Exclusive License And Distribution Agreement

EXCLUSIVE LICENSE
AND DISTRIBUTION AGREEMENT


BETWEEN


NOVAVAX, INC.


AND


KING PHARMACEUTICALS, INC.


JANUARY 8, 2001


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TABLE OF CONTENTS


1. DEFINITIONS........................................................1


2. APPOINTMENT AND GRANT OF RIGHTS....................................1
2.1 Appointment...................................................1
2.2 Right to Promote Products.....................................2
2.3 Trademark.....................................................2
2.4 Ownership of Property Rights..................................3


3. SUPPLY OF PRODUCTS.................................................4
3.1 Manufacture and Supply of Products............................4
3.2 Quarterly Forecasts; Purchase Orders..........................4
3.3 Delivery of Products..........................................6
3.4 Product Samples...............................................7
3.5 Labeling and Packaging Costs..................................7


4. CERTAIN REGULATORY MATTERS.........................................7
4.1 Licenses......................................................7
4.2 Regulatory Responsibility.....................................7
4.3 Efficacy and Safety Information...............................8
4.4 Notice of Adverse Events......................................8
4.5 Recalls; Product Technical Complaints.........................9
4.6 Notice of Government Inspections.............................10
4.7 Government Inquiries.........................................10
4.8 Medical Inquiries............................................10


5. FEES AND EXPENSES.................................................10
5.1 Purchase Price...............................................10
5.2 Royalty Payment..............................................11


6. INSPECTION AND WARRANTY OF PRODUCTS...............................12
6.1 Inspection by KING...........................................12
6.2 Disputes over Products.......................................12
6.3 Replacement of Products that are not Acceptable Products.....12


7. TERM AND TERMINATION..............................................13
7.1 Term of Agreement............................................13
7.2 Termination by NOVAVAX.......................................13
7.3 Termination by KING..........................................14
7.4 Effects of Termination.......................................14
7.5 Actions Upon Termination.....................................15
7.6 Survival.....................................................15
7.7 Payments Upon Termination....................................15


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8. CONFIDENTIAL INFORMATION..........................................16


9. INDEMNIFICATION AND INSURANCE.....................................17
9.1 Indemnification by KING......................................17
9.2 Indemnification by NOVAVAX...................................18
9.3 Claims Procedures............................................18
9.4 Insurance....................................................19


10. REPRESENTATIONS AND WARRANTIES....................................19
10.1 By KING......................................................19
10.2 By NOVAVAX...................................................19


11. NOTICES...........................................................21


12. MISCELLANEOUS PROVISIONS..........................................22
12.1 Assignment; Change of Control................................22
12.2 Governing Law................................................23
12.3 Non-Waiver...................................................23
12.4 Entire Agreement.............................................23
12.5 Jurisdiction; Venue..........................................23
12.6 Severability.................................................25
12.7 Relationship of the Parties..................................25
12.8 Public Announcements.........................................25
12.9 Counterparts.................................................25
12.10 Force Majeure.............................................26
12.11 Interpretation............................................26
12.12 Certain Expenses and Commissions..........................26
12.13 Third Party Beneficiaries.................................26
12.14 Covenant Not to Promote Competing Product.................26
12.15 Headings..................................................27


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EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT


THIS EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT (this "Agreement") is entered into and effective as of this 8th day of January, 2001 (the "Effective Date"), by and between KING PHARMACEUTICALS, INC., a Tennessee corporation ("KING"), and NOVAVAX, INC., a Delaware corporation ("NOVAVAX").


WHEREAS, KING is engaged in the business of and has expertise in, among other things, the promotion of pharmaceutical products to physicians and health care practitioners who specialize in the practice of obstetrics or gynecology or who frequently prescribe hormone replacement therapy products ("OB/GYN"), and has a field representative sales force focused on the OB/GYN community;


WHEREAS, NOVAVAX owns or will own a patent or patents related to the Products (as well as other intellectual property rights in the Products) and expects to file with the FDA a New Drug Application for ESTRASORB(R);


WHEREAS, KING and NOVAVAX desire for NOVAVAX to manufacture or have manufactured and supply KING with Products for promotion, distribution and sale by KING in the Territory and NOVAVAX desires to manufacture or have manufactured and supply KING with such Products on the terms and conditions set forth herein.


NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


1. DEFINITIONS


Capitalized terms used herein without definition shall have the respective meanings assigned thereto in Annex I attached hereto and incorporated herein for all purposes of this Agreement (such definitions to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise specified, all references herein to "Sections" are to Sections of this Agreement.


2. APPOINTMENT AND GRANT OF RIGHTS


2.1 APPOINTMENT.


NOVAVAX hereby appoints KING as its exclusive distributor of the Products within the Territory during the Term of this Agreement, upon and


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subject to the terms and conditions set forth in this Agreement. The exclusivity set forth in this Agreement shall be subject to any limitations provided under applicable law, regulation or governmental guideline including, without limitation, any published directive of the European Union.


2.2 RIGHT TO PROMOTE PRODUCTS.


NOVAVAX hereby grants to KING and its Affiliates, the exclusive right and license to promote, market, distribute and sell the Products within the Territory during the Term of this Agreement, upon and subject to the terms and conditions set forth in this Agreement. NOVAVAX shall not, nor shall it permit its Affiliates, sublicensees, or any other party to, promote, market, distribute or sell the Products within the Territory during the Term of this Agreement. KING agrees to use Commercially Reasonable Efforts to obtain regulatory authority to market and sell the Products within such countries in the Territory as KING determines in its reasonable judgment is reasonable and, after obtaining such regulatory authority, to use Commercially Reasonable Efforts to promote, market, offer-to-sell and sell the Products in the Territory, in such a manner as to effectuate KING's and NOVAVAX's purposes in this Agreement.


2.3 TRADEMARK.


(a) Required Use and Compliance. NOVAVAX hereby grants to KING a license to use the NOVAVAX Trademarks, which are set forth in Exhibit 2.3(a), for the duration of this Agreement solely for advertising, displaying, marketing, promoting, using, offering-for-sale, selling, distributing, importing and/or exporting the Products in accordance with this Agreement. KING shall promote the Products only under the NOVAVAX Trademarks. KING shall not use any trademark or servicemark other than the NOVAVAX Trademarks in promoting the Products without the prior written approval of NOVAVAX. In connection with the subject matter hereof, KING shall use the NOVAVAX Trademarks only in a manner consistent with NOVAVAX's trademark usage guidelines (the "NOVAVAX Guidelines") and shall not use any NOVAVAX Trademark in connection with any goods or products other than the Products, notwithstanding that such goods or products are dissimilar to the Products or have a different use. The parties shall develop the NOVAVAX Guidelines as soon as practicable after the Effective Date. KING shall use the NOVAVAX Trademarks only to the extent authorized herein. NOVAVAX shall not use, nor permit any third party to use, the NOVAVAX Primary Brand Trademarks or other NOVAVAX Trademarks used exclusively with respect to the Products in the Territory during the Term of this Agreement.


(b) Validity of Trademarks. KING acknowledges the validity of NOVAVAX's right, title and interest in and to the NOVAVAX Trademarks and KING shall not have, assert or acquire any right, title or interest in or to any of


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the NOVAVAX Trademarks, except as otherwise explicitly provided in this Agreement.


(c) Notice of Infringement.


(i) KING shall give NOVAVAX notice of any infringement or threatened infringement of any NOVAVAX Trademarks used in connection with this Agreement. Except as otherwise provided in Section 2.3(c)(ii) below, NOVAVAX shall determine in its sole discretion what action, if any, to take in response to the infringement or threatened infringement of its Trademark. In the event that NOVAVAX chooses to take enforcement action in response to the infringement or threatened infringement of its Trademark, KING shall reasonably cooperate in such enforcement; provided, however, that NOVAVAX shall reimburse KING for reasonable expenses incurred by KING that are related to such enforcement.


(ii) NOVAVAX agrees to identify the primary brand Trademarks of the Products (each a "Primary Brand Trademark"). Exhibit 2.3(c)(ii) sets forth the list of Primary Brand Trademarks for the Products as of the Effective Date. As to each Primary Brand Trademark only, if NOVAVAX fails to take enforcement action within ninety (90) days following notice thereof in response to the infringement or threatened infringement of its Trademark in the Territory, then KING shall have the right, in its sole discretion, to conduct litigation or other enforcement proceedings to prevent such infringement at NOVAVAX's expense. In such event, NOVAVAX shall reasonably cooperate in such enforcement.


(iii) The parties shall cooperate in good faith with respect to all Trademark enforcement actions hereunder, and each party shall notify the other party promptly of all substantive developments with respect to such Trademark enforcement actions, including, without limitation, all material filings, court papers and other related documents. Each party shall consider the timely given, reasonable comments and advice of the other party with respect to the strategy employed and submissions made relative to any Trademark enforcement actions. The party enforcing such Trademark action shall retain for its own account any damages or other monetary relief obtained in connection therewith.


2.4 OWNERSHIP OF PROPERTY RIGHTS.


Each party will retain ownership of all information, data, Know-How, inventions, discoveries, programs, copyrights, improvements, devices, designs, apparatus, patents, patent applications, practices, processes, methods, products, techniques, trade secrets, ideas, or other intellectual property owned by it at the commencement of this Agreement.


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3. SUPPLY OF PRODUCTS


3.1 MANUFACTURE AND SUPPLY OF PRODUCTS.


(a) Subject to the provisions of this Section 3, during the Term of this Agreement, NOVAVAX shall use Commercially Reasonable Efforts to manufacture or have manufactured for and supply to KING, Products for KING's promotion, marketing, distribution, and sale of the Products in the Territory. All Products supplied under this Agreement are to be supplied in finished form, in the quantities specified in KING's purchase orders placed with NOVAVAX pursuant to Section 3.2 below and in conformity with the Specifications for the Product.


(b) NOVAVAX may subcontract all or any part of its manufacturing obligations hereunder if it provides no less than six (6) months' written notice of its intent to do so to KING, and KING (i) declines to take over such manufacturing obligations and (ii) provides its consent to such subcontractor, which consent shall not be unreasonably withheld or delayed. Any such subcontractor shall be reputable and shall have sufficient expertise to perform its obligations. Notwithstanding the foregoing, NOVAVAX shall not be required to notify KING or obtain KING's consent with respect to its purchase of materials from third parties for use in its manufacture of the Products hereunder.


(c) In the event that NOVAVAX is or reasonably expects to be unable to supply KING with KING's requirements of Products, based on KING's most recent Binding Quarterly Forecast, NOVAVAX shall so notify KING and KING shall, in addition to KING's other remedies, be permitted to manufacture or have manufactured that quantity of KING's requirements of Products which NOVAVAX is obligated to but is unable to supply hereunder.


(d) NOVAVAX shall manufacture, package, label, and ship or cause to be manufactured, packaged, labeled and shipped the Products and samples of the Products in conformity with the Specifications for the Product and in accordance with all applicable laws, including, without limitation, the Act and all applicable regulations thereunder, the NDA and current Good Manufacturing Practices and all other applicable laws in the U.S. or in the Territory.


3.2 QUARTERLY FORECASTS; PURCHASE ORDERS.


(a) KING shall provide NOVAVAX with a rolling fifteen (15) month forecast of its expected purchases of the Product, at least one full Calendar Quarter prior to the Calendar Quarter during which KING desires that NOVAVAX supply it with the Products. The forecast for the first three (3) months in each fifteen (15) month forecast shall be binding upon KING, and the forecast for the subsequent twelve (12) months shall not be binding. The


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first such fifteen (15) month forecast shall be provided by KING to NOVAVAX at least one full Calendar Quarter prior to the Calendar Quarter in which the first commercial sale of the Product following regulatory approval to sell the Product in the Territory for use in humans is projected ("First Commercial Sale").


(b) Under Section 3.2(a) above, the forecast for those quarters which is binding upon KING and NOVAVAX shall be a "Binding Quarterly Forecast," and the forecasts under Section 3.2(a) which are non-binding upon KING and NOVAVAX shall be "Non-binding Forecasts." A Binding Quarterly Forecast shall be accompanied by an order for the Product reflected in the Binding Quarterly Forecast, subject to quantity modifications as set forth in Section 3.2(c) below.


(c) KING may modify the order represented by a Binding Quarterly Forecast for a period of thirty (30) days after receipt of the Binding Quarterly Forecast by NOVAVAX, within the constraints set forth below. The quantity of each Product ordered by KING in any Calendar Quarter shall not be less than seventy-five percent (75%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter. Additionally, NOVAVAX shall not be obligated to supply that quantity of any Product in any Calendar Quarter that is more than one hundred twenty-five percent (125%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter, but will use its Commercially Reasonable Efforts to supply KING's orders of up to one hundred fifty percent (150%) of the quantity of such Product specified in the Binding Quarterly Forecast applicable to such Calendar Quarter.


(d) KING shall place purchase orders with NOVAVAX in accordance with the applicable Binding Quarterly Forecast. The orders placed by KING hereunder shall specify, in a format agreed upon by the parties, the quantities of each Product desired (consistent with Section 3.2(c) above), the place(s) to which delivery is to be made, and the manner and dates by which delivery is to be made (said delivery dates to be no earlier than ninety (90) calendar days after the purchase order date). All purchase orders shall be sent by KING to the attention of the following employee of NOVAVAX or as otherwise instructed by NOVAVAX.


Name: James Mirto
Title: Senior Vice President, Chief Operating Officer
Address: Novavax, Inc.
8320 Guilford Road
Columbia, Maryland 21046
FAX: (301) 854-3901


The terms of any purchase order or acknowledgment thereof or any other documents relating to KING's purchase of Products from NOVAVAX hereunder


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shall be superceded by the terms of this Agreement. All such purchase orders shall be deemed accepted unless NOVAVAX notifies KING of its non-acceptance no later than seven (7) days after its receipt of such purchase order.


3.3 DELIVERY OF PRODUCTS.


(a) Subject to the terms and conditions of this Agreement, including Section 3.2(e), NOVAVAX shall execute all accepted purchase orders consistent with this Agreement by delivery to the destination within the United States recited therein of all ordered quantities of the Products no later than the delivery dates provided in KING's purchase orders. Subject to Section 3.2(e), KING may reschedule shipment of any Product order, for not greater than 120 days, upon written notice to NOVAVAX at least sixty (60) days prior to the scheduled shipping date for such order. Title and risk of loss for each order will pass to KING when such order of Products is delivered to its destination in the United States.


(b) As of the time of such delivery by NOVAVAX, each lot of the Products will conform to its Specifications. NOVAVAX shall perform release testing in a manner consistent with testing methods agreed upon by the parties or, absent any such agreement, as heretofore conducted by NOVAVAX. NOVAVAX shall provide to KING a certificate of analysis with each shipment of the Products to KING or its designated recipient stating that the Products conform to their Specifications and meet the release specifications. The certificate of analysis shall be in a format agreed upon by the parties. Upon KING's written request, NOVAVAX will also provide KING with a copy of the relevant available manufacturing and controls information for the applicable lot(s) ordered.


(c) All purchase orders for the Products placed by KING shall be whole number multiples of the production batch sizes used by NOVAVAX. The parties acknowledge and agree that the quantity of the Product delivered to KING hereunder may differ by up to ten percent (10%) from the quantity requested in the purchase order. In the event that the quantity delivered hereunder differs from the quantity requested in the purchase order, KING shall pay NOVAVAX for the quantity delivered rather than the quantity requested in the purchase order.


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3.4 PRODUCT SAMPLES.


Except as provided in this Section 3.4, Product samples shall be deemed Products hereunder and shall be subject to the same terms and conditions of other Products. NOVAVAX shall provide KING with samples of the Products to be used by KING solely in marketing and promoting the Products in the Territory. NOVAVAX shall ship the samples to one central warehouse of KING in the United States, as designated by KING, and title and risk of loss and responsibility for handling and warehousing of the samples shall pass to KING upon delivery to such warehouse in the United States. All samples of the Products provided to KING hereunder shall be accompanied by an appropriate certificate of analysis of the Product Specifications and an indication of expiration dating.


3.5 LABELING AND PACKAGING COSTS.


KING shall reimburse NOVAVAX for the direct costs of any manufacturing, packaging, and labeling materials and components paid for by NOVAVAX in reliance upon forecasts submitted by KING hereunder which become obsolete and which cannot be returned for a refund or otherwise used by NOVAVAX upon any change by KING or its Affiliate in the packaging or labeling of the Products. At its option, KING will pay for the return or destruction of the obsolete materials or components.


4. CERTAIN REGULATORY MATTERS


4.1 LICENSES.


Except as otherwise set forth in this Agreement, each party hereto shall, at its sole cost and expense, maintain in full force and effect all necessary licenses, permits and other authorizations required by law, regulation, ordinance or statute to carry out its duties and obligations in the Territory under this Agreement.


4.2 REGULATORY RESPONSIBILITY.


All regulatory matters regarding the Products within and arising from or related to the promotion, marketing or sales of the Products within the Territory shall be the responsibility of, and shall remain under the control of KING, subject to NOVAVAX's responsibilities in matters related to the Products outside the Territory, including without limitation NOVAVAX's responsibilities relating to the manufacturing of the Products in accordance with applicable FDA regulations and current Good Manufacturing Practices. Notwithstanding the foregoing, KING shall promptly provide NOVAVAX with copies of all communications received from any regulatory agency or authority concerning the Products or any Marketing Materials related to the Products in the Territory


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and/or arising from or related to the promotion, marketing or sales of the Products within the Territory and shall submit copies of all such communications and filings to be made to any regulatory agency or authority within the Territory for prior review and comment within five (5) business days. KING shall provide adequate notice to NOVAVAX and shall include NOVAVAX in all meetings with a regulatory agency or authority within the Territory, electronic, in person, or otherwise. KING shall give due consideration to all comments timely made by NOVAVAX and shall notify NOVAVAX, in writing, if it declines to address any such comments, stating the reason therefor.


4.3 EFFICACY AND SAFETY INFORMATION.


Each party shall furnish the other with efficacy and safety information in its possession as reasonably requested to assist each party in the performance of its obligations under this Agreement, including without limitation relevant clinical and safety data included in the NDA (or comparable filing in the Territory) for the Products and additional information, if any, related to the efficacy and safety profile of the Products. Except for that information that is to be disclosed to OB/GYN's in connection with conducting details, such information shall be treated as Confidential and Proprietary Information pursuant to Section 8 of this Agreement and shall not be disclosed to third parties without the prior written approval or direction of the party owning such Confidential and Proprietary Information.


4.4 NOTICE OF ADVERSE EVENTS.


Each party shall promptly notify the other party of any event(s) that materially affect(s) or could reasonably be expected to materially affect the marketing of the Products, including without limitation adverse drug reactions and governmental inquiries. Serious Adverse Events for the Products learned of by KING shall be submitted in writing to NOVAVAX within two (2) business days from the date of learning thereof by KING. Non-Serious Adverse Events for the Products learned of by KING shall be submitted in writing to NOVAVAX no more than five (5) business days from the date of learning thereof by KING. KING and/or its Affiliates shall have the sole responsibility for reporting and responding to such events to applicable regulatory authorities in the Territory; provided, that NOVAVAX may take such actions (including issuing such reports) as it determines are required by applicable law. KING shall promptly provide NOVAVAX with copies of all periodic reports and product safety update reports relating to the Products which are filed or received from third parties relating to the Territory. Notwithstanding the foregoing, within one hundred twenty (120) days after the Effective Date, the parties shall meet and establish a standard operating procedure ("SOP") addressing the responsibilities of each party with respect to adverse event reporting, which SOP shall supercede this Section 4.4, it being understood, however, that KING shall have the


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responsibility of reporting all adverse events to the appropriate regulatory authorities in the Territory.


4.5 RECALLS; PRODUCT TECHNICAL COMPLAINTS.


(a) KING shall have the sole authority and responsibility to respond to any regulatory agencies in the Territory, to respond to Product Technical Complaints and medical complaints and to handle all recalls or market withdrawals of the Products in accordance with applicable law, at its cost and expense; provided, however, that if any such recalls or market withdrawals of the Products are caused solely by actions or inactions by NOVAVAX constituting a breach of the provisions of this Agreement or a violation of applicable law, NOVAVAX, as KING's sole remedy, shall bear all reasonable costs associated with such actions or inactions in connection therewith, provided, however, that NOVAVAX shall have no obligation to reimburse KING for any incidental or consequential damages incurred in connection therewith, including, without limitation, any lost profits.


(b) Each party shall promptly (but in any case, not later than 48 hours) notify the other party in writing of any order, request or directive of a court or other governmental authority to recal ...