Document:

exv10w34

 

Exhibit 10.34

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.

SUPPLY AGREEMENT

     AGREEMENT, (this “Agreement”) is dated as of October 18, 2005 by and between Novavax, Inc., a
Delaware corporation having its principal place of business at 508 Lapp Road, Malvern, Pennsylvania
19355, (“Novavax” or “Supplier”) and Esprit Pharma, Inc., a Delaware corporation having its
principal place of business at 2 Town Center Boulevard, East Brunswick, New Jersey 08816 (“Esprit”
or “Buyer”). Supplier and Purchaser may be referred to individually as a “Party” or collectively
as the “Parties.”

     WHEREAS, Supplier has been engaged in the of development, manufacture, and supply of a product
to be marketed, distributed and sold under the Estrasorb® brand by Supplier;

     WHEREAS, on the date hereof, Buyer and Supplier also entered into a license agreement for the
license by Supplier to Buyer of certain intellectual property enabling the manufacture sale and use
by Purchaser of topically- or transdermally-administered product containing no active ingredient
other than17ß estradiol (excluding contraceptive products, Selective Estrogen Receptor Modulators
and products administered vaginally, orally, nasally, through the gum or by injection) which
utilize Supplier’s micellar nanoparticle technology in the field of women’s health in product that
is marketed under Supplier’s NDA #21-371 (the “License Agreement”);

     WHEREAS, concurrently with the execution and delivery of this Agreement and the License
Agreement, ESPRIT has executed and delivered to NOVAVAX an $8.0 million promissory note due
December 30, 2005 constituting a portion of the consideration for the License Agreement (the
“Promissory Note”);

     WHEREAS, concurrently with the execution and delivery of this Agreement, the License Agreement
and the Promissory Note, New Enterprise Associates, Domain Associates, LLC and Apax Partners, or
certain of their affiliates (the “Private Equity Investors”) have executed and delivered to NOVAVAX
an agreement to fund Esprit with the principal amount due under the Promissory Note within ten (10)
business days of Esprit’s default of any of its obligations thereunder for the express purpose of
satisfying ESPRIT’s obligations under the Promissory Note; and

     WHEREAS, Buyer desires to have Supplier manufacture Product (as defined in Article 1 below)
under the Estrasorb® brand for sale by Buyer or its designee.

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     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and efficiency of which are
hereby acknowledge, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

     As used throughout this Agreement, each of the following terms shall have the respective
meaning set forth below:

     “Affiliate” of a Party shall mean any entity which directly or indirectly controls, is
controlled by or is under common control with such entity, 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.

     “cGMP” shall mean good manufacturing practices according to 21 CFR Parts 210 and 211.

     “CPI” shall mean United States Department of Labor, Bureau of Labor Statistics, Consumer Price
Index, All Urban Consumers, United States City Average, All Items, (1982-84=100) excluding the food
and energy components, or the successor index that most closely approximates the CPI.

     “Cardinal” shall mean Cardinal Health Inc. as the contract manufacturer of the Product
pursuant to the Cardinal Agreement.

     “Cardinal Agreement” shall mean the letter agreement between Cardinal, Supplier and Buyer of
even date herewith.

     “Cardinal Facility” shall mean Cardinal’s manufacturing facility for the Product located at
3001 Red Lion Rd., Philadelphia, Pa. 10014

     “Damages” shall have the meaning ascribed to such term in Section 16.01.

     “FDA” means the United States Food and Drug Administration and successor bodies.

     “Intellectual Property Rights” shall mean the intellectual property, trade secrets, know-how,
technology and information, whether or not protected by patents, to the extent required in the
reasonable judgment of Supplier to manufacture the Product.

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     “License Agreement” shall mean the license agreement referred to in the second recital of this
Agreement.

     “Net Sales “ has the meaning ascribed to such term in the License Agreement.

     “Permitted Raw Materials Inventory” shall have the meaning ascribed to such term in Section
8.03(b).

     “Product” shall mean Estrasorb, as more fully described on Schedule A to this
Agreement, manufactured and packaged in accordance with the Specifications (hereinafter defined).

     “Raw Materials” shall mean the materials, components, and packaging required to manufacture
and package the Product in accordance with the Specifications.

     “Specifications” shall mean the specifications for the design, composition, product safety
assurance, manufacture, packaging, and/or quality control of the Product, as set forth on
Schedule B attached hereto and made a part hereof, as the same may hereafter be modified by
mutual agreement of the parties in writing.

     “Supply Year” shall mean each consecutive 365-day period (or 366-day period in the event of a
leap year) during the Term, commencing on the date of this Agreement.

     “Territory” shall mean the United States, Mexico and Canada.

     “Term” shall have the meaning ascribed to such term in Article 6.

     “Unit of Product” means a month of therapy of Product for an individual end user.

ARTICLE 2

SUPPLY OF PRODUCT

     During the Term, Supplier shall supply Buyer with those quantities of Product as ordered by
Buyer pursuant to this Agreement, subject to the ordering procedures set forth in Article 4 below.
Supplier shall sell Product exclusively to Buyer for sale in the Territory . Each Product sold
hereunder will conform to the Specifications for such Product. Subject to the terms and conditions
herein, Supplier will provide the facility, equipment , labor, and supervision necessary for the
production of the Product in sufficient quantities as required herein.

ARTICLE 3

PRICES FOR PRODUCT

     3.01 Transfer Price. The transfer price of Product from Novavax to Esprit during any
Supply Year will be equal to (i) $***** per Unit of Product for the first $***** of Net Sales in
such Supply Year and (ii) $***** per Unit of Product for the excess over the first $***** of Net

 

			
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Sales for such Supply Year. Notwithstanding anything to the contrary contained herein, the transfer
price of Product from Novavax to Esprit (a) that constitutes samples (including current sample
inventory) as designated by Novavax, will be $***** per week of therapy of Product for
an individual end user of Product and (b) that constitutes short-dated trade inventory (in
stock for equal to or less than one year from the date of packaging) as designated by Novavax and
as set forth on Schedule 3.01 attached hereto will be $***** per Unit of Product. All
transfer prices referred to in this Section 3.01 shall be increased (on a compounded basis) on
***** and ***** by and amount equal to the product of (i) the then current transfer price and (ii)
*****. For the remainder of the Term, the transfer price of Product from Novavax to Esprit will
be *****% of Novavax’s fully burdened manufacturing cost. The parties agree that the aggregate
amount contemplated by clause (b) above will be paid in cash by wire transfer on the date of this
Agreement.

     3.02 Payment Terms. Payment terms on all orders shall be ***** (*****) days from the
date of invoice. Invoicing shall occur upon shipment.

ARTICLE 4

FORECASTS, CAPACITY; ORDERS

     4.01 Forecasts; Capacity; Capital Expenditures. At the beginning of each calendar
quarter during the Term, Buyer shall provide Supplier with a binding written forecast of Buyer’s
requirements for Product for the shorter of the following 12 months or the remainder of the Term
(each, a “Rolling 12 Month Forecast”). Each Rolling 12 Month Forecast will be binding within a
range of + *****% of the stated amount within such Rolling 12 Month Forecast; provided that
the first three months of the each Rolling 12 Month Forecast will be binding without reference to
the foregoing range. Attached hereto as Appendix 1 is an initial binding forecast for
Product to be purchased pursuant to this Agreement between the date of this Agreement and the
placement of subsequent purchase orders for Product in accordance with Section 4.02, below.
Appendix 2 sets forth the capacity expectation for Buyer’s requirements during the Term on
a monthly basis
(“Capacity”). The parties understand and agree that any capital expenditures, incurred by
Supplier in connection with the performance of its obligations under this Agreement will be borne
by Supplier, it being understood that Supplier and Buyer will consult in good faith regarding any
such capital expenditure prior to its incurrence. Notwithstanding anything to the contrary
contained herein, the parties understand and agree that up to $***** of incremental expenses
related to increasing manufacturing Capacity shall be borne by Buyer. The parties further
understand that the foregoing forecasts and Capacity shall include both sample and trade quantities
of Product. Supplier will use commercially reasonable efforts to meet Buyers demand for Product.

     4.02 Change Orders. Quarterly requirements contained in any 12 Month Rolling Forecast
may be changed with ***** days prior written notice from Buyer to Supplier provided that Supplier
consents to such change order in writing (which consent may be withheld by Supplier in its sole
discretion)

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a confidential treatment request.

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     4.03 Example. For illustrative purposes only, assuming execution and delivery of this
Agreement on September 30, 2005, Buyer will deliver (i) its first 12 Month Rolling Forecast on
October 1, 2005 for the succeeding 12 month period and (ii) its second 12 Month Forecast on
December 31, 2005 for the succeeding 12 month period. Quarterly requirements contained in the
forecasts will be binding, subject to change in accordance with Section 4.01 and Section 4.02.

     4.04 Conflicts. To the extent of any conflict or inconsistency between this
Agreement and any purchase order, purchase order release, confirmation, acceptance or any similar
document, the terms of this Agreement shall govern.

ARTICLE 5

ADDITIONAL UNDERSTANDINGS OF THE PARTIES

     5.01 Other Affiliates. If any other Affiliate of Buyer desires to purchase the
Product from Supplier under the terms of this Agreement, then, upon the execution of a copy of this
Agreement by such Affiliate, Supplier shall accord such Affiliate all of the benefits hereof and
treat such affiliate as a “Buyer” for the purposes of this Agreement; provided, however, that this
section will not be construed to relieve Esprit of any of its obligations hereunder

     5.02 Exclusive Rights. During the Term, Supplier shall supply Buyer, on an exclusive
basis, with the Product for sale in the Territory and neither Supplier nor any of its Affiliates
shall sell or distribute the Product.

     5.03 Metered Dose Delivery. Notwithstanding anything to the contrary contained
herein, the parties understand and agree that Supplier is developing developed a metered dose
bottle for the administration of Estrasorb (“Metered Dose Delivery”) and that the parties will,
commencing on the date hereof, initiate the development and implementation of Metered Dose
Delivery. The parties understand and agree that costs and expenses of the development and
implementation of Metered Dose Delivery will be borne as follows: (a) the first $***** by Esprit
and (b) any amount in excess of $***** by Novavax. All such costs and expenses will be paid by the
applicable Party as such costs and expenses are incurred. The parties will work together in good
faith to launch Metered Dose Delivery by *****.

     5.04 Insurance. Each of Supplier and Buyer agrees to procure and maintain in full
force and effect during the Term valid and collectible insurance policies of a type and coverage
amount consistent with Supplier’s and Buyer’s past practice prior to the date hereof. Should
Supplier require additional insurance to be carried by Buyer, any incremental cost will be for
the account of Buyer. Buyer’s and Supplier’s existing policies are listed on Schedule D
attached hereto. Upon Buyer’s request, Supplier shall provide to Buyer a certificate of coverage
or other written evidence reasonably satisfactory to Buyer of such insurance coverage. Upon
Supplier’s request, Buyer shall provide to Supplier a certificate of coverage or other written
evidence reasonably satisfactory to Supplier of such insurance coverage.

 

			
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     5.05 Personnel. During the Term, Supplier shall maintain a workforce of appropriate
size, training and experience sufficient in the reasonable judgment of Supplier for manufacturing
the Product in an amount not to exceed Capacity. If Buyer requires additional personnel for
maintaining its equipment and facilities and otherwise necessary to fulfill Supplier’s other
obligations hereunder, the incremental cost thereof will be borne solely by Buyer. The parties
agree that the personnel requirements associated with the performance of Buyer’s obligations
hereunder are set forth on Appendix 3 attached hereto.

     5.06 Product Returns. All Product returns and all costs and expenses associated
therewith (a) for Products sold prior to the date hereof will be for the account of Supplier; (b)
for Products sold on or after the date hereof will be for the account of Buyer; and (c) for
partial lot #092304T17 will be for the account of Supplier. Medicaid chargebacks and rebates (a)
occurring within the first ***** days after the date hereof will be for the account of Supplier and
(b) occurring thereafter will be for the account of Buyer.

ARTICLE 6

TERM; EFFECTIVE DATE

     The term of this Agreement shall commence on the date hereof and remain in effect until *****
(the “Expiration Date”), unless sooner terminated as expressly provided under this Agreement (the
“Term”). Notwithstanding anything to the contrary contained herein, this Agreement will be
effective as follows: with respect to Esprit’s obligation under the last sentence of Section 3.01
and under Section 5.03, the date of this Agreement and (b) with respect to all other terms and
conditions of this Agreement, the Business Day immediately following the satisfaction in full of
Esprit’s obligations to pay principal and interest under the Promissory Note on the Maturity Date
(as defined therein).

ARTICLE 7

TERMINATION

     7.01 Breach. This Agreement may be terminated, prior to the Expiration Date, by
either Party by giving 90 days written notice of its intent to terminate and stating the grounds
therefor if the other Party shall materially breach or materially fail in the observance or
performance of any representation, warranty, guarantee, covenant or obligation under this
Agreement. The Party receiving the notice shall have 75 days from the date of receipt thereof to
cure the breach or failure. Notwithstanding anything to the contrary contained herein, payment
defaults will have a ten (10) day cure period. In the event such breach or failure is cured, the
notice shall be of no effect.

     7.02 Termination of License Agreement. Subject to earlier expiration or termination,
this Agreement will terminate simultaneously with the termination of the License Agreement.

 

			
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     7.03 Insolvency, Etc. This Agreement may be terminated, prior to the Expiration Date,
upon 30 days written notice by either Party: (i) in the event that the other Party hereto shall
(a) apply for or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of its property, (b)
make a general assignment for the benefit of its creditors, (c) commence a voluntary case under the
United States Bankruptcy Code, as now or hereafter in effect (the “Bankruptcy Code”), (d) file a
petition seeking to take advantage of any law (the “Bankruptcy Laws”) relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of debts, or (e) take any
corporate action for the purpose of effecting any of the foregoing; or (ii) if a proceeding or
case shall be commenced against the other Party hereto in any court of competent jurisdiction,
seeking (a) its liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (b) the appointment of a trustee, receiver, custodian, liquidator or the
like of the Party or of all or any substantial part of its assets, or (c) similar relief under any
Bankruptcy Laws, or an order, judgment or decree approving any of the foregoing shall be entered
and continue unstayed for a period of 60 days; or (iii) an order for relief against the other Party
hereto shall be entered in an involuntary case under the Bankruptcy Code.

     7.04 Effect of Termination. Notwithstanding the termination of this Agreement for
any reason, each Party hereto shall be entitled to recover any and all Damages which such Party
shall have sustained by reason of the breach by the other Party hereto of any of the terms of this
Agreement. Termination of this Agreement for any reason shall not release either Party hereto from
any liability which at such time has already accrued or which thereafter accrues from a breach or
default prior to such expiration or termination, nor affect in any way the survival of any other
right, duty or obligation of either Party hereto which is expressly stated elsewhere in this
Agreement to survive such termination. In the case of a termination under Section 7.01 above, the
non-defaulting Party may pursue any remedy available in law or in equity with respect to such
breach, subject to the terms of Section 17.01.

     (a) In the event that this Agreement expires or is terminated for any reason (other than
Supplier’s material breach, gross negligence or willful misconduct), Buyer shall be responsible for
purchasing from Supplier (at Supplier’s cost) such Permitted Raw Materials Inventory conforming
with the Specifications to the extent such Permitted Raw Materials Inventory has not been fully
utilized prior to the expiry or earlier termination of this Agreement, provided that such Permitted
Raw Materials Inventory has a shelf life of not more 365 days. Buyer shall accept delivery of any
such Permitted Raw Materials Inventory within five days after such expiration or termination at the
location designated by Buyer. If Buyer instructs Supplier to scrap any such Permitted Raw Material
Inventory, Buyer shall pay for such Permitted Raw Materials Inventory as provided in the
immediately preceding sentence plus reimburse Supplier’s incremental expenses directly related to
the proper disposition of the scrapped Permitted Raw Materials Inventory.

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ARTICLE 8

DELIVERY; INVENTORY.

     8.01 Delivery. All charges for packing, hauling, storage, bar coding, and
transportation to point of delivery are not included in the Transfer Price and Transfer Price shall
be F.O.B. Cardinal Facility (i.e., Buyer will pay for shipment). All shipments must be accompanied
by a packing slip which describes the articles, states the purchase order number and shows the
shipment’s destination. Supplier agrees to promptly forward the original bill of lading or other
shipping receipt for each shipment in accordance with Buyer’s instructions. Supplier further
agrees to promptly render, after delivery of goods or performance of services, correct and
complete invoices to Buyer, and to accept payment by check or at Buyer’s discretion, other cash
equivalent (including electronic transfer of funds).

     8.02 Shipment. The risk of loss with respect to Product shall remain with Supplier
until the point at which any such Product is delivered to the loading dock at the Cardinal
Facility. Supplier will pack all Product ordered hereunder in a manner suitable for shipment and
sufficient to enable the Product to withstand the effects of shipping, including handling during
loading and unloading.

     8.03 Inventory. (a) Supplier will maintain inventory of Product on a first-in,
first-out basis. In no event shall Supplier be required to, and Supplier will not, order more
than ***** months’ Raw Materials at Capacity and Supplier will use commercially reasonable efforts
to manage such inventory as efficiently as possible.

     (b) To shorten lead times hereunder and to support variations in demand, as and if necessary,
Supplier shall during the Term maintain such inventory of Raw Materials as are reasonably required
to manufacture and package Product in accordance with the Specifications in a quantity equivalent
to ***** (*****) month of Buyer’s forecasted purchase volume (the foregoing amount of inventory
which conforms to the Specifications being hereinafter referred to collectively as the “Permitted
Raw Material Inventory”) or such other specific amount of Permitted Raw Material Inventory as may
be agreed to by both parties in writing in advance. Supplier’s purchase price and the cost of
carrying Permitted Raw Material Inventory shall be for the account of Buyer. The quantity of
Permitted Raw Material Inventory shall be adjusted by Supplier as needed based upon Buyer’s average
monthly purchase volume as forecasted in
Buyer’s rolling forecast. In the event that Buyer’s requirements for Product materially
exceed Buyer’s current forecasted needs, Supplier shall draw from the Permitted Raw Material
Inventory to meet such excess requirements. Supplier shall then replenish the Permitted Raw
Material Inventory within ***** days.

 

			
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ARTICLE 9

INSPECTION

     Buyer shall have the right, upon reasonable notice to Supplier and during regular business
hours, to inspect and audit not more than ***** per ***** month period the facilities being used by
Supplier for production and storage of the Product to assure compliance by Supplier with cGMP and
applicable FDA and other rules and regulations and with other provisions of this Agreement.
Supplier shall notify Buyer as promptly as practicable of any audit, review or inspection by any
regulatory authority relating, directly or indirectly, to the Product, and shall in any event
notify Buyer of any such audit, review or inspection within 24 hours of Supplier’s first being
informed of any such event. Supplier and Buyer will work together to remedy or cause the remedy of
any deficiencies which may be noted in any such audit or, if any such deficiencies can not
reasonably be remedied within such seven day period, develop a written plan to remedy such
deficiencies as soon as possible; and the costs of such remedy shall be borne by the Supplier.

ARTICLE 10

DEFECTIVE PRODUCT/INSPECTIONS/TESTING

     10.01 Disposition of Defective Product. Buyer shall notify Supplier of the existence
and nature of any non-compliance or defect and Supplier shall have a reasonable opportunity, not to
exceed ***** days from receipt of notification, to inspect such defective Product and provide Buyer
with detailed written instructions to return or dispose of such defective Product. Buyer
shall have no obligation to pay for any Product that is subject to such a claim of
non-compliance or defect. If Supplier fails to so inspect and instruct Buyer as to the disposition
of such defective Product, Buyer may dispose of such defective Product as it sees fit and Supplier
shall promptly (i) reimburse Buyer for all direct, out-of-pocket costs incurred by Buyer in such
disposition, and (ii) replace such defective Product at its own cost and expense.

     10.02 Independent Testing. If, after Supplier’s inspections of such Product, the
parties disagree as to the Product’s conformance to the Specifications or whether the Product has
such a defect, either Party may deliver the Product to an independent third-Party laboratory,
mutually and reasonably acceptable to both parties, for analytical testing to confirm the Product’s
conformance to the Specifications or the presence or absence of defects. All costs associated with
such third-Party testing shall be at Supplier’s expense. No inspection or testing of or payment
for Product by Buyer or any third-Party agent of Buyer shall constitute acceptance by Buyer
thereof, nor shall any such inspection or testing be in lieu or substitution of any obligation of
Supplier for testing, inspection and quality control as provided in the Specifications or under
applicable local, state, or federal laws, rules, regulations, standards, codes or statutes.

     10.03 Reports. Promptly after Buyer’s reasonable written request, Supplier shall
provide Buyer written reports relating to any aspects of the Product that are identified in the
Specifications.

     10.04 Complaint Handling. Supplier shall promptly convey to and inform Buyer of any
customer or user complaints received by Supplier in connection with Product.

 

			
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     10.05 Quality Control. Prior to each shipment of Product to Esprit, Novavax shall
conduct or have conducted quality control testing of Product in accordance with the
Specifications and such other Novavax approved quality control testing procedures that are
consistent with FDA cGMPs. Novavax shall retain or have retained accurate and complete records
pertaining to such testing. Novavax shall notify Esprit in writing at least ten (10) days prior to
any change in the testing methods and shall provide Esprit a copy of the revised testing methods
within ten (10) days of implementation of the changes. Each shipment of Product hereunder shall be
accompanied by a certificate of analysis for each lot of Licensed Product therein.

ARTICLE 11

FAILURE TO SUPPLY; FORCE MAJEURE

     11.01 Force Majeure Events. If either Party is prevented from performing any of its
obligations hereunder due to any cause which is beyond the non-performing Party’s reasonable
control, including fire, explosion, flood, or other acts of God; acts, regulations, or laws of any
government; war or civil commotion; strike, lock-out or labor disturbances; or failure of public
utilities or common carriers (a “Force Majeure Event”), such non-performing Party shall not be
liable for breach of this Agreement with respect to such non-performance to the extent any such
non-performance is due to a Force Majeure Event. Such non-performance will be excused for six (6)
months or as long as such event shall be continuing (whichever occurs sooner), provided that the
non-performing Party gives prompt written notice to the other Party of the Force Majeure Event.
Such non-performing Party shall exercise all commercially reasonable efforts to eliminate the Force
Majeure Event and to resume performance of its affected obligations as soon as practicable.

     11.02 Failure to Supply. Notwithstanding the provisions of Section 11.01, in the
event that Supplier shall be unable or unwilling or shall fail to supply any Product in such
quantities as Buyer shall request and in compliance with the delivery periods set forth in Section
4.02 (whether due to the occurrence of a Force Majeure Event, following the commencement of a case
by or against Supplier under the Bankruptcy Code or otherwise (hereinafter referred to as a
“Failure to Supply”), then Buyer shall be permitted (after the expiration of a ***** day cure
period following written notice from Buyer to supplier of such Failure to Supply and such Failure
to Supply has not been cured by Supplier) to (i) obtain Product directly from Cardinal, (ii) to
obtain such Product from another supplier, or (iii) to use, sell, and make Product itself either in
the Cardinal Facility or at another location. In this regard, Supplier shall (at no cost to
Supplier) take all actions and provide all such cooperation and support reasonably necessary and
reasonably within its control to give Buyer the right to enter, upon reasonable notice and during
regular business hours, and shall be given access to, the Cardinal Facility (or any other location
where the Equipment is used or stored) so that Buyer may use or retrieve all records maintained in
connection with the manufacturing equipment. Supplier’s obligations under this Section shall
survive the termination of this Agreement for a period of ***** months. Upon the occurrence of any
such Failure to Supply and through and until such time as Supplier fully resumes its supply
obligations hereunder: (a) Supplier shall (at no cost to Supplier) take all reasonable actions
within its control, execute and deliver all documents, and provide all such assistance as Buyer
reasonably requests to enable Buyer to obtain Product directly from Cardinal; (b) Supplier shall
(at no cost to Supplier) make available to Buyer or its designee access to any and all Intellectual

 

			
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Property Rights (to the extent not already granted pursuant to the License Agreement) and any other
technical and proprietary materials, information and techniques necessary or helpful for
Buyer to procure required Raw Materials or produce or arrange an alternative supplier of
Product; (c) Supplier shall (at no cost to Supplier) provide advice and consultation in connection
therewith; (d) Buyer shall purchase Product from Supplier once Supplier has cured the failure to
supply; and (e) Buyer shall terminate any contractual arrangements contemplated by clause (a) of
this sentence once Supplier has cured the failure to supply. As soon as reasonably practicable
after an uncured Failure to Supply, Supplier shall furnish Buyer with Licensed Know-How (as defined
in the License Agreement) which is necessary to enable Buyer to manufacture or have manufactured
Product as contemplated by this Agreement.

ARTICLE 12

LABELING; ARTWORK; PROPRIETARY RIGHTS

     Buyer shall have the right to determine the appearance and text of any labeling, packaging and
promotional material used in connection with the Product or any finished product containing or
contained in the Product (“Packaging and Promotional Material”). Buyer will, on or before the
Effective Date, change all Packaging and Promotional Material to the extent required by applicable
law or regulation, including changes to National Drug Codes, and shall, by time the first lot of
Product is manufactured under this Agreement, have made all desired changes to Packaging and
Promotional Material. Supplier shall cooperate with and provide such support as is reasonably
requested by Buyer (at no additional cost to Supplier) in the implementation of any artwork or
other Packaging and Promotional Material component changes. All costs and expenses relating to
Packaging and Promotional Material used in connection with the Product will be borne by Buyer.

ARTICLE 13

CONFIDENTIALITY

     13.01 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 13 (“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 13, with the exceptions that the
Parties shall each be free to disclose the existence of this Agreement and the nature of the
Product being manufactured hereunder and the terms to its 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, and 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 internal

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confidential,
proprietary information. Each Party shall be responsible for the breach of any of the provisions
of this Article 13 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.

     13.02 Notwithstanding the above obligations of confidentiality and non-use a Party may:

     (a) disclose information to a regulatory agency that is necessary to obtain regulatory
approval in a particular jurisdiction; or

     (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 13.2, 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.

     13.03 Neither Party shall state or imply, in any publication, advertisement, sales promotional
material, or other medium (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.

12

 

     13.04 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 date hereof, 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 of this Agreement, it will provide the other Party
with at least ten days, where possible, advance written notice of the text of any such written
announcement or 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.

     13.05 Except for permissible publications under this Article 13 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 Article 13.

     13.06 With respect to information disclosed on or after the date hereof between Buyer and
Supplier 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 Buyer and Supplier, with respect to information disclosed on or after the date
hereof, the terms of this Agreement shall govern and prevail.

ARTICLE 14

CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

     14.01 Product Warranties. Supplier warrants to Buyer that all Product supplied in
connection with this Agreement shall be of merchantable quality, fit for the purpose intended by
this Agreement and shall be manufactured and provided in accordance and conformity with the
Specifications.

     14.02 Execution and Performance of Agreement. Each of Supplier and Buyer represents
to the other that (i) it has full right, power and authority to enter into and perform its
obligations under this Agreement; (ii) the entry into and performance of this Agreement has been
duly authorized, executed and delivered by it; and (iii) this Agreement is the valid binding
obligation of it enforceable against it in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability relating to or
affecting

13

 

creditors’ rights and to general principles of equity. Supplier and Buyer further
represent and warrants to the other that the performance of its obligations under this Agreement
will not result in a violation or breach of, and will not conflict with or constitute a default
under any agreement, contract, commitment or obligation to which such Party or any of its
Affiliates is a Party or by which it is bound.

     14.03 Cardinal. Supplier represents and warrants that, pursuant to the agreements and
understandings it has or may during the Term have with Cardinal in connection with the manufacture
and packaging of the Product, Buyer has or will have access to the Cardinal Facility and the
manufacturing equipment used to manufacture the Product to the extent contemplated by the Cardinal
Agreement. Supplier shall use commercially reasonable efforts to enable Buyer to continue to have
such access and rights during the Term, it being understood that that Cardinal and Supplier will
negotiate in good faith the extension of the Cardinal Agreements for a term at least commensurate
with the Term. In addition, Supplier will also use commercially reasonable efforts to assure
supply of Licensed Product during the Term should Supplier and Cardinal be unable to consummate the
extension of the Cardinal Agreements contemplated above, including consideration of an alternative
manufacturing site and building inventory of finished Product.

     14.04. 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.

     14.05 EXCEPT FOR THEIR RESPECTIVE OBLIGATIONS UNDER ARTICLE 11 ARISING OUT OF THIRD PARTY
CLAIMS, SUITS OR DEMANDS, 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.

ARTICLE 15

COMPLIANCE

     Supplier agrees to comply with the applicable provisions of any Federal or state law and all
executive orders, rules and regulations issued thereunder, whether now or hereafter in force,
including Executive Order 11246, as amended, Chapter 60 of Title 41 of the Code of Federal
Regulations, as amended, prohibiting discrimination against any employee or applicant for
employment because of race, color, religion, sex or national origin; Section 60-741.1 of Chapter 60
of 41 Code of Federal Regulations, as amended, prohibiting discrimination against any employee or
applicant for employment because of physical or mental handicap; Section 60.250.4 of Chapter 60 of
41 Code of Federal Regulations, as amended, providing for the employment of disabled veterans and
veterans of the Vietnam era; Chapter 1 of Title 48 of the Code of Federal
Regulations, as Amended, Federal Acquisition Regulations; Sections 6, 7 and 12 of the Fair

14

 

Labor Standards Act, as amended, and the regulations and orders of the United States Department of
Labor promulgated in connection therewith. Supplier agrees that it shall comply with all present
and future statutes, laws, ordinances and regulations relating to the manufacture and supply of the
Product being provided hereunder, including, without limitation, those enforced by the FDA
(including compliance with good manufacturing practices) and International Standards Organization
Rules 9,000 et seq.

ARTICLE 16

INDEMNIFICATION

     16.01 Indemnification by Supplier. Supplier shall indemnify and hold harmless Buyer
and its directors, officers and employees from and against any and all damages, liabilities,
claims, costs, charges, judgments and expenses (including reasonable attorneys’ fees) claimed by
third parties (collectively “Damages”) that may be sustained, suffered or incurred by Buyer or its
directors, officers and employees, arising directly from or by reason of (i) the breach by Supplier
of any warranty, representation, covenant or agreement made by Supplier in this Agreement; (ii) the
negligence or willful misconduct of Supplier and (iii) any claim, suit, or proceeding brought by a
third party wherein it is alleged that any property damage, personal injury or death has been
caused by the Product; provided that Supplier shall not be liable for any product liability or
personal injury claims by third parties arising from the sale, distribution or use of any Product
which meets the Specifications and is not otherwise defective.

     16.02 Indemnification by Buyer. Buyer shall indemnify and hold harmless Supplier and
its directors, officers and employees from and against any and all Damages, that may be sustained,
suffered or incurred by Supplier and its directors, officers and employees arising
directly from or by reason of (i) the breach by Buyer of any warranty, representation,
covenant or agreement made by Buyer in this Agreement, or (ii) the negligence or willful misconduct
of Buyer.

     16.03 Claims. If any claim (a “Third Party Claim”) is made against a party entitled
to indemnification hereunder (an “Indemnified Party”) that, if sustained, would give rise to
Damages to a party (the “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 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

15

 

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 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.

ARTICLE 17

MISCELLANEOUS

     17.01 Arbitration. Any dispute, controversy or claim arising out of or relating to
this Agreement or the validity, inducement, or breach thereof, shall be settled by arbitration
before a panel of three arbitrators in accordance with the Commercial Arbitration 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

16

 

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. 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 selection procedures administered by the AAA.
Within a period of 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 45 days
absent agreement of the parties or interfere with the availability of emergency relief.

     17.02 Relationship of the Parties. The relationship of Buyer and Supplier established
by this Agreement is that of independent contractors, and nothing contained herein shall be
construed to (i) give either Party any right or authority to create or assume any obligation of any
kind on behalf of the other or (ii) constitute the parties as partners, joint venturers, co-owners
or otherwise as participants in a joint or common undertaking.

     17.03 Entire Agreement. It is the mutual desire and intent of the parties to provide
certainty as to their respective 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
makes any covenant or other commitment to the other concerning its future action. Accordingly,
this Agreement and the License Agreement (i) constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof 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. No modification, change or amendment to
this Agreement shall be effective unless in writing signed by each of the parties hereto.

     17.04 Construction. Unless otherwise expressly provided for herein (i) financial and
accounting terms will have the meaning ascribed to such terms in accordance with U.S. generally
accepted accounting principles, consistently applied, (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, and (vi) headings and
titles of Sections and Articles herein will be construed to be descriptive only and without any
substantive or interpretive effect.

17

 

     17.05 Notices. All notices and other communications hereunder shall be in writing.
All notices hereunder of an Indemnity Claim, a Force Majeure Event, default or breach hereunder,
or, if applicable, Termination or renewal of the Term hereof, or any other notice of any event or
development material to this Agreement taken as a whole, shall be delivered personally, or sent by
national overnight delivery service or postage pre-paid registered or certified U.S. mail, and
shall be deemed given: when delivered, if by personal delivery or overnight delivery service; or
if so sent by U.S. mail, three business days after deposit in the mail, and shall be addressed:

If to Supplier:

Chief Executive Officer

Novavax, Inc.

508 Lapp Road

Malvern, Pa. 10355

If to Buyer:

Chief Executive Officer

Esprit Pharma, Inc.

Two Tower Blvd.

East Brunswick, New Jersey 08816

or to such other place as either Party may designate by written notice to the other in accordance
with the Terms hereof.

     17.06 Failure to Exercise. The failure of either Party to enforce at any time for any
period any provision hereof shall not be construed to be a waiver of such provision or of the right
of such Party thereafter to enforce each such provision, nor shall any single or partial exercise
of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of
any other right or remedy. Remedies provided herein are cumulative and not exclusive of any
remedies provided at law.

18

 

     17.07 Assignment. This Agreement may not be assigned by either Party without the
prior written consent of the other which will not be unreasonably withheld or delayed, except that
either Party may assign its rights and/or obligations hereunder to any of its wholly-owned
Affiliates or to a successor to its business in a sale of all or substantially all of the assets of
such Party. Subject to the foregoing sentence, this Agreement shall bind and inure to the benefit
of
the parties hereto and their respective successors and assigns. This Section 17.07 shall not
be deemed to prohibit or otherwise apply to a change in control of Supplier (whether by merger of
sale of capital stock or otherwise) at the shareholder or Board of Director levels or otherwise.

     17.08 Severability. In the event that any one or more of the provisions (or any part
thereof) contained in this Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument. Any Term or provision of this Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, to the extent the economic
benefits conferred by this Agreement to both parties remain substantially unimpaired, not affect
the validity, legality or enforceability of any of the Terms or provisions of this Agreement in any
other jurisdiction.

     17.09 Further Assurances. Upon reasonable request from Buyer therefor, Supplier shall
provide to Buyer, promptly, any product samples, manufacturing information and other information as
is necessary for Buyer to complete or obtain U.S. or foreign registration (including reimbursement
arrangements) or approval in any territory where Buyer is allowed to sell product or use
technology.

     17.10 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     17.11 Expenses. Each Party shall pay all of its own fees and expenses (including all
legal, accounting and other advisory fees) incurred in connection with the negotiation and
execution of this Agreement and the arrangements contemplated hereby.

     17.12 Survival. Sections 7.04 and 11.02 and Articles 12, 13, 16, and 17 shall survive
the termination of this Agreement in accordance with the respective Terms thereof.

19

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized respective representatives as of the day and year first above written.

	 	 	 	 	 
	ESPRIT PHARMA, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	 
	NOVAVAX, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

 

 

SUPPLY AGREEMENT

Schedule A — Product

ESTRASORB a topically- or transdermally-administered product marketed under Seller’s NDA 21-37 of
the following formulation:

	 	 	 
	Ingredient Description 	 	Percent w/w
	17 b -Estradiol USP/Ph. Eur.
	 	*****
	Soybean Oil USP
	 	*****
	Polysorbate 80 NF
	 	*****
	190 Proof Ethyl Alcohol USP
	 	*****
	Purified Water USP
	 	*****

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

SUPPLY AGREEMENT

Schedule B — Specifications

1. Formula

	 	 	 
	Formula	 	Percent w/w
	Polysorbate 80, NF

	 	*****
	Soybean Oil, USP

	 	*****
	190 Proof Ethyl Alcohol, USP

	 	*****
	Purified Water, USP

	 	*****
	17 b -Estradiol, USP

	 	*****

2. Specifications

	 	 	 
	Specifications	 	Limits
	Appearance

	 	*****
	Submicron particle sizing

	 	*****
	pH

	 	*****
	Estradiol Identity
	 	*****
	Estradiol Assay and
	 	 
	Related Substances
	 	 
	 
	 	 
	Stability indicating Assay

	 	 
	Ethanol Assay-

	 	*****
	Viscosity

	 	*****
	Content Uniformity USP <905>(packaged product only)

	 	*****
	In-Vitro Release of Estradiol Assay (bulk only)

	 	*****
	Microbial Limits

	 	*****
	Crystal Analysis

	 	*****
	Quantitative Crystal Analysis

	 	*****

3. Compounding Formula

	 	 	 
	Raw Materials

	 	*****kg
	Polysorbate 80, NF

	 	     *****kg
	Soybean Oil, USP

	 	     *****kg
	190 Proof Ethyl Alcohol, USP

	 	     *****kg
	Purified Water, USP

	 	*****kg
	17 b -Estradiol, USP

	 	     *****kg

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

4. Packaging Specifications

Foil-Laminated Pouch

	 	 	 	 	 
	 	 	1000kg	 	1000kg
	Description
	 	*****	 	*****
	Equipment
	 	*****	 	*****
	Dimension
	 	*****	 	*****
	PMS Colors
	 	*****	 	*****
	Manufacturer
	 	*****	 	*****
	Printer
	 	*****	 	*****

Primary Carton Pouch (Pouch carton)

	 	 	 
	Description

	 	*****
	Material

	 	
	Color

	 	
	Ink

	 	
	 
	 	 
	Thickness
	 	 
	Style
	 	 
	Dimension

	 	*****
	Supplier

	 	*****

4. Packaging Specifications (cont.)

Secondary Carton Pouch (Packer)

	 	 	 
	Description
	 	*****
	Material
	 	 
	Color
	 	 
	Ink
	 	 
	 
	 	 
	Thickness
	 	 
	Style
	 	 
	Dimension

	 	*****
	Supplier

	 	*****

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

Insert

	 	 	 	 	 
	Type of Insert	 	Prescribing Insert	 	Patient Information
	Material

	 	*****
	 	*****
	 
	 	 	 	 
	Paper Basic Weight

	 	*****
	 	*****
	Style

	 	*****
	 	*****
	Flat Size
	 	*****	 	*****
	Folded Size
	 	 	 	 
	Font Size
	 	 	 	 
	Font
	 	 	 	 
	Printing Ink (both side)

	 	 
	 	 
	Manufacturer/Supplier

	 	*****
	 	*****

5. Package Specification Weight:

	 	 	 	 	 
	Equipment	 	Bartelt	 	Klocker
	Weight (Target fill weight)

	 	*****
	 	*****
	Foil Weight

	 	*****
	 	*****

Component Specifications

*****

Current Master Label

*****

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

SUPPLY AGREEMENT

Schedule D — Insurance

	 	 	 	 	 	 	 	 	 	 	 
	 	 	LIMIT OF	 	 	 	 	 	POLICY	 	POLICY
	TYPE OF POLICY	 	INSURANCE	 	INSURER	 	POLICY NUMBER	 	TERM	 	PREMIUM
	*****

	 	*****
	 	*****
	 	*****
	 	*****
	 	*****

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy No.	 	From	 	Term	 	To	 	Company	 	Amount Limits	 	Coverage	 	Premium	 	Remarks
	*****

	 	*****
	 	 	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

SUPPLY AGREEMENT

Appendix 1 — Initial Forecast

	 	 	 
	Revised

*****

	 	Esprit Pharma

Forecasted Material Requirements for Estrasorb

2006

Per Novavax, Inc.

Estrasorb Inventory Purchased at Closing

As of ***** (before release of shipments on *****)

Finished Product

	 	 	 	 	 
	 	 	Expiration	 	 
	Lot #	 	Date	 	# of MOTS
	*****

	 	*****
	 	***** At SPS
	*****

	 	*****
	 	***** At SPS
	*****

	 	*****
	 	***** At SPS
	*****

	 	*****
	 	***** At SPS
	 

	 	 	 	*****
	 

	 	 	 	 
	 
	 	 	 	 
	***** lots due before *****

	 	 	 	***** est.
	***** lots due before *****

	 	 	 	***** est.
	 

	 	 	 	 
	Total commitment as of*****

	 	 	 	*****

Scenario #1: *****

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Oct. 19-	 	 
	 	 	31-Dec	 	2006
	$ *****	 	2005	 	Jan	 	Feb	 	March	 	April	 	May	 	June	 	July	 	August	 	Sept	 	Oct	 	Nov	 	Dec	 	Total
	Forecasted Demand in $

	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	 	$*****
	% of year

	 	 	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%
	 	*****%	 	 
	MOTS sold                    $ *****

	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	*****
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Beginning inventory

	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	Requested
delivery 

from Novavax

	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	Ending
inventory 

(***** month 

safety stock)

	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****
	 	*****

*****

 

			
	*	 	Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.exv10w1

 

EXHIBIT 10.1

Rehabilitation Plan Implementation Agreement

     This
agreement is executed as of the date set forth below between John Garamendi,
Insurance Commissioner of the State of California, in his capacity as Trustee of the Mission
Insurance Company Trust, the Mission National Insurance Company Trust and the Enterprise Insurance
Company Trust, on the one hand, and Covanta Holding Corporation, formerly known as Danielson
Holding Corporation and as Mission Insurance Group, Inc. on the other hand.

Definitions

     1. “Allocated Shares” shall have the meaning ascribed to such term in Paragraph 25 below.

     2. “Agreement” shall mean this Rehabilitation Plan Implementation Agreement, including the
Exhibits attached hereto.

     3. “Amendment Agreement” shall mean the Amendment to Agreement Regarding Closing, attached
hereto as Exhibit A and incorporated by reference into this document and made a part
hereof.

     4. “Closing Agreement” shall mean the Agreement Regarding Closing dated as of August 9, 1990,
by and among the Insurance Commissioner as conservator of Mission American Insurance Company and
Compac Insurance Company; as liquidator of Mission Insurance Company, Enterprise Insurance Company
and Mission National Insurance Company; and as ancillary liquidator of

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Holland-America Insurance Company and Mission Reinsurance Corporation, and the Director of the
Division of Insurance of the State of Missouri.

     5. “Covanta” shall mean Covanta Holding Corporation.

     6. “Danielson” shall mean Danielson Holding Corporation.

     7. “EICT” shall mean Enterprise Insurance Company Trust.

     8. “Exchange Act” shall have the meaning ascribed to such term in Paragraph 42 below.

     9. “Implementation Payment” shall have the meaning ascribed to such term in Paragraph 27
below.

     10. “Insurance Commissioner” shall mean John Garamendi, Insurance Commissioner of the State of
California, or his predecessor(s) and successor(s) in office, as the case may be.

     11. “Latent Allocated Shares” shall have the meaning ascribed to such term in Paragraph 31
below.

     12. “Latent Deficiency Claims” shall have the meaning ascribed to such term in Paragraph 29
and specifically identified in Paragraph 30 below.

     13. “Latent Deficiency Claims Administration Procedures Agreement” shall mean that certain
agreement by and among the Insurance Commissioner, in his capacity as Trustee of MICT, MNICT, and
EICT, on the one hand, and Covanta on

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the other hand, attached hereto as Exhibit B and incorporated by reference into this
document and made a part hereof.

     14. “Liquidation Court” shall have the meaning ascribed to such term in Paragraph 22 below.

     15. “MICT” shall mean Mission Insurance Company Trust.

     16. “MNICT” shall mean Mission National Insurance Company Trust.

     17. “RRR Agreement” shall mean the Agreement of Reorganization, Rehabilitation, and
Restructuring entered into by the Insurance Commissioner as conservator of Mission American
Insurance Company and Compac Insurance Company; as liquidator of Mission Insurance Company,
Enterprise Insurance Company, and Mission National Insurance Company; and as ancillary liquidator
of Holland-America Insurance Company and Mission Reinsurance Corporation with the Missouri
Insurance Director, as Receiver of Holland-America Insurance Company and Mission Reinsurance
Corporation, and with the Mission Insurance Group, Inc.

     18. “Rehabilitation Agreement” shall mean collectively, the RRR Agreement, the Closing
Agreement and the trust agreements for each of MICT, MNICT and EICT.

     19. “Trustee” shall mean the Insurance Commissioner, in his capacity as Trustee.

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Initial Recitals

     20. Mission Insurance Company, Mission National Insurance Company, and Enterprise Insurance
Company are or were California-domiciled property and casualty insurance companies.

     21. On October 31, 1985, on the application of the Insurance Commissioner, the Superior Court
for the County of Los Angeles issued an order which placed Mission Insurance Company, Mission
National Insurance Company and Enterprise Insurance Company into conservation proceedings, in case
number C 572 724.

     22. On February 24, 1987, the Superior Court for the County of Los Angeles, (the “Liquidation
Court”) entered those orders which placed Mission Insurance Company, Mission National Insurance
Company and Enterprise Insurance Company in liquidation proceedings in the case captioned Insurance
Commissioner of the State of California v. Mission Insurance Company, et al., case number C 572
724.

     23. As of December 13, 1989, the Insurance Commissioner, as Liquidator of Mission Insurance
Company, Mission National Insurance Company, Enterprise Insurance Company, and as Conservator of
Mission American Insurance Company and Compac Insurance Company, entered into the RRR Agreement
with Missouri

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Insurance Director as Receiver of Holland-America Insurance Company and Mission Reinsurance
Corporation, and with Mission Insurance Group, Inc.

     24. On April 25, 1990, the Final Order of Rehabilitation was issued by the Liquidation Court
which had the effect, inter alia, of entering a rehabilitation order as to Mission Insurance
Company, Mission National Insurance Company and Enterprise Insurance Company and, upon closing of
the transactions described in the RRR Agreement, resulted in the creation of MICT, MNICT and EICT,
pursuant to the agreement of MICT, the agreement of MNICT and the agreement of EICT.

     25. Pursuant to the Rehabilitation Agreement, as of August 15, 1990, an aggregate of 1,648,488
shares of Covanta common stock were issued to the Insurance Commissioner to be held for and on
behalf of holders of Deficiency Claims (as defined in the RRR Agreement) (the “Allocated Shares”),
which Allocated Shares have been allocated to MICT (1,172,874 shares), MNICT (399,751 shares) and
EICT (75,863 shares).

     26. The parties to this Agreement now seek to enter into a further agreement to implement the
RRR agreement.

Implementation Payment

     27. Upon satisfaction of the conditions precedent set forth in Paragraph 54(i) through (vii)
below of this Agreement and in consideration of the settlement

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of disputes regarding the interpretation of the Rehabilitation Agreement, Covanta agrees to
make the following cash contributions to MICT, MNICT and EICT (collectively, the “Implementation
Payment”) within ten days following satisfaction of such conditions precedents set forth in
Paragraphs 53 and 54 of this Agreement, in order to facilitate the effectuation of the terms of the
Rehabilitation Agreement and the winding up of such trusts:

          a. MICT: six million five hundred four thousand, two hundred seventy seven dollars
($6,504,277).

          b. MNICT: two million two hundred sixteen thousand, eight hundred fifty five dollars
($2,216,855).

          c. EICT: four hundred twenty thousand seven hundred five dollars ($420,705).

Distribution of Shares Pursuant to the Rehabilitation Agreement

     28. Pursuant to the Rehabilitation Agreement, the Insurance Commissioner now holds, as agent
for and on behalf of claimants against the Mission National Insurance Company and Mission Insurance
Company, the Allocated Shares to be distributed as provided in Section 2.1 of the RRR Agreement to
holders of “Deficiency Claims,” as defined in Section 1.8 of the RRR Agreement.

     29. In order to effectuate the terms of the RRR Agreement, the parties enter into this
Agreement to set forth a method of distributing the Allocated Shares to

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holders of Deficiency Claims. The parties recognize that numerous claimants filed proofs of
claims which were approved by the Trustee. The parties reaffirm that the unpaid portion of such
claims shall be treated as Deficiency Claims. This Agreement recognizes, however, that additional
Deficiency Claims (as defined in the RRR Agreement) are held by additional claimants, which
additional claims shall be referred to as “Latent Deficiency Claims,” as specifically identified in
Paragraph 30 below. Although holders of Latent Deficiency Claims cannot qualify for cash
distributions pursuant to California Insurance Code Sections 1011 et seq., this Agreement confirms
and recognizes that such Latent Deficiency Claims do qualify to share in distributions of the
Allocated Shares pursuant to the RRR Agreement.

     30. In order to qualify for treatment as Latent Deficiency Claims, a claimant’s claim must be
a claim that is a Deficiency Claim, as defined in Section 1.8 of the RRR Agreement, pursuant to
applicable law, that would qualify the claimant as a creditor pursuant to California Insurance Code
Sections 1021 to 1024 and 1032, except that one or more of the following factors applies:

          a. the claimant(s) did not meet the August 18, 1995 deadline for filing amendments to proofs
of claims, pursuant to the amended final liquidation dividend plan;

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          b. the claimant(s)’ claims were otherwise valid policyholder priority claims within the
meaning of Section 1033 of the California Insurance Code, but did not become liquidated (in whole
or in part) and certain within the meaning of California Insurance Code Section 1025 by the
court-ordered deadline of December 31, 2003 (for purposes of clarity and the definition of Latent
Deficiency Claims, but not for the purpose of any revaluation of proofs of claims for the purposes
of distributions under Section 1033 of the California Insurance Code, and without limiting the
generality of the foregoing, this category includes claims of claimants under direct insurance
contracts issued by Mission Insurance Company, Mission National Insurance Company and Enterprise
Insurance Company that were settled for less than the stated amount of such claims); or

          c. the claimant(s)’ claims were otherwise valid non-policyholder priority claims within the
meaning of Section 1033 of the California Insurance Code, but did not become liquidated (in whole
or in part) and certain within the meaning of California Insurance Code Section 1025 by the
court-ordered deadline of August 2, 2004 (for purposes of clarity and the definition of Latent
Deficiency Claims, but not for the purpose of any revaluation of proofs of claims for the purpose
of distributions under Section 1033 of the California Insurance Code, and without limiting the
generality of the foregoing, this category includes claims of claimants under reinsurance contracts
issued by Mission Insurance Company,

8

 

Mission National Insurance Company and Enterprise Insurance Company that were settled for less
than the stated amount of such claims).

     31. Pursuant to the Rehabilitation Agreement and this Agreement, the Insurance Commissioner
shall agree to distribute to holders of Latent Deficiency Claims, a portion of the Allocated Shares
equal in total amount to the Implementation Payment divided by the average closing price for the
ten (10) trading days for shares of Covanta common stock immediately preceding the Court approval
of this Agreement (“the Latent Allocated Shares”) to holders of Latent Deficiency Claims as
follows:

          a. The Trustee shall make a preliminary allocation of the Allocated Shares in accordance with
the RRR Agreement to holders of approved yet unpaid Deficiency Claims that do not qualify as Latent
Deficiency Claims;

          b. The Trustee shall make a preliminary allocation of the Latent Allocated Shares in
accordance with the RRR Agreement and this Agreement to holders of approved yet unpaid claims that
qualify as Latent Deficiency Claims;

          c. As to EICT, the Insurance Commissioner may distribute cash in lieu of shares if such a
distribution is required to ensure equality of distribution to the Latent Deficiency Claims.

          d. Consistent with the proportionality requirements of former section 108(e)(8)(B) of the
Internal Revenue Code, following the issuance of the order of

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the Liquidation Court establishing the amount of the Latent Deficiency Claims and a
determination by Covanta of all holders of Latent Deficiency Claims, Covanta shall review the
preliminary allocations of Latent Allocated Shares and advise the Trustee of Covanta’s final
determination of the number of Latent Allocated Shares to be distributed to holders of Latent
Deficiency Claims and shall coordinate with the Trustee to effect such distributions.

          e. Consistent with the proportionality requirements of former section 108(e)(8)(B) of the
Internal Revenue Code, following the issuance of the order of the Liquidation Court establishing
the amount of the Latent Deficiency Claims, the Trustee may distribute to holders of Deficiency
Claims that portion of the Allocated Shares that have not been designated as Latent Allocated
Shares; provided, however, that the parties will meet and confer, as necessary, to ensure and agree
that any proposed distribution complies with the tax proportionality requirements of former Section
108(e)(8)(B) of the Internal Revenue Code.

     32. Covanta shall be responsible, at its own expense, to administer the Latent Deficiency
Claims administration procedures, as set forth below.

Latent Deficiency Claims Administration

     33. Covanta shall administer the responsibilities regarding the identification, processing and
evaluation of the Latent Deficiency Claims, as set forth herein. Covanta will reimburse the
Insurance Commissioner’s Conservation

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and Liquidation Office staff in assisting Covanta in performing its duties and providing
assistance under this Agreement, subject to an aggregate limitation of $200,000; provided, however,
that such limitation shall not apply to and Covanta shall reimburse the Insurance Commissioner’s
Conservation and Liquidation Office for (i) the actual costs charged by the storage facilities for
the retrieval of information requested by Covanta and (ii) the costs and expenses for actuarial,
accounting and attorneys fees incurred by the Insurance Commissioner, including the costs and fees
of the Insurance Commissioner’s Conservation and Liquidation Office staff and attorneys, which
amount is estimated to be approximately $175,000, in connection with the negotiation of this
Agreement.

     34. Covanta shall bear the sole responsibility for ensuring that Latent Deficiency Claims are
identified and evaluated under this Agreement and the RRR Agreement. The Trustee and the Insurance
Commissioner’s Conservation and Liquidation Office staff shall have no liability arising from a
failure of Covanta to identify and evaluate Latent Deficiency Claims.

     35. The Insurance Commissioner’s Conservation and Liquidation Office staff shall provide
Covanta with a complete listing of substantially all proofs of claims which were timely filed in
compliance with the September 12, 1987 claims filing requirements from the records of EICT, MICT
and MNICT.

11

 

     36. The parties shall request a court order which provides, to the extent permissible at law,
that Covanta shall be immune from suit or liability to any individual claimant in its performance
of its duties. Covanta shall continue to owe such duties to the Trustee, including, without
limitation, a duty of good faith and fair dealing, and the Trustee shall have the right to enforce
Covanta’s duties on behalf of the claimants.

     37. Covanta may utilize third party administrators or similar third party claims services to
assist Covanta with its discharge of its obligations hereunder. Any such third party administrator
or other claims processor shall be subject to the Trustee’s written approval, which shall not be
unreasonably withheld, and shall be utilized at Covanta’s sole expense and under Covanta’s control.
Each such third party company shall be insured by a liability insurance policy with a limit of no
less than one million dollars ($1,000,000) per occurrence in each policy year and two million
dollars ($2,000,000) per policy year in the aggregate. The Trustee shall be named as an additional
insured in each such policy. The Trustee may waive this requirement in his sole discretion as to a
particular third party claims processor.

     38. The Insurance Commissioner retains the right to oversee the claims procedures adopted by
Covanta to ensure that the implementation of these procedures is consistent with this Agreement.

12

 

     39. Covanta shall have the duty to advise the Trustee of the identity and amount of each claim
of a claimant with a Latent Deficiency Claim. The Trustee shall have the right to review all
claims files, correspondence, arbitration materials, and other documents submitted by claimants or
otherwise pertinent to the evaluation of the Latent Deficiency Claims, excepting only the
privileged attorney-client correspondence and attorney work product of Covanta. For purposes of
this paragraph, claims files materials, and other claims evaluation materials or documents
submitted by claimants in seeking evaluation of Latent Deficiency Claims shall be deemed not
privileged from review by the Insurance Commissioner.

     40. Nothing in this Agreement shall create a right of any claimant to share in cash
distributions from EICT, MNICT, or MICT. The claims procedure in this Agreement shall be limited
to the determination of “Latent Deficiency Claims” for purposes of implementing the Rehabilitation
Agreement, and shall not be binding for or determinative of any other issue.

     41. Covanta shall utilize commercially reasonable best efforts to ensure that the Latent
Deficiency Claims administration procedures are completed on or prior to December 31, 2006.
Representatives of Covanta and the Insurance Commissioner’s Conservation and Liquidation Office
shall confer not less frequently than on a quarterly basis to discuss the status of the
administration of

13

 

Latent Deficiency Claims and such other related matters in connection with the performance of
this Agreement.

Further Assurances and Disclosure Covenants

     42. Covanta acknowledges and agrees that: (a) this Agreement, upon execution and satisfaction
of the conditions precedent set forth in Paragraphs 53 and 54 hereof, shall be a “material
definitive agreement not made in the ordinary course of business” to Covanta as defined under Item
601(b)(10) under Regulation S-K, as promulgated by the U.S. Securities and Exchange Commission; (b)
Covanta is obligated to file all reports required to be filed by Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (“Exchange Act”); (c) pursuant to Rule 13a-11 of the Exchange Act,
Covanta is required to file Current Reports on Form 8-K; (d) a material definitive agreement is
required to be disclosed under Item 1.01 of a Current Report on Form 8-K within the time periods
set forth therein; and (e) pursuant to its obligations under, and in accordance with, applicable
federal securities laws, including Rule 13a-11, Covanta shall file a Current Report on Form 8-K to
disclose its entering into a material definitive agreement.

     43. As set forth in more detail in the Amendment Agreement attached hereto as Exhibit
A, Covanta agrees to make appropriate, accurate and timely disclosure of this Agreement or its
terms in its required filings with applicable

14

 

regulatory authorities, including the Securities and Exchange Commission and the Internal
Revenue Service.

     44. Covanta agrees to indemnify and hold harmless the Insurance Commissioner and the Trustee
from any claims, demands, losses, liabilities, attorneys’ fees, costs, incidental damages, actual
damages, or consequential damages imposed upon the Trustee or the Insurance Commissioner arising
from, or relating to, Covanta’s performance or failure to perform under this Agreement. The
Insurance Commissioner and the Trustee may retain counsel of their choosing and Covanta shall
reimburse the Trustee for the reasonable fees and expenses incurred by the Trustee in accordance
herewith. If the Insurance Commissioner or the Trustee selects the California Attorney General’s
office as his counsel, then Covanta shall reimburse the fees and costs associated with that office
at the rate that office charges or attributes to the Insurance Commissioner or the Trustee.

     45. BY THIS PARAGRAPH BUT SUBJECT TO PARAGRAPHS 48 AND 49, THE TRUSTEE DISCLAIMS ANY AND ALL
WARRANTIES AND REPRESENTATIONS, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES THAT THIS AGREEMENT
SHALL ACHIEVE THE PURPOSES FOR WHICH COVANTA MAY INTEND IT, ANY WARRANTY OR REPRESENTATION AS TO
THE FINANCIAL CONDITION OF THE TRUSTS FOR WHICH THE TRUSTEE ACTS, AND ANY WARRANTY OR

15

 

REPRESENTATION OF ANY REPRESENTATIVE OF THE TRUSTEE, INCLUDING ITS COUNSEL. COVANTA ENTERS
INTO THIS TRANSACTION AT ITS OWN RISK AND EXPENSE, AFTER DOING ITS OWN DUE DILIGENCE, WITHOUT ANY
RIGHT TO RELY UPON ANY REPRESENTATION OR WARRANTY NOT EXPRESSLY CONTAINED IN THIS AGREEMENT. The
parties reaffirm and incorporate the provisions of the RRR Agreement, including in particular
Article 6.

     46. COVANTA MAY NOT RECOVER ANY SPECIAL OR CONSEQUENTIAL DAMAGES FOR BREACH OF THIS AGREEMENT.
TO THE GREATEST EXTENT PERMITTED BY LAW, COVANTA WAIVES AND RELEASES THE INSURANCE COMMISSIONER
AND THE TRUSTEE FROM ANY CLAIM THAT THEY HAVE MADE ANY REPRESENTATION, OMISSION OR WARRANTY TO
INDUCE EXECUTION OF THIS AGREEMENT.

RELEASE AND REAFFIRMATION

     47. To the greatest extent permitted by law but subject to Paragraphs 48 and 49, Covanta
releases and holds harmless the Insurance Commissioner, MICT, MNICT, and EICT, their agents,
employees, deputies, attorneys, and representatives, from any and all claims, demands, indemnities,
requirements, liabilities of any kind or nature, except as limited in the following paragraph.
This

16

 

release includes a release of any claims in contract, in tort, in statutory violation, at law,
in equity, for indemnity, for damages, for consequential expenses, or otherwise, including claims
under the RRR Agreement expressly covered by the terms of this Agreement. This release extends to
claims known and unknown, to contingent claims, to liquidated claims, to unliquidated claims, to
claims not yet perfected or accrued, and to claims of any affiliate of Covanta of any kind or
nature.

     48. Subject to Paragraph 49, the release set forth in this Agreement shall be limited in this
single and isolated respect: While Covanta releases the Insurance Commissioner from all claims for
breach of contract prior to the date of this Agreement, including claims for breach of the RRR
Agreement, of any kind or nature, both parties hereby reaffirm and effectuate the RRR Agreement,
and nothing in this release is to disavow or disaffirm future obligations to perform under the RRR
Agreement. For avoidance of doubt, the parties’ intention is that EICT, MNICT and MICT are fully
released as to any claim, including a claim under the RRR Agreement, other than claims for future
breaches of the RRR Agreement.

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     49. The parties recite, acknowledge and waive the benefit of California Civil Code Section 1542,
which provides:

	 	 	 
	  /s/  CA
 
Covanta’s initials
	 	“A general release does not extend to claims which the creditor does not know or suspect to exist
in his or her favor at the time of executing the release, which, if known by him or her, must have
materially affected his or her settlement with the debtor”.

	 	 	 
	  
 

The Trustee’s initials

	 	 

     50. The parties recognize that Covanta’s release is intended to be as broad as possible
except as to the performance of obligations or as otherwise provided in this Agreement (including
all Exhibits and other attachments hereto or agreements entered into or delivered in connection
with this Agreement).

Amendment Agreement

     51. The parties agree that the tax-related provisions of the Rehabilitation Agreement shall be
modified in the form set forth in the Amendment Agreement, which is attached to this Agreement as
Exhibit A.

Determination of Latent Deficiency Claims Amount

     52. The parties shall jointly request a court order that provides, among other things, a
determination of the amount of the minimum ultimate aggregate liability to holders of Latent
Deficiency Claims. Covanta shall engage an independent accounting or actuarial expert, reasonably
acceptable to all parties, to provide and submit to the Liquidation Court in support of such
request, a
declaration(s) of the amount of Latent Deficiency Claims.

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Conditions Precedent

     53. The obligations of the Insurance Commissioner to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of the following conditions, any or all of which
may be waived in whole or in part only
by a writing by the Insurance Commissioner:

     (i) the Liquidation Court shall have approved this Agreement.

     (ii) the Liquidation Court shall have entered orders which, among those orders, contain the
following provisions:

          a. an order which closes the liquidation cases;

          b. an order which provides that MICT, MNICT and EICT shall stay in existence through at least
December 31, 2010, to complete the tasks remaining in their wind-up, subject to earlier
termination;

          c. an order which authorizes entry into this Agreement; and

          d. an order which establishes the minimum amount of the Latent Deficiency Claims to be covered
under this Agreement, which amount shall be consistent with the amount requested by the parties as
described in Paragraph 52 above;

     (iii) The parties shall have executed the Amendment Agreement in substantially the form
attached hereto as Exhibit A;

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     (iv) The parties shall have executed the Latent Deficiency Claims Administration Procedures
Agreement in substantially the form attached hereto as Exhibit B;

     (v) The Insurance Commissioner shall have been satisfied, in his sole discretion, with the
results of his legal, accounting, actuarial, tax and other due diligence investigations;

     (vi) Covanta shall have received all required approvals, including without limitation, the
approval of the Insurance Commissioner, as regulator;

     (vii) The Insurance Commissioner shall have received, and be entitled to rely upon, an opinion
issued to Covanta by Covanta’s tax counsel reasonably acceptable to the Insurance Commissioner; and

     (viii) The Insurance Commissioner shall have received a secretary’s certificate evidencing the
authority of Covanta to enter into this Agreement.

     54. The obligations of Covanta to consummate the transactions contemplated by this Agreement
are subject to the satisfaction of the following conditions, any or all of which may be waived in
whole or in part only by a writing by Covanta:

     (i) the Liquidation Court shall have approved this Agreement.

     (ii) the Liquidation Court shall have entered orders which, among those orders, contain the
following provisions:

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          a. an order which closes the liquidation cases;

          b. an order which provides that MICT, MNICT and EICT shall stay in existence through at least
December 31, 2010, to complete the tasks remaining in their wind-up, subject to earlier
termination;

          c. an order which authorizes entry into this Agreement by the Insurance Commissioner;

          d. an order which establishes the minimum amount of the Latent Deficiency Claims to be covered
under this Agreement, which amount shall be consistent with the amount requested by the parties as
described in Paragraph 52 above; and

          e. an order which confirms that Covanta shall have no personal duty or liability to the
claimants for its work as Latent Deficiency Claims administrator under this Agreement; and

          f. an order enjoining all claimants against the EICT, MICT and MNICT from pursuing any claim
or legal process of any kind against Covanta, its officers, directors, employees, agents, personnel
and attorneys, as to any claim arriving from or related to this Agreement;

     (iii) The parties shall have executed the Amendment Agreement in substantially the form
attached hereto as Exhibit A;

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     (iv) The parties shall have executed the Latent Deficiency Claims Administration Procedures
Agreement in substantially the form attached hereto as Exhibit B;

     (v) Covanta shall have been satisfied, in its sole discretion, with the results of its legal,
accounting, actuarial, tax and other due diligence investigations; and

     (vi) Covanta shall have received all required approvals, including without limitation the
approval of the Insurance Commissioner, as regulator.

Document Access

     55. The Trustee hereby grants to Covanta, its officers, employees, agents, contractors,
attorneys, experts, consultants and representatives access to the proof of claim files and claims
files as to the potential Latent Deficiency Claims. Covanta agrees that such materials shall be
kept in the strictest confidence, and that Covanta shall not, and shall cause its officers,
employees, agents, contractors, attorneys, experts, consultants and representatives not to,
disclose the materials in those files, in whole or in part, to any third person or entity, or
otherwise make any use of the files or any of their materials except as set forth in Paragraph 56
below, without the express written permission of the Trustee.

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     56. The confidentiality provisions set forth in Paragraph 55 above shall be qualified in each,
and only in each, of the following ways:

          a. documents publicly available shall not be within the confidentiality provisions of
Paragraph 55;

          b. documents may be used to correspond with claimants;

          c. documents may be used in the evaluation of Latent Deficiency Claims and in any appeals from
such evaluations; and

          d. documents may be used by Covanta for the purposes of performing its obligations or
responding to actions under this Agreement, the Latent Deficiency Claims Administration Procedures
Agreement and Amendment Agreement.

     57. Covanta shall notify each person authorized by Covanta to work with the documents covered
by the confidentiality provisions set forth in paragraph 55 of Covanta’s and their obligations of
confidentiality and shall cause (a) its officers, employees, agents, attorneys and accountants to
comply with these confidentiality provisions and (b) its contractors, experts, consultants and
other third party representatives to execute a confidentiality agreement in substantially the form
attached hereto as Exhibit C.

     58. The Trustee may set commercially reasonable terms of document access, including the
location of the access, whether Covanta will be provided with

23

 

the original documents or instead will be required to make copies. Upon the request of
Covanta, the Trustee shall provide reasonable assistance to Covanta in accessing the information
contained in such documents. Any actual expenses incurred in connection with this access shall be
borne exclusively by Covanta.

Covanta’s Annual Administrative Commitment

     59. Covanta agrees to bear the costs to administer this Agreement and the RRR Agreement. All
expenses of the Trustee’s staff in administering this Agreement shall qualify as “expenses” to be
charged at the rate(s) customarily charged at their then-current rate sheet and shall be applied
against the reimbursement cap set forth in Paragraph 33 hereof. Covanta shall pay any such charges
within thirty days of receiving an invoice, with reasonable documentation, to make such a payment.
In no event shall the Trustee or the Insurance Commissioner have any liability for the cost of
administering Latent Deficiency Claims.

     60. In addition to the cost of administering this Agreement, Covanta shall pay the pro rata
cost of distribution of the Latent Allocated Shares under the RRR Agreement, using the same
mechanism as that used by EICT, MICT and MNICT.

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Additional Covenants

     61. If any regulatory approvals are required, including but not limited to, the approval of
the Insurance Commissioner as regulator, then Covanta shall be responsible for obtaining those
approvals.

     62. Nothing in this Agreement is intended to alter the liquidation priorities set forth in
California Insurance Code Section 1033. The Allocated Shares (including the Latent Allocated
Shares) are distributed solely through the rehabilitation plan set forth in the RRR Agreement, and
do not constitute any variation from the RRR Agreement. Nothing in this Agreement or transactions
contemplated by this Agreement alters Section 1025 of the California Insurance Code, or any other
requirements of the California Insurance Code.

     63. Based upon the fact that the aggregate amount of Allocated Shares held by the Insurance
Commissioner as agent for and on behalf of MICT, MNICT and the other former Mission Insurance
Group, Inc. trusts is less than 5% of the issued and outstanding shares of Covanta common stock and
that such shares are no longer subject to the escrow obligations of Article Fifth of Covanta’s
certificate of incorporation, Covanta shall cause new stock certificates, representing the
Allocated Shares (including the Latent Allocated Shares), to be issued in the name of the Insurance
Commissioner to be delivered to a third party escrow agent

25

 

selected by the Insurance Commissioner for purposes of the distribution of such shares in
accordance with Paragraph 31 hereof.

Miscellaneous Provisions

     64. The Trustee shall be entitled to issue any press release or releases regarding this
Agreement or setting forth the facts about this Agreement. Covanta will consult with the Trustee
prior to issuing a press release specifically relating to this Agreement; provided, however, that
nothing herein shall restrict Covanta’s ability to comply with its disclosure obligations under
applicable laws, including without limitation, the federal securities and tax laws, rules and
regulations, or any applicable listing agreement, manual, by-laws, rules or regulations of any
national securities exchange.

     65. Covanta shall bear its own expenses of negotiation and effectuation of this Agreement,
including all expenses of performance, including, without limitation, all expenses for agents,
brokers, attorneys, and its own personnel.

     66. Upon notice from the Trustee that he no longer intends to maintain records or data that
relate to the income tax of the trusts, Covanta, shall have the right, at its sole cost and
expense, to take possession of and to maintain such records.

     67. The Trustee is a party to this Agreement and the other agreements contemplated in this
Agreement, only in his representative capacity as Trustee and

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as agent for and on behalf of holders of Latent Deficiency Claims, and not individually. The
State of California is not a party to this Agreement. Neither the Trustee nor the Insurance
Commissioner, nor their agents, employees, attorneys, deputies or representatives, shall have
personal liability in connection with this transaction.

     68. This Agreement, together with the Rehabilitation Agreement, the Amendment Agreement, the
Latent Deficiency Claims Administration Procedures Agreement and any other agreements or documents
entered into or issued in connection with this Agreement, are intended to be an integrated and
comprehensive expression of the parties’ agreement. This Agreement shall be construed such that it
implements and effectuates the terms set forth herein, and such that it imposes upon the Trustee no
duties other than those expressly set forth in this Agreement or such other agreements entered into
in connection with this Agreement.

     69. This Agreement is governed by California law, without regard to principles of conflicts of
law.

     70. The headings and captions in this Agreement are set forth for convenience only, and shall
not be deemed a part of this Agreement.

     71. The recitals herein are introductory only and are not binding agreements.

27

 

     72. There are no representations, warranties, conditions or covenants not set forth in this
Agreement (including all Exhibits and attachments hereto or certificates or other documents issued
in writing by the Insurance Commissioner or Trustee in connection with this Agreement) and the
Rehabilitation Agreement. The Insurance Commissioner and the Trustee assume no additional duties
through entry of this Agreement which are not expressly set forth herein.

     73. Any failure of a party to comply with any obligation, covenant, agreement or condition
herein may be waived in writing, but such waiver or failure to insist upon a duty, obligation or
condition shall not waive or estop the right of a party to require performance of a subsequent
duty, condition or obligation. Any waiver of a term of this Agreement must be written and signed
by a duly authorized representative of the party on whose behalf the waiver is being made.

     74. Each party shall execute and deliver to the other party such documents as may reasonably
be required to effectuate this document, but nothing in this Agreement shall impose the duty on the
Trustee or Covanta to enter into additional agreements not set forth in this Agreement.

     75. In the event that the conditions precedent set forth in Paragraphs 53 and 54 above are not
satisfied or waived in writing, in all respects, on or before March 31, 2006, then this Agreement
shall be deemed to be terminated and of no force or effect.

28

 

     76. This Agreement may be executed in counterparts, which, when combined, shall constitute a
single Agreement.

     77. Any disputes arising from or relating to this Agreement shall be submitted to the
Liquidation Court for resolution; provided, however, that if the liquidation of MICT, MNICT and
EICT is closed, then the party initiating the dispute shall petition to re-open the case. If the
case is not open or re-opened, then the Superior Court of Los Angeles County, California shall have
jurisdiction over any such dispute, and, to the extent permitted by law, such jurisdiction shall be
exclusive as to all matters other than enforcement of judgments.

     78. The addresses for notice and for counsel are set forth below the signatures. Each party
may change its address for notice by written notice. Notices may be given by mail, by facsimile or
by federal express; provided, however, that if facsimile notice is given, then a letter shall also
be sent by mail.

     So agreed as of January 11, 2006:

John Garamendi, Insurance Commissioner of the State of California, in his capacity as Trustee of
the MICT, the MNICT and the EICT

	 	 	 
	/s/ David E. Wilson
 

David E. Wilson, Special Deputy Insurance Commissioner

	 	 

29

 

	 
	Additional notice to:

	 

	Mohsen Sultan

	Conservation and Liquidation Office

	425 Market Street, 23rd Floor

	San Francisco, CA 94105-2406

	 

	Jack Hom

	State of California Insurance Department

	45 Fremont Street, 19th Floor

	San Francisco, CA 94105-2204

	 

	Robert H. Nunnally, Jr.

	Wisener*Nunnally*Gold, LLP

	625 W. Centerville Road, Suite 110

	Garland, Texas 75041

	 	 	 	 	 
	Covanta Holding Corporation	 	 
	 
	 	 	 	 
	By:

	 	  /s/ Craig D. Abolt
 

Craig D. Abolt
	 	 
	Title:

	 	Senior Vice President and Chief Financial Officer	 	 

	 
	With additional notice to:

	 

	Timothy J. Simpson

	Senior Vice President and General Counsel

	Covanta Holding Corporation

	40 Lane Road

	Fairfield, NJ 07004

	 
	David S. Stone

	Neal, Gerber & Eisenberg LLP

	2 North LaSalle Street

	Suite 2200

	Chicago, IL 60602

30

 

	 
	C. Guerry Collins

	Lord Bissell & Brook LLP

	300 South Grand Avenue

	8th Floor

	Los Angeles, California 90071

31

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