Post Office.
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     12.9. Modification. This Agreement may not be amended or modified unless in
writing executed by both parties hereto. Except as otherwise expressly set forth
herein, neither party will have any rights of setoff or to withhold the
performance of any obligation (including with respect to any payment otherwise
required to be made) hereunder.
     12.10. Terms. Unless otherwise expressly provided for herein (i) financial
and accounting terms will have the meaning ascribed to such terms in accordance
with GAAP, (ii) the word, “including”, will mean “including but not limited to”
and the word “day” will mean “calendar day”, (iii) references to the singular
will include the plural and vice versa, (iv) the use of any pronoun will include
the neuter and both genders, and (v) references to Sections, Articles, Schedules
and Exhibits will be references to Sections, Articles, Schedules and Exhibits to
this Agreement and the word, “herein” and words of similar import will be
construed to refer to this Agreement, (vi) the word “knowledge” will mean actual
knowledge after reasonably diligent inquiry of executive officers of the
relevant entity, and (vii) headings and titles of Sections and Articles herein
will be construed to be descriptive only and without any substantive or
interpretive effect.
     12.11. Consent to Grant of Security Interest
     NOVAVAX does hereby consent to the granting of a security interest in this
Agreement and the Supply Agreement dated as of the date hereof, in favor of any
secured lender designated by ESPRIT. Moreover NOVAVAX agrees to execute whatever
other documentation may be reasonably required in connection with such consent.
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ARTICLE 13. TAXES
     13.1. ESPRIT Payments. ESPRIT will make all payments to NOVAVAX under this
Agreement without deduction or withholding for taxes except to the extent that
any such deduction or withholding is required by law in effect at the time of
payment.
     13.2. Proof of Payment. Any tax required to be withheld on amounts payable
under this Agreement will promptly be paid by ESPRIT on behalf of NOVAVAX to the
appropriate governmental authority, and ESPRIT will furnish NOVAVAX with proof
of payment of such tax.
     13.3. Cooperation. ESPRIT and NOVAVAX will cooperate with respect to all
documentation required by any taxing authority or reasonably requested by ESPRIT
to secure a reduction in the rate of applicable withholding taxes.
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                      NOVAVAX, INC.       ESPRIT PHARMA, INC.    
 
                   
By:
          By:        
 
                    Name: Rahul Singhvi       Name: Greg Stokes     Title:
President and Chief Executive Officer       Title: President & Chief Operating
Officer    
 
                   
Date:
          Date:        
 
 
 
         
 
   

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LICENSE AND DEVELOPMENT AGREEMENT
Schedule 1 — Patents and Patent Applications

                      Country   Status   Application No.   Patent No.   Issue
Date   Expiration
United States
  Granted   08/380942   5629021   05/13/1997   01/31/2015
Mexico
  Granted   975663   198438   09/04/2000   01/29/2016
Canada
  Granted   2211262   2211262   08/30/2005   01/29/2016

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LICENSE AND DEVELOPMENT AGREEMENT
Schedule 2 — Formulation For Existing Licensed Product
Formulation (to be added)

      Ingredient Description   Percent w/w
Testosterone USP/EP
  ***
Soybean Oil USP
  ***
Polysorbate 80 NF
  ***
190 Proof Ethyl Alcohol USP
  ***
Purified Water USP
  ***

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