Document:

exv10w6

Exhibit 10.6

THIS AMENDED AND RESTATED SUBORDINATED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

3226509 NOVA SCOTIA COMPANY 

 AMENDED AND RESTATED SUBORDINATED PROMISSORY NOTE

(Guaranteed by ION GEOPHYSICAL CORPORATION)

			
	 	 	 
	 
	 	December 30, 2008
	 	 	 
	US$35,000,000.00
	 	Calgary, Alberta

     FOR VALUE RECEIVED, 3226509 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability company, as
the “Company”, promises to pay to MAISON MAZEL LTD. (formerly known as 1236929 ALBERTA
LTD.), an Alberta corporation, as “Payee”, in lawful money of the United States of America,
the principal sum of THIRTY-FIVE MILLION AND NO/100 DOLLARS (US$35,000,000.00), together with
accrued interest thereon at such rates and at such time or times as provided for herein. As more
fully set forth in Section 17 hereof, this Amended and Restated Subordinated Promissory
Note (this “Note”) (i) restates and amends that certain Promissory Note dated September 18,
2008 issued by the Company to the Payee in the original principal amount of US$35,000,000.00 (the
“Original Note”) pursuant to that certain Amended and Restated Share Purchase Agreement by
and among ION Geophysical Corporation, a Delaware corporation and the indirect owner of all of the
outstanding equity interests of the Company (“ION”), the Payee, ARAM Systems Ltd., Canadian
Seismic Rentals Inc. and the other “Sellers” (as that term is defined therein), dated as of
September 17, 2008 (such agreement, as amended prior to the date hereof and as it may be further
amended, restated, modified or supplemented, being referred to herein as the “Share Purchase
Agreement”), and (ii) adds the subordination provisions contained in Section 7 hereof.

     Capitalized terms used herein that are not defined in this Note shall have the respective
meanings assigned to such terms in the Share Purchase Agreement.

     The following is a statement of the rights of Payee and the conditions to which this Note is
subject, and to which the Payee hereof, by the acceptance of this Note, agrees:

     1. Definitions. In addition to the terms specifically defined elsewhere in this Note,
the following capitalized terms as used herein have the following meanings:

          (a) “Company” means the entity executing this Note and its successors and permitted
assignees.

 

 

          (b) “Payee” shall mean the Person specified in the introductory paragraph of this
Note, or any Person who shall at such time be the permitted assignee of this Note.

          (c) “Senior Credit Facility” shall mean that certain Amended and Restated Credit
Agreement, dated as of July 3, 2008, by and among ION and ION International S.à r.l, as the
borrowers, the Subsidiaries of ION party thereto as guarantors, the financial institutions party
thereto as lenders, HSBC Bank USA, N.A., as administrative agent, and the other agents named
therein party thereto, as such agreement has been amended prior to the date of this Note, and as it
may be further amended, restated, modified or supplemented.

          (d) “Senior Obligations” shall mean all principal (and premium, if any), interest
(including, without limitation, interest occurring after an insolvency, bankruptcy or similar
proceeding, whether or not such interest is an allowed claim in any such proceeding), amounts
reimbursable, fees, expenses, penalties, indemnities, costs of enforcement and other amounts due or
that may become due in connection with (i) the obligations of ION and its Subsidiaries under the
Senior Credit Facility, (ii) the obligations of ION and certain of its Subsidiaries under that
certain Bridge Loan Agreement, dated as of December 30, 2008, by and among ION, as the borrower,
the Subsidiaries of ION party thereto as guarantors, the financial institutions party thereto as
lenders, and Jefferies Finance LLC, as administrative agent (as amended, restated, supplemented or
otherwise modified from time to time, the “Bridge Loan Facility”), (iii) the liabilities of
ION and its Subsidiaries with respect to capital leases and obligations arising pursuant to the
‘Sale/Leaseback Agreement’ (as such term is defined in the Senior Credit Facility), (iv) all
guaranties by ION and its Subsidiaries of the obligations described in clauses (i) – (iii) above,
and (v) any debentures, notes or other evidence of indebtedness issued in exchange for, or in the
refinancing of, such Senior Obligations, or any indebtedness arising from the payment and
satisfaction of any such Senior Obligations by a guarantor.

          (e) “Subordinated Obligations” shall mean all obligations with respect to this Note,
including, without limitation, principal, premium, if any, interest payable pursuant to the terms
of this Note (including, without limitation, upon acceleration or otherwise), together with and
including any amounts received or receivable upon the exercise of rights of action (including,
without limitation, claims for damages) or otherwise in respect of this Note.

     2. Interest Accrual. Subject to the provisions of Section 7 hereof, the
Company promises to pay interest in accordance with Section 3 hereof on the unpaid
principal amount hereof for the period from (and including) the date of the making of the Original
Note, to (but excluding) the date that the Indebtedness under this Note shall be paid in full.
Interest on the unpaid principal amount of this Note has accrued at the rate of nine percent (9%)
per annum (based on a year of 365 or 366 days, as the case may be) for the period that commenced
September 18, 2008, until (and including) December 17, 2008; and commencing on (and including)
December 18, 2008, until (and including) December 21, 2008, interest on the unpaid principal amount
of this Note has accrued at a rate equal to twelve percent (12%) per annum; and commencing on (and
including) December 22, 2008, interest on the unpaid principal amount of this Note shall accrue
thereafter until paid at a rate equal to fifteen percent (15%) per annum.

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     3. Payment of Interest and Principal. The indebtedness under this Note shall be
payable as set forth herein.

          (a) Interest. Subject to the provisions of Section 7 hereof, the interest
accrued on this Note shall be payable quarterly on March 31, June 30, September 30 and December 31
of each year, commencing on March 31, 2009.

          (b) Principal. Subject to the provisions of Section 7 hereof, the outstanding
principal balance of this Note, together with all accrued and unpaid interest thereon, shall be due
and payable on September 17, 2013 (the “Maturity Date”).

          (c) Prepayment. This Note may be prepaid, at any time, in whole or in part, with each
such prepayment being applied first to accrued and unpaid interest, and then to outstanding
principal, upon one (1) Business Day’s prior written notice, without premium or penalty.

          (d) Business Day. Whenever any payment to be made hereunder shall be stated to be due
on a date that is not a Business Day, the payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the amount of interest due
hereunder.

     4. Right of Set-Off. The Company shall have the right to withhold and set off against
any amount due hereunder, the amount of (a) any indemnification of money Damages to which the
Company (or any Buyer Indemnified Person) is entitled under Article 8 of the Share Purchase
Agreement, but only subject to and in accordance with the terms of Section 8.11(a) and (b)
thereof and with Section 2 of the Release Agreement dated as of December 30, 2008 made by
and among ION, the Payee, ARAM Systems Ltd., Canadian Seismic Rentals Inc. and the other Sellers
(the “Release Agreement”), and (b) any purchase price adjustments payable by Sellers
pursuant to Section 1.5 of the Share Purchase Agreement, but only subject to and in
accordance with the terms of Section 1.5(a)(v) thereof and with Section 3 of the
Release Agreement.

     5. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

          (a) Failure to Pay. The Company shall fail in any material respect to pay (i) any principal
payment on the due date thereof as provided herein or (ii) any interest or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten
(10) Business Days of the Company’s receipt of Payee’s written notice to the Company of such
failure to pay; provided, however, that any exercise by the Company in good faith of its
right of setoff pursuant to Section 4 above, whether or not ultimately determined to be
justified, shall not constitute an Event of Default hereunder;

          (b) Breach of Covenants. The Company shall fail in any material respect to observe or perform
any covenant, obligation, condition or agreement contained in this Note and (i) such failure shall
continue for thirty (30) days, or (ii) if such failure is not curable within such thirty (30) day
period, but is reasonably capable of cure within sixty (60) days, then either (A) such failure
shall continue for sixty (60) days or (B) the Company shall not have commenced
curative measures in a manner reasonably satisfactory to Payee within such initial thirty (30)
day period;

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          (c) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated in full or in part, (v) become “insolvent” (as such
term may be defined or interpreted under applicable statutory authority), (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced against it or (vii) take any action
for the purpose of effecting any of the foregoing;

          (d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of the Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency
or other similar law now or hereafter in effect shall be commenced, and an order for relief entered
or such proceeding shall not be dismissed or discharged within sixty (60) days of such
commencement; or

          (e) Senior Obligations. ION shall be in default under the terms of any Senior Obligations
where (i) such default has resulted in the acceleration of such Senior Obligations prior to its
stated maturity, and (ii) the principal amount at maturity of such Senior Obligations under which
there has been such a default aggregates $20.0 million or more.

     6. Rights of Payee upon Default. Upon the occurrence or existence of any Event of
Default (other than any Event of Default referred to in Sections 5(c) or 5(d)
hereof), and at any time thereafter during the continuance of such Event of Default, Payee may, by
written notice to the Company, declare all outstanding obligations payable by the Company hereunder
to be immediately due and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived, anything contained herein to the contrary
notwithstanding; provided, that so long as any Senior Obligations shall be outstanding,
such acceleration shall not be effective until the earlier of (i) an acceleration of any such
Senior Obligations in accordance with the agreements or instruments evidencing such Senior
Obligations or (ii) thirty (30) days after receipt by the Company and each holder of outstanding
Senior Obligations (or in the case of holders of Senior Obligations evidenced by the Senior Credit
Facility or the Bridge Loan Facility, the applicable administrative agent thereunder) of written
notice of such acceleration. Upon the occurrence or existence of any Event of Default described in
Sections 5(c) or 5(d) hereof, immediately and without notice, all outstanding
obligations payable by the Company hereunder shall automatically become immediately due and
payable, without presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein. In addition to the foregoing remedies, upon
the occurrence or existence of any Event of Default, Payee may exercise any other right, power
or remedy granted to it otherwise permitted to it by law, either by suit in equity or by
action at law, or both.

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     7. Subordination. The payment of the Subordinated Obligations is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the
prior payment in full in cash of all of the Senior Obligations, whether outstanding on the date
hereof or hereafter incurred, of ION and its Subsidiaries.

          (a) Insolvency Proceedings. If there shall occur any receivership, insolvency, assignment for
the benefit of creditors, bankruptcy, reorganization, or arrangements with creditors (whether or
not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation, or any other marshalling of the assets and liabilities of the
Company, (i) no amount shall be paid by the Company in respect of any Subordinated Obligations at
the time outstanding, unless and until all Senior Obligations then outstanding shall have
previously been paid in full in cash, and (ii) no claim or proof of claim shall be filed with
respect to the Company by or on behalf of the Payee, which claim or proof of claim shall assert any
right to receive any payments in respect of any Subordinated Obligations, except subject to the
prior payment in full in cash of all Senior Obligations then outstanding. Upon any distribution to
creditors of the Company in any receivership, insolvency, assignment for the benefit of creditors,
bankruptcy, reorganization, or arrangements with creditors (whether or not pursuant to bankruptcy
or other insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation, or any other marshalling of the assets and liabilities of the Company, (A) the holders
of Senior Obligations will be entitled to receive payment in full in cash of all Senior Obligations
then outstanding (including interest after the commencement of any such proceeding at the rate
specified in the agreement evidencing such applicable Senior Obligations) before the Payee will be
entitled to receive any payment with respect to the Subordinated Obligations, and (B) until all
Senior Obligations are paid in full in cash, any distribution to which the Payee would be entitled
but for this Section 7 shall be made to the holders of Senior Obligations as their
interests may appear.

          (b) Default on Senior Obligations. If there shall occur an “Event of Default” (as defined in
any agreement evidencing any Senior Obligations), then, unless and until such “Event of Default”
shall have been cured or waived or shall have ceased to exist, or all Senior Obligations shall have
previously been paid in full in cash, no payment shall be made in respect of any Subordinated
Obligations.

          (c) Acceleration of Securities. If payment of any Subordinated Obligations is accelerated
because of an Event of Default, the Company shall promptly notify holders of Senior Obligations (or
in the case of holders of Senior Obligations evidenced by the Senior Credit Facility or Bridge Loan
Facility, the applicable administrative agent thereunder) of such acceleration.

          (d) Further Assurances. By acceptance of this Note, the Payee agrees to execute and deliver
any customary forms of a subordination agreement or agreements (or similar document or instrument)
as may be requested from time to time by holders of Senior Obligations, and as a condition to the
Payee’s rights hereunder, the Company may require that
Payee execute any form of subordination agreement or agreements or similar document or
instrument.

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          (e) Other Indebtedness. Indebtedness and other obligations of ION and its Subsidiaries which
do not constitute Senior Obligations shall not be senior in any respect to any Subordinated
Obligations, unless expressly consented to in writing by the Payee and the holders of the Senior
Obligations.

          (f) Subrogation. Subject to the payment in full in cash of all Senior Obligations, the Payee
shall be subrogated to the rights of the holder(s) of such Senior Obligations (to the extent of the
payments or distributions made to the holder(s) of such Senior Obligations pursuant to the
provisions of this Section 7) to receive payments and distributions of assets of the
Company applicable to the Senior Obligations. No such payments or distributions applicable to the
Senior Obligations shall, as between the Company and its creditors, other than the holders of
Senior Obligations and the Payee, be deemed to be a payment by the Company on account of any
Subordinated Obligations; and for purposes of such subrogation, no payments or distributions to the
holders of Senior Obligations to which the Payee would be entitled (except for the provisions of
this Section 7) shall, as between the Company and its creditors, other than the holders of
Senior Obligations and the Payee, be deemed to be a payment by the Company on account of the Senior
Obligations.

          (g) No Impairment. Subject to the rights of the holders of Senior Obligations under this
Section 7 to receive cash, securities or other properties otherwise payable or deliverable to the
Payee of any Subordinated Obligations, nothing contained in this Section 7 shall impair, as
between the Company and Payee, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Payee the principal hereof, interest hereon and any other Subordinated
Obligations as and when the same shall become due and payable, or shall prevent the Payee, upon
default hereunder, from exercising all rights, powers and remedies otherwise provided herein or by
applicable law.

          (h) When Distribution Must Be Paid Over. If, notwithstanding Sections 7(a) and
7(b), any payment or distribution of assets shall be received by the Payee on account of,
or with respect to any Subordinated Obligations at any time when (i) the making of such payment or
distribution is otherwise prohibited under this Section 7 and (ii) solely with respect to
any such payment or distribution in respect of scheduled payments of interest, the Payee shall have
(A) actual knowledge of the occurrence of any event described in Section 7(a) or
7(b) or (B) been given written notice of any such event by the Company, ION or any holder
of Senior Obligations (or its agent or other representative) within 89 days of the Payee’s receipt
of any such payment or distribution in respect of any such scheduled payment of interest, such
payment or distribution shall be held in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Obligations as their interests may
appear for application to the payment of all Senior Obligations remaining unpaid to the extent
necessary to pay such Senior Obligations in full in cash in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of Senior
Obligations.

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          (i) Lien Subordination. Any security interest, lien, charge or encumbrance of Payee, whether
now or hereafter existing in connection with any Subordinated Obligations, on any assets or
property of the Company or any proceeds or revenues therefrom which Payee may have at any time as
security for any Subordinated Obligations, shall be subordinate to all security interests, liens,
charges or encumbrances now or hereafter granted to a holder of Senior Obligations by the Company
or by law, notwithstanding the date, order or method of attachment or perfection of any such
security interest, lien, charge or encumbrance or the provisions of any applicable law.

          (j) Reliance of Holders of Senior Obligations. Payee, by its acceptance hereof, shall be
deemed to acknowledge and agree that the foregoing subordination provisions are, and are intended
to be, an inducement to and as consideration for each holder of Senior Obligations, whether such
Senior Obligations was created or acquired before or after the creation of the indebtedness
evidenced by this Note or any of the other Subordinated Obligations, and each such holder of Senior
Obligations shall be deemed conclusively to have relied on such subordination provisions in
acquiring and holding, or in continuing to hold, such Senior Obligations.

          (k) Miscellaneous. The provisions of this Section 7 shall inure to the benefit of the
holders of Senior Obligations and each of their respective successors and assigns, and shall be
binding upon each of the Company, the Payee and their respective successors and assigns. Each of
the holders of Senior Obligations is intended to be, and is hereby made, express and intended third
party beneficiary of the terms hereof and may enforce the terms of this Section 7 as if a
party hereto, and no amendment to the terms of this Section 7 shall be effective as against
any given holder of Senior Obligations without its prior written consent. Moreover, any holder of
Senior Obligations may, but shall not be obligated to, give Payee notice of the creation or
existence of the holder of Senior Obligations held by it; however, such notice shall not be
necessary in order for the holder of Senior Obligations to enforce the terms or claim the benefits
of this Section 7. This Section 7 shall be a continuing agreement and shall be
irrevocable and shall remain in full force and effect until the date on which all of the Senior
Obligations shall have been discharged in full in cash by complete payment in accordance with the
terms thereof. The provisions of this Section 7 shall apply in favor of any holder of
Senior Obligations now or hereafter created. No action which any holder of Senior Obligations or
ION, the Company or any of their respective Subsidiaries may take or refrain from taking with
respect to the Senior Obligations, including any amendments thereto, shall affect the provisions of
this Section 7 or the obligations of the Company or any Payee hereunder. No right of any
holder of Senior Obligations or any future holder of any of the Senior Obligations shall at any
time in any way be prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any holder of Senior Obligations, or by any
noncompliance by the Company with the terms, provisions and covenants of this Section 7,
regardless of any knowledge thereof which any holder of Senior Obligations may have or otherwise be
charged with. As used in this Section 7, a “distribution” or “payment” may consist of a
distribution, payment or other transfer of assets by or on behalf of the Company (including,
without limitation, a repayment, prepayment, redemption, repurchase or other acquisition of this
Note) from any source, of any kind or character, whether in cash, securities or other property, by
setoff or otherwise.

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     8. Guarantee. The payment of principal of and interest on this Note is guaranteed by
ION pursuant to the terms of that certain Amended and Restated Guaranty, dated as of the date
hereof (as amended, restated or otherwise modified from time to time), and Payee shall be entitled
to the benefits of such Amended and Restated Guaranty.

     9. Special Company Covenants.

          (a) The Company agrees that until all outstanding indebtedness under this Note is paid in
full, the covenant set forth in Section 6.01 of the Senior Credit Facility (or any
comparable covenant with respect to the incurrence, assumption or maintenance
of indebtedness contained in any senior revolving credit facility of ION and its Subsidiaries that
hereafter replaces the revolving credit facility under the Senior Credit Facility) shall be deemed
to be incorporated herein by reference for the benefit of the Payee, as such covenant may be
amended, waived or modified from time to time (it being the intention of the Company and the Payee
that the Payee shall not have a separate right hereunder to consent to or approve any amendment or
waiver of, or any consent to any deviation from, or any modification of, any such covenant).

          (b) In addition, the Company agrees that if ION incurs indebtedness under any financing that
(i) qualifies as ‘Long Term Junior Financing’ (as such term is defined in the Senior Credit
Facility), (ii) results from a refinancing or replacement of the Senior Credit Facility such that
the aggregate principal indebtedness (including revolving commitments) thereunder would be in
excess of $275,000,000, or (iii) qualifies as unsecured indebtedness for borrowed money evidenced
by notes or debentures, which debt shall have a stated maturity date of not less than five (5)
years after the original date of their issuance and results in total gross cash proceeds to ION of
not less than $45.0 million ($40.0 million after the Bridge Loan Facility has been paid in full),
then the total proceeds from such financing shall also include amounts sufficient to repay in full,
and the Company shall repay in full, the then-outstanding principal of and interest on the
indebtedness under this Note; provided, however, that all amounts outstanding under the Bridge Loan
Facility by ION and its affiliates shall be paid in full prior to or concurrently with such
repayment by the Company hereunder.

     10. Successors and Assigns. Subject to the restrictions on transfer described in
Section 12 below, the rights and obligations of the Payee hereunder shall be binding upon
and benefit the successors, assigns and transferees of the Payee.

     11. Waiver and Amendment. Any provision of this Note may be amended, waived or
modified only upon the prior written consent of the Company and Payee.

     12. Transfer of this Note. This Note shall not be assigned or transferred by Payee
without the express prior written consent of the Company, which consent shall not be unreasonably
withheld; provided, however, that if an Event of Default has occurred and remains uncured, then
Payee’s rights and obligations under this Note shall be freely assignable by Payee so long as Payee
and its assignee comply with all applicable securities laws in relation to such assignment.

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     13. Notices. All notices, requests, demands, claims, instructions and other
communications hereunder shall be in writing. Any notice, request, demand, claim, instruction or
other communication to be given hereunder by either party to the other shall be sent by facsimile
(with confirmation received of the recipient’s number) to the number stated below or shall be
delivered personally or sent by registered or certified mail (postage prepaid and return receipt
requested) to the address stated below.

If to the Company:

c/o ION Geophysical Corporation

2105 CityWest Blvd, Suite 400

Houston, Texas 77042-2839

Attention: R. Brian Hanson

Facsimile: (281) 879-3674

Copy to (which shall not constitute notice):

ION Geophysical Corporation

2105 CityWest Blvd, Suite 400

Houston, Texas 77042-2839

Attention: David L. Roland

Facsimile: (281) 879-3600

and

Mayer Brown LLP

700 Louisiana Street, Suite 3400

Houston, Texas 77002

Attention: Marc H. Folladori

Facsimile: (713) 238-4696

If to Payee:

161 Lochend Drive

Cochrane, Alberta T4C 2H2

Attention: Donald G. Chamberlain

Facsimile: (403) 932-2438

Copy to (which shall not constitute notice):

Borden Ladner Gervais LLP

1000 Canterra Tower

400 Third Avenue S.W.

Calgary, Alberta T2P 4H2

Attention: David C. Whelan

Facsimile: (403) 266-1395

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or at such other facsimile number or address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be deemed to have been
duly given to the party to whom it is directed upon actual receipt by such party. Any notice which
is sent by facsimile or addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed on the date indicated on the
facsimile confirmation or the postal receipt. Any party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.

     14. Payment. All payments hereunder shall be made in lawful money of the United
States of America.

     15. Governing Law. This Note, the Original Note and all actions arising out of or in
connection therewith shall be governed by and construed in accordance with the laws of the Province
of Alberta, without regard to the conflicts of law provisions thereof or of any other jurisdiction.

     16. Submission to Jurisdiction. Each party to this Note irrevocably and
unconditionally attorns to the jurisdiction of the courts of the Province of Alberta in any Action
arising out of or relating to this Note and agrees that all claims in respect of such Action may be
heard and determined in any such court. Each party also agrees not to bring any Action arising out
of or relating to this Note in any other court. Each party waives any objection to venue in any
such Action and any defense of inconvenient forum to the maintenance of any Action so brought and
waives any bond, surety or other security that might be required of any other party with respect
thereto and waives any right to elect trial by jury. Any party may make service on any other party
by sending or delivering a copy of the process to the party to be served at the address and in the
manner provided for the giving of notices in Section 13. Nothing in this Section
16 will affect the right of any party to bring any Action arising out of or relating to this
Note in any other court or to serve legal process in any other manner permitted at Law or in
equity. Each party agrees that a final judgment in any Action so brought shall be conclusive and
may be enforced by Action on the judgment or in any other manner provided at Law or in equity.

     17. Amendment and Restatement of Original Note. The provisions of the Original Note
are, effective as of the date of this Note, hereby amended, modified and supplemented so as to read
as set forth in this note and the provisions of the Original Note, as so amended, modified and
supplemented hereby, are restated in this Note in their entirety. Obligations, rights and
remedies, which as of the date of this Note have arisen under and remain outstanding under the
Original Note, shall, subject only to the effect of the amendments, modifications and supplements
to the Original Note effected by this Note, continue in effect without interruption, impairment,
abatement or prejudice, all in accordance with the provisions set forth herein.

[Signature page follows]

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     IN WITNESS WHEREOF, the Company has caused this Amended and Restated Subordinated Promissory
Note to be issued as of the date first written above.

	 	 	 	 	 	 	 
	 	 	3226509 NOVA SCOTIA COMPANY

a Nova Scotia unlimited liability company (the

“Company”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David L. Roland 	 	 
	

				 

		
	 

	 	Name:
	 	David L. Roland 
	 	 
	 

	 	Title:
	 	Vice President 
	 	 
	 
	 	 	 	 	 	 

ACCEPTED AND AGREED TO BY:

MAISON MAZEL LTD. (the “Payee”)

	 	 	 	 	 
	By:

	 	/s/ Donald G. Chamberlain 	 	 
	 

	 	 	 	 
	Name:
	 	Donald G. Chamberlain 	 	 
	Title:
	 	President 	 	 

-11-exv10w1

Exhibit 10.1

NOVAVAX, INC.

AMENDED AND RESTATED

CHANGE IN CONTROL SEVERANCE BENEFIT PLAN

Section 1. Introduction.

     The Novavax, Inc. Change in Control Severance Benefit Plan (“Plan”) was originally approved by
the Board of Directors (the “Board”) of Novavax, Inc. (the “Company”) and became effective on
August 10, 2005, and was subsequently amended and restated on July 26, 2006. On December 22, 2008,
the Board approved an amendment and restatement of the Plan as set forth herein, effective January
1, 2008 (“Effective Date”). The purpose of the Plan is to provide severance benefits to certain
eligible employees of the Company in the event of their termination of employment in connection
with a Change in Control (as defined herein). This Plan document also is the Summary Plan
Description for the Plan. The amendment and restatement of the Plan is designed to ensure that the
severance benefits payable under the plan are exempt from the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (“Code”).

     Certain capitalized terms used in the Plan are defined in Section 6.

Section 2. Eligibility For Benefits.

     (a) General Rules.

          (i) Subject to the requirements set forth in this Section 2, the Company shall grant benefits
under the Plan to Eligible Employees. “Eligible Employees” include those employees of the Company
who are approved by the Board in its sole and absolute discretion and designated as participants in
this Plan. Employees who have been selected to participate by the Board shall be listed on Exhibit
A to this Plan. At any time the Board may select additional employees to participate in the Plan,
but no employee or other service provider of the Company who has not been specifically approved by
the Board shall be eligible for benefits hereunder.

          (ii) An Eligible Employee shall be eligible for benefits under this Plan if the Eligible
Employee’s employment with the Company terminates due to an Involuntary Termination without Cause
for a reason other than the Eligible Employee’s death or Disability, or as a result of a
Constructive Termination, which in either case occurs: (x) during the period not to exceed
twenty-four (24) months after the effective date of a Change in Control (where the number of months
for a particular Eligible Employee is equal to the period for which he or she is receiving
severance as specified on Exhibit A), or (y) before the effective date of a Change in Control, but
after the first date on which the Board and/or senior management of the Company has entered into
formal negotiations with a potential acquirer that results in the consummation of a Change in
Control (provided, however, that in no event shall a termination of employment occurring more than
one (1) year before the effective date of a Change in Control be covered by this Plan).

 

 

     (b) Other Requirements.

          (i) In order to be eligible to receive benefits under the Plan, an Eligible Employee must
execute a general waiver and release of all legal claims against the Company and its Affiliates and
their representatives on a form satisfactory to the Company.

          (ii) Any Change in Control that triggers the payment of benefits under this Plan must occur
during the term of this Plan as specified in Section 5(b).

     (c) Exceptions. Notwithstanding the foregoing:

          (i) An Eligible Employee who is eligible for Change in Control severance benefits under any
individually negotiated employment contract or agreement between the Eligible Employee and the
Company shall be deemed to have elected to receive severance benefits under this Plan and shall not
be eligible for any severance benefits under such other employment contract or agreement (unless
expressly provided otherwise by the Board in a manner that does not violate the requirements of
Section 409A of the Code).

          (ii) An Eligible Employee whose employment is terminated by the Company for Cause at any time,
who terminates employment voluntarily for a reason other than a Constructive Termination (including
termination of employment because of the Eligible Employee’s death or Disability), whose employment
terminates for any reason, whether initiated by the Eligible Employee or the Company, more than
twenty-four (24) months after the effective date of the Change in Control (or, if less, the number
of months designated by the Board on Exhibit A for which the Eligible Employee is entitled to
severance), or before the beginning of formal negotiations with a potential acquirer of the
Company’s business or more than one year before the effective date of Change in Control (even if
formal negotiations with a potential acquirer have begun), shall not be eligible to receive Change
in Control severance benefits under this Plan (and the Eligible Employee’s participation in this
Plan shall terminate at that time).

Section 3. Amount and Type Of Benefits; Limitations and Exceptions.

     Benefits payable under the Plan are as follows and are subject to the following limitations
and exceptions:

     (a) The Company, in its sole discretion, may grant to an Eligible Employee, and his or her
dependents and beneficiaries (if applicable) any of the following benefits or combination thereof:

          (i) In a single payment, any amount up to (A) twenty-four (24) months of such Eligible Employee's Pay,
if such Eligible Employee is the Chief Executive Officer of the Company, (B) twelve (12) months of such Eligible Employee's Pay, if such Eligible Employee is a Vice President or other executive officer, (C) six (6) months of
such Eligible Employee's Pay, if such Eligible Employee is any Eligible Employee that is not the Chief Executive Officer, a Vice President or executive Officer, and (D) one hundred percent (100%) of such Eligible Employee's target
Bonus Amount; provided that amounts paid under A, B and C shall not be additive but shall be alternative;

          (ii) Up to twenty-four (24) months of any medical, dental, vision and hospitalization
insurance benefits, beginning immediately following the Termination Date, to the extent an Eligible
Employee elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
and remains eligible for such COBRA coverage; such benefits to be provided on terms and conditions
no less favorable to the Eligible Employee than those in effect immediately prior to the
Termination Date;

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          (iii) A period of up to one (1) year, or the remaining time of the term of grant, if shorter,
after his or her Termination Date during which to exercise otherwise vested exercisable, and
unexpired stock options.

     (b) Such benefits shall be set forth in the applicable Benefit Schedule in substantially the
form attached as Exhibit A.

     (c) All fringe benefits not otherwise covered by this Plan and the attached Benefits Schedule
(such as, but not limited to, pension/retirement, life insurance, disability coverage and other
welfare benefits) shall terminate as of the employee’s Termination Date (except to the extent that
the specific plans or programs provide for extended coverage or if any conversion privilege is
available thereunder).

     (d) Parachute Payments.

          (i) Notwithstanding the above, if any payment or benefit that an Eligible Employee would
receive under this Plan, when combined with any other payment or benefit he or she receives that is
contingent upon a Change in Control (“Payment”) would (i) constitute a “parachute payment” within
the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise
tax imposed by Section 4999 of the Code (“Excise Tax”), then such Payment shall be either (x) the
full amount of such Payment or (y) such lesser amount (with Payments being reduced in the order and
priority established by the Board) as would result in no portion of the Payment being subject to
the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal,
state and local employment taxes, income taxes, and the Excise Tax results in the Eligible
Employee’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding
that all or some portion of the Payment may be subject to the Excise Tax. The Eligible Employee
shall be solely responsible for the payment of all personal tax liability that is incurred as a
result of the payments and benefits received under this Plan, and Participant will not be
reimbursed by the Company for any such payments.

          (ii) The Company shall attempt to cause its accountants to make all of the determinations
required to be made under Section 3(d)(i), or, in the event the Company’s accountants will not
perform such service, the Company may select another professional services firm to perform the
calculations. The Company shall request that the accountants or firm provide detailed supporting
calculations both to the Company and Eligible Employee prior to the Change in Control if
administratively feasible or subsequent to the Change in Control if events occur that result in
parachute payments to the Eligible Employee at that time. For purposes of making the calculations
required by Section 3(d), the accountants or firm may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good faith determinations
concerning the application of the Code. The Company and Eligible Employee shall furnish to the
accountants or firm such information and documents as the accountants or firm may reasonably
request in order to make a determination under this Section 3(d). The Company shall bear all costs
the accountants or firm may reasonably incur in connection with any calculations contemplated by
Section 3(d). Any such determination by the Company’s accountants or other firm shall be binding
upon the Company and Eligible Employee, and the Company shall have no liability to Eligible
Employees for the determinations of its accountants or other firm.

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     (e) Any provisions contained in the Company’s stock option or equity plans, or contained in an
Eligible Employee’s individual stock option agreement with the Company, regarding the accelerated
vesting or exercisability of stock options or awards upon a Change in Control shall continue to
apply and may be supplemented by, but shall not be superseded by, the terms of this Plan.

Section 4. Time Of Payment And Form Of Benefit; Indebtedness.

     (a) Cash benefits under this Plan as described in the attached Benefit Schedule, less
applicable tax withholdings, shall be paid to an Eligible Employee in a lump sum. The Company
reserves the right to determine the timing of such payments, provided, however, that all payments
under this Plan shall be completed within sixty (60) days after an Eligible Employee’s Termination
Date or, in the case where an Eligible Employee’s Termination Date precedes a Change in Control,
sixty (60) days after the effective date of the Change in Control (subject to the provisions
requiring later payment set forth in Section 4(c) below). Notwithstanding the above, no payment
shall be made under this Plan prior to the last day of any waiting period or revocation period as
required by applicable law in order for the general waiver and release of legal claims required by
Section 2(b)(i) of this Plan to be effective; provided, however, that in any event such payment is
made no later than two and one-half (2-1/2) months following the calendar year in which the later
of the Termination Date or effective date of the Change in Control occurs.

     (b) If an Eligible Employee is indebted to the Company at his or her payment date, the Company
reserves the right to offset any payments under the Plan by the amount of such indebtedness.

Section 5. Right To Interpret Plan; Amend And Terminate; Binding Nature Of Plan.

     (a) Exclusive Discretion. The Plan Administrator (defined below) shall have the exclusive
discretion and authority to establish rules, forms, and procedures for the administration of the
Plan, and to construe and interpret the Plan and to decide any and all questions of fact,
interpretation, definition, computation or administration arising in connection with the operation
of the Plan, including, but not limited to, the eligibility to participate in the Plan and the
amount of benefits paid under the Plan. The rules, interpretations, computations and other actions
of the Plan Administrator shall be binding and conclusive on all persons.

     (b) Term Of Plan; Amendment Or Termination.

          (i) The Board reserves the right to amend or modify the terms of the Plan or the benefits
provided hereunder at any time, provided, however, that any such amendment or modification that
diminishes or otherwise adversely affects the rights or benefits of an Eligible Employee under the
Plan shall only become effective upon the written consent of any such affected Eligible Employee.
The Board may terminate the Plan at any time with the written consent of the Eligible Employees, or
may terminate a particular Eligible Employee’s participation in the Plan or entitlement to benefits
with the written consent of such Eligible Employee. Notwithstanding the above, the Plan may be
terminated by the Board in its discretion, without the consent of any Eligible Employee, at any
time after the date that is twelve (12) months after a Change in Control event (or twenty-four
months in the case of the Chief Executive Officer), provided that all unpaid severance benefits
related to such Change in Control

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have been paid to Eligible Employees whose Termination Date occurred prior to the termination
of the Plan.

          (ii) Eligible Employees shall have the right to be promptly notified that any action amending
or terminating the Plan has been taken.

     (c) Binding Effect On Successor To Company. This Plan shall be binding upon any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, or upon any successor to the Company as
the result of a Change in Control, and any such successor or assignee shall be required to perform
the Company’s obligations under the Plan, in the same manner and to the same extent that the
Company would be required to perform if no such succession or assignment or Change in Control had
taken place. In such event, the term “Company,” as used in the Plan, shall mean the Company as
hereinafter defined and any successor or assignee as described above which by reason hereof becomes
bound by the terms and provisions of this Plan, and the term “Board” shall refer to the Board of
Directors of any such surviving or continuing entity.

Section 6. Definitions.

     Capitalized terms used in this Plan, unless defined elsewhere in this Plan, shall have the
following meanings:

     (a) Accrued Compensation means an amount which includes all amounts earned or accrued through
the Termination Date but not paid as of the Termination Date, including (i) Pay, (ii) reimbursement
for reasonable and necessary expenses incurred by the Eligible Employee on behalf of the Company
during the period ending on the Termination Date, (iii) unused vacation pay, and (iv) any earned
and accrued bonuses and incentive compensation as of the Termination Date (but not including any
pro rata portion of the Bonus Amount).

     (b) Affiliate means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms as defined in Sections 424(e) and (f), respectively, of
the Code.

     (c) Bonus Amount means one hundred percent (100%) of the target annual performance bonus
amount that an Eligible Employee is eligible to receive for the period that includes the
Termination Date. If an Eligible Employee’s bonus is calculated on a monthly or quarterly basis,
the maximum bonus award for these purposes shall be the amount determined by annualizing the
maximum monthly or quarterly payment.

     (d) Cause means (i) conviction of, a guilty plea with respect to, or a plea of nolo contendere
to a charge that the Eligible Employee has committed a felony under the laws of the United States
or of any state or a crime involving moral turpitude, including, but not limited to, fraud, theft,
embezzlement or any crime that results in or is intended to result in personal enrichment at the
expense of the Company; (ii) material breach of any agreement entered into between the Eligible
Employee and the Company that impairs the Company’s interest therein; (iii) willful misconduct,
significant failure to perform the Eligible Employee’s duties, or gross neglect by the Eligible
Employee of the Eligible Employee’s duties; or (iv) engagement in any activity that constitutes a
material conflict of interest with the Company.

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     (e) Change in Control means (i) a sale, lease, license or other disposition of all or
substantially all of the assets of the Company, (ii) a consolidation or merger of the Company with
or into any other corporation or other entity or person, or any other corporate reorganization, in
which the shareholders of the Company immediately prior to such consolidation, merger or
reorganization, own less than fifty percent (50%) of the outstanding voting power of the surviving
entity and its parent following the consolidation, merger or reorganization, or (iii) any
transaction or series of related transactions involving a person or entity, or a group of
affiliated persons or entities (but excluding any employee benefit plan or related trust sponsored
or maintained by the Company or an Affiliate) in which such persons or entities that were not
shareholders of the Company immediately prior to their acquisition of Company securities as part of
such transaction become the owners, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or similar transaction and
other than as part of a private financing transaction by the Company, or (iv) a Change in the
Incumbent Board. For purposes of this Plan, a Change in the Incumbent Board shall occur if the
existing members of the Board on the date this Plan is initially adopted by the Board (the
“Incumbent Board”) cease to constitute at least a majority of the members of the Board,
provided, however, that any new Board member shall be considered a member of the
Incumbent Board for this purpose if the appointment or election (or nomination for such election)
of the new Board member was approved or recommended by a majority vote of the members of the
Incumbent Board who are then still in office.

     (f) Code means the Internal Revenue Code of 1986, as amended.

     (g) Company means Novavax, Inc., a Delaware corporation, and any successor as provided in
Section 5(d) hereof.

     (h) Constructive Termination means a termination initiated by an Eligible Employee because any
of the following events or conditions have occurred:

          (i) a change in the Eligible Employee’s position or responsibilities (including reporting
responsibilities) which represents a material adverse change from the Eligible Employee’s position
or responsibilities as in effect, immediately preceding the effective date of a Change in Control
or at any time thereafter; the assignment to the Eligible Employee of any duties or
responsibilities which are materially and adversely inconsistent with the Eligible Employee’s
position or responsibilities as in effect immediately preceding the effective date of a Change in
Control or at any time thereafter; except in connection with the termination of the Eligible
Employee’s employment for Cause or the termination of an Eligible Employee’s employment because of
an Eligible Employee’s Disability or death, or except as the result of a voluntary termination by
the Eligible Employee other than as a result of a Constructive Termination;

          (ii) a material reduction in the Eligible Employee’s Pay or any material failure to pay the
Eligible Employee any compensation or benefits to which the Eligible Employee is entitled within
five (5) days of the date due;

          (iii) the Company’s requiring the Eligible Employee to relocate his principal worksite to any
place outside a fifty (50) mile radius of the Eligible Employee’s current worksite,

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except for reasonably required travel on the business of the Company or its Affiliates which
is not materially greater than such travel requirements prior to the Change in Control;

          (iv) the failure by the Company to continue in effect (without reduction in benefit level
and/or reward opportunities) any material compensation or employee benefit plan in which the
Eligible Employee was participating immediately preceding the effective date of a Change in Control
or at any time thereafter, unless such plan is replaced with a plan that provides substantially
equivalent compensation or benefits to the Eligible Employee;

          (v) the insolvency or the filing (by any party, including the Company) of a petition for
bankruptcy of the Company, which petition is not dismissed within sixty (60) days;

          (vi) any material breach by the Company of any provision of this Plan;

          (vii) the failure of the Company to obtain an agreement, from any successors and assigns to
assume and agree to perform the obligations created under this Plan as a result of a Change in
Control, as contemplated in Section 5 hereof.

     An Eligible Employee must notify the Company of the circumstances on which a Constructive
Termination is purportedly based within ninety (90) days of the initial occurrence of any such
event. The Company shall have thirty (30) days from the date of such notice to cure such event or
condition.

     (i) Disability means the permanent and total disability of a person within the meaning of
Section 409A(a)(2)(C) of the Code.

     (j) Eligible Employee means an individual specified in Section 2(a) who is eligible to
participate in the Plan.

     (k) Involuntary Termination without Cause means the termination of an Eligible Employee’s
employment which is initiated by the Company for a reason other than Cause.

     (l) Pay means the Eligible Employee’s base pay (excluding incentive pay, premium pay,
commissions, overtime, bonuses and other forms of supplemental or variable compensation) at the
rate in effect during the regularly scheduled payroll period coincident with the Change in Control
or with the Termination Date, whichever is greater.

     (m) Plan means this Novavax, Inc. Change in Control Severance Benefit Plan.

     (n) Termination Date means the last date on which the Eligible Employee is in active pay
status as an employee with the Company. A holiday cannot constitute a Termination Date unless the
Eligible Employee actively provided services for the Company on such holiday.

Section 7. No Implied Employment Contract.

     The Plan shall not be deemed (i) to give any employee or other person any right to be retained
in the employ of the Company, or (ii) to interfere with the right of the Company to discharge any
employee or other person at any time and for any reason, which right is hereby reserved.

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Section 8. Legal Construction.

     This Plan is intended to be governed by and shall be construed in accordance with the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and, to the extent not preempted by
ERISA, the laws of the State of Pennsylvania.

Section 9. Claims, Inquiries And Appeals.

     (a) Claims for Benefits and Inquiries. Any claim for benefits, inquiries about the Plan or
inquiries about present or future rights under the Plan must be submitted to the Plan Administrator
in writing by an Eligible Employee (or his or her authorized representative). The Plan
Administrator is the Compensation Committee of the Board, or its designee, and claims and inquiries
should be directed to:

Novavax, Inc.

9920 Belward Campus Drive

Rockville, MD 20850

Attn: Vice President of Human Resources, the Chief Executive Officer, or the Chairman of the
Compensation Committee of the Board

     (b) Denial of Claims. In the event that any claim for benefits is denied in whole or in part,
the Plan Administrator must provide the claimant with written or electronic notice of the denial of
the claim, and of the claimant’s right to review the denial. Any electronic notice will comply
with the regulations of the U.S. Department of Labor. The notice of denial will be set forth in a
manner designed to be understood by the claimant and will include the following:

          (i) the specific reason or reasons for the denial;

          (ii) references to the specific Plan provisions upon which the denial is based;

          (iii) a description of any additional information or material that the Plan Administrator
needs to complete the review and an explanation of why such information or material is necessary;
and

          (iv) an explanation of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the applicant’s right to bring a civil action under Section
502(a) of ERISA following a denial on review of the claim, as described in Section 9(d) below.

     This notice of denial will be given to the claimant within ninety (90) days after the Plan
Administrator receives the claim, unless special circumstances require an extension of time, in
which case, the Plan Administrator has up to an additional ninety (90) days for processing the
claim. If an extension of time for processing is required, written notice of the extension will be
furnished to the claimant before the end of the initial ninety (90) day period.

     This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the claim.

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     (c) Request for a Review. Any person (or that person’s authorized representative) for whom a
claim for benefits is denied, in whole or in part, may appeal the denial by submitting a request
for a review to the Plan Administrator within sixty (60) days after the claim is denied. A request
for a review shall be in writing and shall be addressed to:

Novavax, Inc.

9920 Belward Campus Drive

Rockville, MD 20850

Attn: Vice President of Human Resources, the Chief Executive Officer, or the Chairman of the
Compensation Committee of the Board

A request for review must set forth all of the grounds on which it is based, all facts in support
of the request and any other matters that the claimant feels are pertinent. The claimant (or his
or her representative) shall have the opportunity to submit (or the Plan Administrator may require
the claimant to submit) written comments, documents, records, and other information relating to his
or her claim. The claimant (or his or her representative) shall be provided, upon request and free
of charge, reasonable access to, and copies of, all documents, records and other information
relevant to his or her claim. The review shall take into account all comments, documents, records
and other information submitted by the claimant (or his or her representative) relating to the
claim, without regard to whether such information was submitted or considered in the initial
benefit determination.

     (d) Decision on Review. The Plan Administrator will act on each request for review within
sixty (60) days after receipt of the request, unless special circumstances require an extension of
time (not to exceed an additional sixty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be furnished to the claimant
within the initial sixty (60) day period. This notice of extension will describe the special
circumstances necessitating the additional time and the date by which the Plan Administrator is to
render its decision on the review. The Plan Administrator will give prompt, written or electronic
notice of its decision to the claimant. Any electronic notice will comply with the regulations of
the U.S. Department of Labor. In the event that the Plan Administrator confirms the denial of the
claimant for benefits in whole or in part, the notice will set forth, in a manner calculated to be
understood by the applicant, the following:

          (i) the specific reason or reasons for the denial;

          (ii) references to the specific Plan provisions upon which the denial is based;

          (iii) a statement that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other information relevant to his
or her claim; and

          (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of
ERISA.

     (e) Rules and Procedures. The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its
responsibilities in reviewing benefit claims. The Plan Administrator may require a

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claimant who wishes to submit additional information in connection with an appeal from the
denial of benefits to do so at the claimant’s own expense.

     (f) Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until
the claimant (i) has submitted a written claim for benefits in accordance with the procedures
described by Section 9(a) above, (ii) has been notified by the Plan Administrator that the claim is
denied, (iii) has filed a written request for a review of the claim in accordance with the appeal
procedure described in Section 9(c) above, and (iv) has been notified that the Plan Administrator
has denied the appeal. Notwithstanding the foregoing, if the Plan Administrator does not respond
to a Participant’s claim or appeal within the relevant time limits specified in this Section 9, the
Participant may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.

Section 10. Basis Of Payments To And From Plan.

     All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded, and
benefits hereunder shall be paid only from the general assets of the Company.

Section 11. Other Plan Information.

     (a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to
the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue
Service is 22-2816046. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 550.

     (b) Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for the
purpose of maintaining the Plan’s records is December 31.

     (c) Agent for the Service of Legal Process. The agent for the service of legal process with
respect to the Plan is:

Novavax, Inc.

9920 Belward Campus Drive

Rockville, MD 20850

Attn: Vice President of Human Resources, the Chief Executive Officer, or the Chairman of the
Compensation Committee of the Board

     (d) Plan Sponsor and Administrator. The “Plan Sponsor” is the Company and the “Plan
Administrator” of the Plan is the Compensation Committee of the Board, or its designee. Any
correspondence should be directed to:

Novavax, Inc.

9920 Belward Campus Drive

Rockville, MD 20850

Attn: Vice President of Human Resources, the Chief Executive Officer, or the Chairman of the
Compensation Committee of the Board

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     The Plan Sponsor’s and Plan Administrator’s telephone number is [Telephone Number]. The Plan
Administrator is the named fiduciary charged with the responsibility for administering the Plan.

Section 12. Statement Of ERISA Rights.

     Participants in this Plan (which is a welfare benefit plan sponsored by Novavax, Inc.) are
entitled to certain rights and protections under ERISA. If you are an Eligible Employee, you are
considered a participant in the Plan and, under ERISA, you are entitled to:

     Receive Information About Your Plan and Benefits

     (a) Examine, without charge, at the Plan Administrator’s office and at other specified
locations, such as worksites, all documents governing the Plan and a copy of the latest annual
report (Form 5500 Series) filed by the Plan, if required, with the U.S. Department of Labor and
available at the Public Disclosure Room of the Employee Benefits Security Administration;

     (b) Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and copies of the latest annual report (Form 5500 Series), if required, and
an updated (as necessary) Summary Plan Description. The Administrator may make a reasonable charge
for the copies; and

     (c) Receive a summary of the Plan’s annual financial report. The Plan Administrator is
required by law to furnish each participant with a copy of this summary annual report.

Prudent Actions by Plan Fiduciaries

     In addition to creating rights for Plan participants, ERISA imposes duties upon the people who
are responsible for the operation of the employee benefit plan. The people who operate the Plan,
called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries. No one, including your employer, your union or any
other person, may fire you or otherwise discriminate against you in any way to prevent you from
obtaining a Plan benefit or exercising your rights under ERISA.

Enforce Your Rights

     If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right
to know why this was done, to obtain copies of documents relating to the decision without charge,
and to appeal any denial, all within certain time schedules.

     Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan (note: the Plan
currently is not subject to the requirement of filing such an annual report) and do not receive
them within 30 days, you may file suit in a Federal court. In such a case, the court may require
the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the control of the
Administrator.

     If you have a claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or Federal court. In addition, if you disagree with the Plan’s decision or lack

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thereof concerning the qualified status of a domestic relations order or a medical child
support order, you may file suit in Federal court.

     If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated
against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or
you may file suit in a Federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued to pay these costs and
fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds
your claim is frivolous.

Assistance with Your Questions

     If you have any questions about the Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, or if you need assistance
in obtaining documents from the Plan Administrator, you should contact the nearest office of the
Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
You may also obtain certain publications about your rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security Administration.

Section 13. Execution.

     To record the adoption of this Plan, as amended/and restated, effective as of January 1, 2008,
Novavax, Inc. has caused its duly authorized officer to execute the same this ______ day of
_________, 2008.

	 	 	 	 	 
	 	Novavax, Inc.

 	 
	 	By:  	 	 
	 	 	Title:  Chief Executive Officer 	 
	 	 	 	 
	 

12

 

EXHIBIT A

Benefits Schedule

For Novavax Executives

Under The

Novavax, Inc.

Change In Control Severance Benefit Plan

     The benefits payable under this Plan to an Eligible Employee who qualifies for benefits under
the terms of the Plan are as follows:

1. All Accrued Compensation and the Bonus Amount payable no later than 60 days after the later of
the Termination Date or the effective date of the Change of Control.

2. In a single payment, an amount in cash not to exceed twenty-four (24) months of such Eligible
Employee’s Pay, payable no later than 60 days after the later of the Termination Date or the
effective date of the Change in Control.

3. For a period not to exceed twenty-four (24) months (the “Continuation Period”), as determined by
the Company, the Company shall, at its expense, continue on behalf of the Eligible Employee and the
Employee’s dependents and beneficiaries the following insurance benefits: any medical, dental,
vision and hospitalization benefits provided to the Eligible Employee immediately prior to the
Termination Date; provided, however, that the Company’s obligation to provide continuation coverage
shall arise under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and shall
apply only if the Eligible Employee timely elects COBRA coverage and the Eligible Employee and his
or her dependents are otherwise eligible for benefits under COBRA. Accordingly, in the case of an
Eligible Employee whose Termination Date precedes the effective date of the Change in Control and
who did not timely elect COBRA coverage prior to becoming eligible for benefits under this Plan, no
reimbursements or payments for health care continuation will be made by the Company under this
Section (unless such Eligible Employee has received COBRA benefits following their Termination
Date, and/or is currently receiving those benefits at the time of a Change in Control, in which
case the Company will reimburse any past COBRA premium costs and will pay for future coverage) in
accordance with the terms of this Section for the period specified above.

     The coverage and benefits (including deductibles and costs) provided hereunder during the
Continuation Period shall be no less favorable to the Eligible Employee and the Employee’s
dependents and beneficiaries, than the coverage and benefits made available immediately prior to
the Termination Date. The Company’s obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that the Eligible Employee obtains any such benefits pursuant to a
subsequent employer’s benefit plans, in which case the Company may reduce the coverage of any
benefits it is required to provide the Eligible Employee hereunder as long as the aggregate
coverages and benefits of the combined benefit plans are no less favorable to the Employee than the
coverages and benefits required to be provided hereunder.

 

4. With respect to any stock option held by an Eligible Employee that is outstanding under any
Company stock option or equity incentive plan at the time the Employee becomes eligible for
benefits under this Plan (either at the Termination Date or upon the Change in Control if
termination has already occurred), the Company agrees that, at the time of the Termination Date or
Change in Control, as applicable the Eligible Employee shall be given a period of one (1) year
following his or her Termination Date in which to exercise the options to the extent such options
are otherwise vested and exercisable as of the Termination Date under the terms of the applicable
stock option agreement(s) and plan(s), but provided that no exercise may occur later than the
expiration date of the option as set forth is the applicable option agreement or plan.
Notwithstanding the above, this Section 4 shall not apply to stock options that have expired
(including after any post-termination exercise period) at the time an Eligible Employee becomes
eligible for benefits under the Plan. The foregoing agreement shall not apply to any stock options
that already have a one year or greater post-termination exercise period. The Eligible Employee
acknowledges that, by agreeing to an offer to extend the exercise period in this manner, his or her
stock options may be converted from an incentive stock option into a non-statutory stock option.

5. This Section 5 applies only to stock options issued to an Eligible Employee under any Company
stock option or equity incentive plan after the effective date of the amended and restated version
of this Plan (“New Option Grants”). With respect to any New Option Grants that are outstanding at
the time an Eligible Employee becomes eligible for benefits under this Plan, the vesting and
exercisability of such New Option Grants shall be accelerated in full, and the Option shall be
considered 100% vested, as of the date the Eligible Employee becomes entitled to benefits
hereunder. This provision shall not apply to any stock option that contains a more favorable
vesting provision under the applicable stock option agreement or any individually negotiated
agreement (such as 100% “single trigger” vesting upon a Change in Control). It is possible that an
Eligible Employee may terminate employment, and his or her stock options may have expired (without
being exercised) before a subsequent Change in Control transaction (although the Employee may still
be entitled to benefits under this Plan in that instance). In that case, no accelerated vesting
shall occur under this provision as to an already expired stock option.

2

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