10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended September 30, 2009

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1034

Commission File No. 0-26770

NOVAVAX, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 22-2816046
(I.R.S. Employer
Identification No.)

9920 Belward Campus Drive, Rockville, MD
(Address of principal executive offices) 20850
(Zip code)

(240) 268-2000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes      o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes      o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ 
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes      þ No

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Shares of Common Stock Outstanding at November 4, 2009: 93,489,568

NOVAVAX, INC.
Form 10-Q
Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008	1
	Consolidated Statements of Operations for the three and nine-months ended September 30, 2009 and 2008 (unaudited)	2
	Consolidated Statements of Stockholders’ Equity as of September 30, 2009 (unaudited)	3
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008 (unaudited)	4
	Notes to the Consolidated Financial Statements (unaudited)	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	30
Item 1A	Risk Factors	30
Item 6	Exhibits	33
SIGNATURES

i

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

NOVAVAX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)

	September 30,			December 31,
	2009			2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	29,984		$	26,938
Short-term investments classified as available for sale		4,391			6,962
Accounts and other receivables, net of allowance for doubtful accounts of $218 as of September 30, 2009 and December 31, 2008, respectively		173			290
Prepaid expenses and other current assets		387			774
Current assets of discontinued operations		—			132
Total current assets		34,935			35,096
Property and equipment, net		7,644			8,228
Goodwill		33,141			33,141
Other non-current assets		160			160
Total assets	$	75,880		$	76,625
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		1,544			1,750
Accrued expenses and other current liabilities		3,544			2,969
Current portion of notes payable		281			650
Convertible notes, current		—			21,778
Current liabilities of discontinued operations		—			242
Deferred rent		278			328
Total current liabilities		5,647			27,717
Non-current liabilities		433			480
Deferred rent		2,783			2,939
Total liabilities		8,863			31,136
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value, 200,000,000 shares and 100,000,000 shares authorized at September 30, 2009 and December 31, 2008; 93,843,442 shares issued and 93,388,012 outstanding at September 30, 2009, and 69,220,021 shares issued and 68,764,591 outstanding at December 31, 2008		938			692
Additional paid-in capital		329,646			284,595
Notes receivable from directors		(1,572	)		(1,572	)
Accumulated deficit		(260,195	)		(235,776	)
Treasury stock of 455,430 shares at September 30, 2009 and at December 31, 2008, cost basis		(2,450	)		(2,450	)
Accumulated other comprehensive income		650			—
Total stockholders’ equity		67,017			45,489
Total liabilities and stockholders’ equity	$	75,880		$	76,625

The accompanying notes are an integral part of these consolidated financial statements.

-1-

NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share information)
(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2009			2008			2009			2008
Revenues	$	201		$	194		$	251		$	994
Operating costs and expenses:
Research and development		5,256			8,655			14,819			18,469
General and administrative		3,207			1,265			8,661			7,675
Total operating costs and expenses		8,463			9,920			23,480			26,144
Loss from operations before other (expense) income		(8,262	)		(9,726	)		(23,229	)		(25,150	)
Other income(expense), net		732			(604	)		(1,190	)		(597	)
Loss from continuing operations		(7,530	)		(10,330	)		(24,419	)		(25,747	)
Income from discontinued operations		—			2,488			—			778
Net loss	$	(7,530	)	$	(7,842	)	$	(24,419	)	$	(24,969	)
Basic and diluted net loss per share:
Loss per share from continuing operations	$	(0.08	)	$	(0.16	)	$	(0.30	)	$	(0.41	)
Income per share from discontinued operations		—			0.04			—			0.01
Net loss per share	$	(0.08	)	$	(0.12	)	$	(0.30	)	$	(0.40	)
Basic and diluted weighted average number of common shares outstanding		92,297,263			66,521,776			82,027,113			62,820,068

The accompanying notes are an integral part of these consolidated financial statements.

-2-

NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the nine months ended September 30, 2009
(in thousands, except share information)
(unaudited)

							Notes									Accumulated
					Additional		Receivable									Other		Total
	Common Stock				Paid-in		From			Accumulated			Treasury			Comprehensive		Stockholders’
	Shares		Amount		Capital		Directors			Deficit			Stock			Income		Equity
Balance, December 31, 2008		69,220,021	$	692	$	284,595	$	(1,572	)	$	(235,776	)	$	(2,450	)	$	—	$	45,489
Non-cash compensation costs for stock options and restricted stock		—		—		1,270		—			—			—			—		1,270
Issuance of stock to Cadila, net of issuance costs of $0.5 million		12,500,000		125		10,469		—			—			—			—		10,594
Redemption of convertible debt		3,056,939		31		7,629		—			—			—			—		7,660
Issuance of stock to ROVI		1,094,891		11		2,966		—			—			—			—		2,977
Sales of stock under ATM, net of offering costs of $0.7 million		7,489,207		74		21,930		—			—			—			—		22,004
Exercise of stock options		472,384		5		787		—			—			—			—		792
Restricted stock issued as compensation		10,000		—		—		—			—			—			—		—
Unrealized gain on short-term investments		—		—		—		—			—			—			650		650
Net loss		—		—		—		—			(24,419	)		—			—		(24,419	)
Balance, September 30, 2009		93,843,442	$	938	$	329,646	$	(1,572	)	$	(260,195	)	$	(2,450	)	$	650	$	67,017

The accompanying notes are an integral part of these consolidated financial statements.

-3-

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Nine months ended
	September 30,
	2009			2008
Operating Activities:
Net loss	$	(24,419	)	$	(24,969	)
Less net income from discontinued operations		—			(778	)
Net income from continuing operations		(24,419	)		(25,747	)
Reconciliation of net loss from continuing operations to net cash used in operating activities:
Depreciation		899			581
Amortization of debt discount		147			307
Reserve for notes receivable and accrued interest		—			(1,041	)
Loss and disposal of property and equipment		28			250
Impairment of short-term investments		646			—
Impairment of long lived assets		21			296
Amortization of net discounts on short-term investments		—			(181	)
Amortization of deferred financing costs		222			181
Deferred rent		(207	)		(65	)
Non-cash stock compensation		1,270			1,646
Changes in operating assets and liabilities:
Accounts receivable		105			432
Inventory		—			(30	)
Deferred revenue		201			—
Prepaid expenses and other assets		371			401
Accounts payable and accrued expenses		272			2,387
Other assets		—			—
Net cash used in operating activities from continuing operations		(20,444	)		(20,583	)
Net cash provided by operating activities from discontinued operations		—			2,993
Net cash used in operating activities		(20,444	)		(17,590	)
Investing Activities:
Proceeds from leasehold improvement allowance		—			3,000
Capital expenditures		(356	)		(5,051	)
Purchases of short-term investments		—			(15,650	)
Proceeds from disposal of property and equipment					7 40
Proceeds from maturities of short-term investments		2,575			49,520
Net cash provided by investing activities from continuing operations		2,226			31,859
Net cash provided by investing activities from discontinued operations		—			1,354
Net cash provided by investing activities		2,226			33,213
Financing Activities:
Principal payments of notes payable		(15,088	)		(998	)
Proceeds from the exercise of stock options		792			249
Net proceeds from the sales of common stock, net of offering costs of $1.0 million and $0.4 million		35,560			17,570
Net cash provided by financing activities		21,264			16,821
Net increase in cash and cash equivalents		3,046			32,444
Cash and cash equivalents at beginning of period		26,938			4,350
Cash and cash equivalents at end of period	$	29,984		$	36,794
Supplemental disclosure of cash flow information:
Cash interest payments	$	879		$	1,065
Supplemental disclosure of non-cash activities:
Equipment purchases included in accounts payable	$	5		$	616
Repayment of notes payable through issuance of common stock	$	7,660		$	—

The accompanying notes are an integral part of these consolidated financial statements.

-4-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Organization

     Novavax, Inc., a Delaware corporation (“Novavax” or the “Company”), was incorporated in 1987, and is a clinical-stage biopharmaceutical company focused on creating differentiated, value-added vaccines that improve upon current preventive options for a range of infectious diseases. These vaccines leverage the Company’s virus-like-particle (“VLP”) platform technology coupled with a unique disposable production technology.

     VLPs are genetically engineered three-dimensional nanostructures which incorporate immunologically important lipids and recombinant proteins. The Company’s VLPs resemble the virus but lack the genetic material to replicate the virus. The Company’s proprietary production technology uses insect cells rather then chicken eggs or mammalian cells. The Company’s current product targets include vaccines against the H5N1 and other subtypes of avian influenza with pandemic potential, H1N1, human seasonal influenza, Varicella Zoster (“VZV”), which causes shingles, and Respiratory Syncytial Virus (“RSV”).

2. Summary of Significant Accounting Policies

Basis of Presentation

     Except for the consolidated balance sheet of Novavax as of December 31, 2008, which is derived from audited financial statements, the accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair statement of such financial position and results of operations have been included. All such adjustments are of a normal recurring nature unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year.

     The consolidated financial statements and notes are presented as required by Form 10-Q and do not contain certain information included in the Company’s annual financial statements and notes. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results for any subsequent quarter or the entire fiscal year ending December 31, 2009. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. The Company evaluated its September 30, 2009 financial statements for subsequent events through November 6, 2009, the date the financial statements were issued. Please see Note 8 — Subsequent Events.

     The Company must classify a business line as discontinued operations once the Company has committed to a plan to sell the business, as determined pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 360. “Property, Plant and Equipment” (“ASC 360”) (formerly Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment of Long-Lived Assets, “ or SFAS 144). In February 2008, the Company sold its Estrasorb business. Historical financial information presented in the consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the current year presentation.

-5-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The accompanying unaudited interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

     The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss per Share

     The Company calculates basic loss per share on the weighted average number of common shares outstanding during the period. The dilutive effect of common stock equivalents is included in the calculation of diluted earnings per share only when the effect of the inclusion would be dilutive. Outstanding stock options with an exercise price above market are excluded from the Company’s diluted computation as their effect would be anti-dilutive. For the three and nine months ended September 30, 2009, there were approximately 1.7 million and 4.1 million outstanding stock options, respectively, along with 3.3 million outstanding warrants that were excluded from the calculation of diluted loss per share. For both the three and nine months ended September 30, 2008, there were approximately 4.8 million outstanding stock options along with 3.3 million outstanding warrants that were excluded from the calculation of diluted loss per share.

Comprehensive Loss

     The Company discloses comprehensive loss and its components as part of its consolidated financial statements. Comprehensive loss is comprised of the net loss and other comprehensive income (loss), which includes certain changes in equity that are excluded from the net loss.

     The following table summarizes the Company’s comprehensive loss (in thousands, unaudited):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Net loss	$	(7,530	)	$	(7,842	)	$	(24,419	)	$	(24,969	)
Unrealized gains on short-term investments classified as available for sale		171			—			650			—
Comprehensive loss	$	(7,359	)	$	(7,842	)	$	(23,769	)	$	(24,969	)

-6-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Short-Term Investments

     Short-term investments at September 30, 2009 and December 31, 2008 consist of investments in three and five auction rate securities, respectively, with a par value of $5.6 million and $8.2 million, and a fair value of $4.4 million and $7.0 million, respectively. The auction rate securities remaining as of September 30, 2009 have been in an unrealized loss position for less than 12 months. The Company recorded other than temporary impairment charges to other expenses related to these securities during the nine months ended September 30, 2009 of $1.4 million as a result of illiquidity issues that presently exist in the credit markets and management’s belief these securities cannot currently be sold at par value, but are saleable at a discount from their par value. During the three and nine months ended September 30, 2009, the Company also recorded temporary unrealized gains, through comprehensive loss, of $0.2 million and $0.6 million related to the increase in estimated fair value for three of the Company’s auction rate securities and the redemption of two of its investments at par value. The Company did not record any changes in estimated fair value during the three and nine months ended September 30, 2008.

     During the three months ended September 30, 2009, two of the auction rate securities were redeemed at par value resulting in a realized gain of approximately $692,000.

Fair Value Measurements

     Effective January 1, 2008, the Company adopted a newly issued accounting standard which clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. The Company defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Company permits the use of various valuation approaches, including market, income and cost approaches.

     The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities. Valuations of these products do not require a significant amount of judgment. The Company does not have any Level 1 assets at September 30, 2009.

Level 2 — These valuations are based primarily on a “market approach” using quoted prices in markets that are not very active, broker or dealer quotations, or alternative pricing sources with reasonable levels of transparency. The Company considers its auction rate securities to be Level 2 assets.

Level 3 — These valuations are based primarily on unobservable inputs that are supported by little or no market activity and that are financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. The Company’s Level 3 assets are comprised of goodwill.

-7-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     If the inputs used to measure the financial assets and liabilities fall within more than one of the different levels described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

     Financial assets and liabilities measured a fair market value on a recurring basis as of September 30, 2009 are summarized below:

	Fair Value Measurements at September 30, 2009
	(Unaudited)
	(in thousands)
	Quoted Prices in		Significant
	Active Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs		Assets
Assets	Level 1		Level 2		Level 3		At Fair Value
Auction rate securities	$	—	$	4,391	$	—	$	4,391
Goodwill		—		—		33,141		33,141
Total assets	$	—	$	4,391	$	33,141	$	37,532

Property and Equipment

     Property and equipment are comprised of the following:

	As of
	September 30, 2009			December 31, 2008
	(Unaudited)
	(in thousands)
Construction in progress	$	1,022		$	5,394
Furniture, machinery and equipment		4,464			3,880
Leasehold improvements		4,525			637
Computer software and hardware		333			339
		10,344			10,250
Less accumulated depreciation and amortization		(2,700	)		(2,022	)
	$	7,644		$	8,228

     Construction in progress is primarily related to costs incurred in the construction of the Company’s Good Manufacturing Practice (“GMP”) pilot manufacturing facility which started during the third quarter of 2007. Amounts included in construction in progress will be placed in service upon completion of validation, which is expected to occur by December 31, 2009.

-8-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Goodwill and Other Intangible Assets

     Goodwill originally resulted from business acquisitions. Assets acquired and liabilities assumed were recorded at their fair values; the excess of the purchase price over the identifiable net assets acquired was recorded as goodwill. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to impairment tests annually, or more frequently should indicators of impairment arise. The Company utilizes a discounted cash flow analysis that includes profitability information, estimated future operating results, trends and other information in assessing whether the value of indefinite-lived intangible assets can be recovered. Goodwill impairment is deemed to exist if the carrying value of a reporting unit exceeds its estimated fair value.

     Due to continued volatility in the financial and credit markets and the Company’s stock price, the Company determined it should perform an interim test for impairment of the Company’s goodwill as of March 31, 2009. The Company did not perform an interim test for impairment of the Company’s goodwill as of September 30, 2009 due to the Company’s higher stock price at that time.

     At March 31, 2009 and December 31, 2008, the Company used both the market approach and the income approach to determine if the Company had an impairment of its goodwill. The income approach was used as a confirming look to the market approach. The Company used a market approach to determine the market value of capitalization of its single reporting unit. Step one of the impairment test states that if the fair value of a reporting unit exceeds its carrying amount, goodwill is considered not to be impaired. The Company’s forecasts were used to create a risk adjusted discounted cash flow analysis to indicate the market value capitalization. The fair value of the Company’s reporting unit was compared to the carrying amount of the reporting unit. Under both approaches, the fair value of the reporting unit was higher than the carrying value, resulting in no impairment recorded against goodwill.

Equity Method Investments

     In June 2009, the Company transferred certain intellectual property, with no book value, to CPL Biologicals Private Limited (“CPLB”) in exchange for a 20% interest. The Company accounts for this investment using the equity method. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Company’s proportionate share of earnings or losses and distributions up to the amount initially invested or advanced. At September 30, 2009, the Company did not record its portion of CPLB’s loss, as it is nominal.

-9-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Stock-Based Compensation

Stock Options

     The Company measures the cost of employee services received in exchange for equity share options granted based on the grant-date fair value of the options. The cost is recognized as compensation expense over the requisite service period (generally the vesting period) of the options. Compensation cost included in operating expenses was $366,000 and $1,024,000 for the three and nine months ended September 30, 2009, and $446,000 and $1,443,000 for the three and nine months ended September 30, 2008.

     As of September 30, 2009, there were stock options outstanding for the purchase of 6,377,391 shares of common stock. At September 30, 2009, the aggregate fair value of the remaining compensation cost of unvested options, as determined using a Black-Scholes option valuation model, was approximately $4,331,000 (net of estimated forfeitures). This unrecognized compensation cost of unvested options is expected to be recognized over a weighted average period of 1.91 years.

     During the three and nine months ended September 30, 2009, the Company granted stock options for the purchase of approximately 484,000 and 1,272,000 shares of common stock, respectively, with a fair value of approximately $1,272,000 and $1,597,000 (net of estimated forfeitures). Stock options for the purchase of approximately 65,000 and 555,000 shares of common stock were forfeited during the three and nine months ended September 30, 2009, respectively. During the three and nine months ended September 30, 2008, the Company granted stock options for the purchase of approximately 84,000 and 935,000 shares of common stock, respectively, with a fair value of approximately $120,000 and $1,490,000 (net of estimated forfeitures), respectively. Stock options for the purchase of approximately 369,000 and 714,000 shares of common stock were forfeited during the three and nine months ended September 30, 2008, respectively.

     The weighted average fair value of stock options on the date of grant and the assumptions used to estimate the fair value of stock options issued during the three and nine months ended September 30, 2009 and 2008, using the Black-Scholes option valuation model were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Weighted average fair value of options granted	$	2.60		$	1.43		$	1.25		$	1.59
Expected life (years)		3.89-4.02			4.12			3.89-7.05			3.62-6.37
Expected volatility		90.90-90.33	%		84.73-85.25	%		85.68-111.83	%		81.14-87.78	%
Risk free interest rate		1.57-2.00	%		2.60-3.09	%		1.56-3.19	%		1.97-3.29	%
Expected dividend		0.0	%		0.0	%		0.0	%		0.0	%
Expected forfeiture rate		21.07	%		21.96	%		21.07-21.96	%		21.96	%

-10-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The expected life of options granted was based on the Company’s historical share option exercise experience using the historical expected term from vesting date. The expected volatility of the options granted during the three and nine months ended September 30, 2009 and 2008 was determined using historical volatilities based on stock prices over a look-back period corresponding to the expected life. The risk-free interest rate was determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the options. The forfeiture rate was determined using historical rates since the inception of the plans. The Company has never paid a dividend, and as such the dividend yield is zero.

Restricted Stock

     Non-cash compensation expense related to all restricted stock issued to employees and directors has been recorded as compensation using the straight-line method of amortization. The Company accounts for stock-based awards issued to non-employees by revaluing the options based on shorter period of either the reporting period or the vesting period. For the three and nine months ended September 30, 2009, $50,000 and $246,000 of non-cash stock compensation expense was included in total operating costs and expenses and additional paid-in capital was increased accordingly. For the three and nine months ended September 30, 2008, $34,000 and $203,000, respectively, of non-cash stock compensation expense was included in total operating costs and expenses and additional paid-in capital was increased accordingly.

Recently Adopted Accounting Guidance

     In April 2009, the FASB issued guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance also requires those disclosures in summarized financial information at interim reporting periods and is effective for interim periods ending after June 15, 2009. This pronouncement did not have any material impact on the Company’s financial position and consolidated results of operations.

     In June 2009, the FASB issued guidance which will become the source for authoritative U.S. Generally Accepted Accounting Principles recognized by the FASB to be applied by non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission under the authority of the federal securities laws are also sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification does not change current guidance and is effective for interim and annual periods ending on or after September 15, 2009. The adoption of this guidance did not have any impact on the Company’s consolidated results of operations and financial position.

Recent Accounting Guidance Not Yet Adopted

     In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities, which is effective for the Company beginning January 1, 2010. The new guidance requires revised evaluations of whether entities represent variable interest entities, ongoing assessments of control over such entities, and additional disclosures for variable interests. We believe adoption of this new guidance will not have a material impact on the Company’s financial position and results of operations.

-11-

NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Income Taxes

     The American Recovery and Reinvestment Act of 2009 (the “Act”) was enacted and signed into law on February 17, 2009. The Act includes the extension of a provision passed by the United States Congress in 2008 which allows companies to accelerate the recognition of a portion of research and development (“R&D”) credits in lieu of bonus depreciation and convert the R&D credits carry forward into currently refundable credits. The amount that may be converted is based on the amount invested in property that would otherwise qualify for bonus depreciation and is capped at the lesser of 6% of historic R&D credits or $30 million. The Company is evaluating the R&D credit provisions of the Act but has not yet reached a decision whether it will forego the bonus depreciation to obtain any R&D credit that may be refundable.

3. Significant Transactions

     On January 12, 2009, the Company entered into an At the Market Sales Agreement (the “January Sales Agreement”) with Wm Smith & Co. (“Wm Smith”), under which the Company may sell an aggregate of up to $25.0 million in gross proceeds of the Company’s common stock from time to time through Wm Smith, as the agent for the offer and sale of the common stock. During the three and nine months ended September 30, 2009, the Company sold 2,039,630 shares and 7,489,207 shares at a range of $1.75-$5.03 and received net proceeds of $8.0 million and $22.0 million, respectively, under the January Sales Agreement.

     On September 15, 2009, the Company entered into a second At Market Issuance Sales Agreement (the “September Sales Agreement”), with Wm Smith, under which the Company may sell an aggregate of up to $10.0 million in gross proceeds of the Company’s common stock from time to time through Wm Smith. The Company has not sold any common stock under the September Sales Agreement.

     On June 30, 2009 the Company entered into a stock purchase agreement with ROVI for the purchase of $3.0 million of Novavax common stock at $2.74 per share. The Company issued approximately 1.1 million shares and received the proceeds on July 6, 2009.

4. Convertible Notes

     As of December 31, 2008, the Company had $22 million of senior convertible notes outstanding (the “Notes”). The Notes carried a 4.75% coupon; were convertible into shares of Novavax common stock at $4.00 per share; and matured on July 15, 2009. On April 29, 2009, the Company entered into amendment agreements (the “2009 Amendments”) with holders of the outstanding Notes representing $17.0 million of the $22.0 million outstanding principal amount of the Notes to amend the terms of the Notes to allow for early retirement and 70% of this principal amount plus accrued and unpaid interest was paid in cash, $12.1 million, and 30% was paid through issuance of 2,040,000 shares of common stock at $2.50 per share.

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NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     On July 15, 2009, the Company paid the $5.0 million balance of the Notes. Under the terms of the Notes, the Company paid approximately $2.6 million of principal and accrued interest in cash and issued 1,016,939 shares of common stock to pay the remaining $2.6 million of principal and accrued and unpaid interest, based on a price of $2.5163 per share. As of July 15, 2009, the Notes were fully paid and extinguished.

5. Operating Leases

     Future minimum rental commitments under non-cancelable leases as of September 30, 2009 are as follows (in thousands):

	Operating				Net Operating
Year	Leases		Sub-Leases		Leases
2009	$	568	$	84	$	484
2010		2,088		339		1,749
2011		2,087		259		1,828
2012		2,132		—		2,132
2013		2,179		—		2,179
Thereafter		6,400		—		6,400
Total minimum lease payments	$	15,454	$	682	$	14,772

     In April 2009, the Company negotiated an amendment to its sublease with PuriCore to extend the term of the sublease until September 30, 2011, to expand the sublease premises to include all of the approximately 32,900 rentable square feet and to grant PuriCore the option to renew the sublease for an additional three year term.

6. Discontinued Operations

     In February 2008, the Company sold certain assets used in the production of Estrasorb, an estrogen product currently licensed by Graceway Pharmaceuticals, LLC, to Graceway. In connection with the sale, the Company agreed to manufacture and supply additional units of Estrasorb for Graceway, which the Company completed in August 2008. The Company received an upfront payment from Graceway upon the execution of the transaction agreements. As part of the transaction, once the Company satisfied its supply obligations, the Company transferred to Graceway manufacturing equipment related to the production of Estrasorb, valued at $1.1 million on the closing date, which had been included as assets held for sale in the Company’s consolidated balance sheet.

     The results of operations for the Company’s manufacturing facility in Philadelphia, Pennsylvania are being reported as discontinued operations and the consolidated statements of operations for prior periods have been adjusted to reflect this presentation.

     The assets and liabilities related to the Company’s discontinued manufacturing operations had identifiable cash flows that were largely independent of the cash flows of other groups of assets and liabilities and the Company did not have a significant continuing involvement beyond one year after the closing of the Graceway transaction.

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NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The Company delivered the required quantity of Estrasorb as required under the Graceway agreements and exited the facility in August 2008.

     The following table presents summarized financial information for the Company’s discontinued manufacturing operations presented in the consolidated statements of operations for the three and nine months ended September 30, 2009 and 2008:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(Unaudited)				(Unaudited)
	(In thousands)				(In thousands)
Revenues	$	—	$	3,546	$	—	$	3,775
Cost of products sold		—		976		—		2,450
Excess inventory costs over market		—		83		—		548
Total operating expenses		—		1,059		—		2,998
Net income	$	—	$	2,487	$	—	$	777

     The following table presents major classes of assets and liabilities that have been presented as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets.

	September 30, 2009		December 31, 2008
	(Unaudited)
	(In thousands)
Prepaid expenses and other current assets	$	—	$	132
Current assets of discontinued operations	$	—	$	132
Accounts payable	$	—	$	209
Accrued expenses and other liabilities		—		33
Current liabilities of discontinued operations	$	—	$	242

7. Related Party Transactions

     Dr. Rajiv Modi, a director of Novavax, is also a managing director of Cadila Pharmaceuticals. As reported by the Company on March 31, 2009, Novavax and Cadila have formed a joint venture called CPL Biologicals Private Limited, of which Novavax owns 20%. Novavax and Cadila have also entered into a Master Services Agreement, pursuant to which Cadila may perform certain research, development and manufacturing services for Novavax up to $7.5 million. A subsidiary of Cadila owns 18% of our outstanding common stock. The aggregate amount of these agreements is approximately $26.5 million. For the three and nine months ended September 30, 2009, the Company incurred $41,000 related to the Master Services Agreement.

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NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     John Lambert, the Chairman of the Board of Directors, has a consulting agreement with the Company, pursuant to which he assists the Company with issues regarding the development and commercialization of its vaccine product candidates. His annual compensation for these services is $220,000. The Company also pays Mr. Lambert $30,000 annually for his service as Chairman of the Board of Directors and may also be granted equity awards. For the three and nine months ended September 30, 2009, the Company recorded consulting expenses for Mr. Lambert of $55,000 and $165,000 respectively, in accordance with the consulting agreement. For the three and nine months ended September 30, 2008, the Company recorded consulting expenses for Mr. Lambert of $55,000 and $165,000, respectively.

     Two of the Company’s former directors have outstanding notes due to the Company in the aggregate principal amount of $1,572,000, as reflected on the Company’s balance sheet as of September 30, 2009. The notes, in the initial principal amount of $1,479,268, were initially delivered by the former directors to the Company in March 2002 as payment of the exercise price of options. In May 2008, one of the Notes was amended and restated to, among other things, include accrued interest in the principal amount, bringing the aggregate principal amount outstanding to $1,610,516. As of September 30, 2009, the Company received payments of $65,000. As security, the former directors pledged shares of the Company’s common stock as collateral. The Company has the right to sell the pledged shares if the trading price of the common stock reaches certain targets. As of September 30, 2009, the outstanding principal and interest for these two notes was $2,017,000. The Company has not accrued interest due to collection concerns. Both notes are currently in default and the Company is pursuing the collection of these promissory notes.

8. Subsequent Events

     On October 21, 2009, Novavax entered into a binding term sheet (the “Xcellerex Agreement”) with Xcellerex, Inc. Pursuant to the Xcellerex Agreement, Xcellerex will manufacture a fixed quantity of bulk drug substance of Novavax’s 2009 H1N1 vaccine for potential use and sale in Mexico. As consideration, the Company paid Xcellerex a fixed non-refundable payment and will pay a “per dose” fee for each dose equivalent of bulk materials delivered to Novavax. A portion of the fixed payment, and the actual cost of materials supplied by Novavax, will be credited against the payment due for each batch of bulk material. Xcellerex is the exclusive contract manufacturer for the bulk material for sale in Mexico until February 15, 2010.

     On October 20, 2009, Novavax entered into a Materials Transfer Agreement with Laboratorio Avi-Mex S.A. de C.V. (“Avimex”), pursuant to which Novavax will supply Avimex with certain amounts of its 2009 H1N1 vaccine candidate. Avimex will use the H1N1 vaccine to conduct clinical trials and seek regulatory approval in Mexico. Avimex will make certain milestone payments to Novavax and will pay the Company a transfer fee for the H1N1 vaccine based on the Company’s production cost. Novavax also granted Avimex an irrevocable right and option to enter into a non-exclusive distribution agreement to distribute the 2009 H1N1 vaccine in Mexico.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Statements herein regarding future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding revenues, operating expenses, cash burn, future product development and related clinical trials and future research and development, including regulatory approval in the United States and other countries and product sales, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those expressed or implied by such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those expressed or implied by such forward-looking statements. Such factors include, among other things, the following: our ability to progress any product candidates into pre-clinical or clinical trials; the scope, initiation, rate and progress of our preclinical studies and clinical trials and other research and development activities; clinical trial results; even if the data from preclinical studies or clinical trials is positive, the product may not prove to be safe and efficacious; regulatory approval is needed before any vaccines can be sold in or outside the United States; the 2009 H1N1 vaccine has not been approved by the Mexican authorities; approval of the 2009 H1N1 vaccine may not be timely and thus may not be granted until after the 2009/2010 flu season has ended; sales of the 2009 H1N1 vaccine are not scheduled begin until late in the 2009/2010 flu season which could result in poor sales; the 2009 H1N1 vaccine must be manufactured quickly, or it may not be sold until after the 2009/2010 flu season has ended; the rate and progress of manufacturing scale-up; Xcellerex has not manufactured Novavax’s 2009 H1N1 vaccine at commercial levels and Novavax has not manufactured any vaccine at a commercial level; Novavax’s pilot plant facility is subject to standard FDA inspections, which may result in increased costs and production delays; the success of the Company’s joint ventures, collaborations, partnerships and licensing agreements; the Company’s dependence on third parties to manufacture and distribute its vaccines; risks associated with conducting business outside of the United States; the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; our ability to obtain rights to technology; competition for clinical resources and patient enrollment from drug candidates in development by other companies with greater resources and visibility; our ability to enter into future collaborations with industry partners and the terms, timing and success of any such collaboration; the cost, timing and success of regulatory filings and approvals; our ability to obtain adequate financing in the future through product licensing, co-promotional arrangements, public or private equity or debt financing or otherwise; general business conditions; competition; business abilities and judgment of personnel; availability of qualified personnel; and other factors referenced herein. Further information on the factors and risks that could affect Novavax’s business, financial conditions and results of operations, is contained in Novavax’s filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov. These forward-looking statements speak only as of the date of this quarterly report, and Novavax assumes no duty to update forward-looking statements.

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Overview

     Novavax, Inc., a Delaware corporation (“Novavax” or the “Company”), was incorporated in 1987, and is a clinical-stage biopharmaceutical company focused on creating differentiated, value-added vaccines that improve upon current preventive options for a range of infectious diseases. These vaccines leverage the Company’s virus-like-particle (“VLP”) platform technology coupled with a unique, disposable production technology. The Company produces these VLP based, potent, recombinant vaccines utilizing new and efficient manufacturing approaches.

     VLPs are genetically engineered three-dimensional nanostructures, which incorporate immunologically important lipids and recombinant proteins. Our VLPs resemble the virus but lack the genetic material to replicate the virus. Our proprietary production technology uses insect cells rather than chicken eggs or mammalian cells. Our current product targets include vaccines against the H5N1 and other subtypes of avian influenza with pandemic potential, H1N1, human seasonal influenza, Varicella Zoster (“VZV”), which causes shingles, and Respiratory Syncytial Virus (“RSV”).

     We began production of the H1N1 VLPs in our manufacturing facility on June 5, 2009 and completed production of the first batch of vaccine within 12 weeks from the receipt of the viral H1N1 RNA. On August 18, 2009, we announced positive preclinical results with our novel H1N1 influenza VLP vaccine. The study, conducted by scientists from Novavax and the Centers for Disease Control and Prevention (“CDC”) based in Atlanta, Georgia represents the first efficacy report of a 2009 novel H1N1 vaccine in ferrets.

     On October 20, 2009, we announced the initiation of a two-stage clinical study of our VLP H1N1 influenza vaccine in Mexico in collaboration with Avimex and GE Healthcare. Avimex is providing financial support for the trial and is expected to distribute the H1N1 vaccine in Mexico if it is approved for commercial sale. The randomized blinded, placebo-controlled clinical trial in Mexico City will evaluate the safety, immunogenicity and efficacy of our 2009 H1N1 VLP vaccine in healthy adults. The first stage will evaluate the vaccine’s safety, immunogenicity and efficacy among 1,000 subjects. Pending favorable results from the first stage, the second stage of the study will be initiated to evaluate the safety of the vaccine in a larger cohort of 3,000 subjects. The primary safety and immunogenicity results are expected in January 2010, which is within three months of the start of this study. If the results are clinically acceptable, they will be used to seek registration of our 2009 H1N1 pandemic flu vaccine in Mexico. These data are also expected to support development of our pandemic and seasonal flu VLP vaccines in other countries, including the United States.

     In May, 2009, we enrolled subjects in the second Phase II study of our trivalent seasonal influenza VLP vaccine candidate. This clinical trial was designed to evaluate the safety and immunogenicity of a broader range of vaccine doses and to provide data to help select doses for future studies in older adults and a Phase III efficacy study. In September, 2009, we announced positive results in our human clinical trial. Our influenza VLP vaccine candidate was well tolerated and the HAI responses met the seroconversion criteria for licensure as outlined in the FDA guidance document for influenza vaccine development. We expect to begin a seasonal influenza close ranging study in the elderly (>65 years of age) in the fourth quarter of 2009.

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     We have also developed vaccine candidates for both RSV and VZV, both of which are currently being evaluated in preclinical studies. On July 22, 2009, we announced final selection of an RSV vaccine candidate that will be advanced into additional preclinical studies to support an Investigational New Drug (“IND”) application. The first preclinical study of this vaccine candidate in mice, the results of which we announced in February 2009, showed that it induced production of antibodies that neutralized live RSV. In addition, the vaccine protected mice against replication of RSV in the lungs. On October 13, 2009, we announced the receipt of a Small Business and Innovation Research (“SBIR”) grant from the National Institute of Allergy and Infectious Diseases (“NIAID”) of the National Institutes of Health (“NIH”). The grant from the NIAID is to support a segment of our preclinical research program for RSV particle-based vaccine. The SBIR grant, valued at approximately $246,000, will support continued preclinical development of the RSV-F vaccine candidate utilizing the bovine calf model.

     A VZV vaccine candidate has also induced antibody and T-cell responses. We plan on moving forward with further preclinical development of both vaccines in 2009 and 2010.

     Our vaccine products currently under development or in clinical trials will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercial use. There can be no assurance that our research and development efforts will be successful or that any potential products will prove to be safe and effective in clinical trials. Even if developed, these vaccine products may not receive regulatory approval or be successfully introduced and marketed at prices that would permit us to operate profitably. The commercial launch of any vaccine product is subject to certain risks including but not limited to, manufacturing scale-up and market acceptance. No assurance can be given that we can generate sufficient product revenue to become profitable or generate positive cash flow from operations at all or on a sustained basis.

Significant Transactions

     On September 15, 2009, we entered into a second At Market Issuance Sales Agreement (the “September Sales Agreement”), with Wm Smith & Co. (“Wm Smith”), under which we may sell an aggregate of up to $10.0 million in gross proceeds of our common stock from time to time through Wm Smith. We have not sold any common stock under the September Sales Agreement. During the three and the nine months ended September 30, 2009, the Company received net proceeds of $8.0 million and $22.0 million respectively from the sale of stock of 2,039,630 shares and 7,489,207 shares at a range of $1.75 to $5.03 per share pursuant to the January sales agreement with Wm Smith.

     On July 15, 2009, we paid the $5.0 million balance of the senior convertible notes (the “Notes”). Under the terms of the Notes, we paid approximately $2.6 million of principal and accrued interest in cash and issued 1,016,939 shares of common stock to pay the remaining $2.6 million of principal and accrued and unpaid interest, based on a price of $2.5163 per share. The Notes are now fully paid and extinguished.

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Subsequent Events

     On October 21, 2009, we entered into a binding term sheet (the “Xcellerex Agreement”) with Xcellerex, Inc. Pursuant to the Xcellerex Agreement, Xcellerex will manufacture a fixed quantity of bulk drug substance of our 2009 H1N1 vaccine for potential use and sale in Mexico. As consideration, we paid Xcellerex a fixed non-refundable payment and will pay a “per dose” fee for each dose equivalent of bulk materials delivered to us. A portion of the fixed payment, and the actual cost of materials supplied by us, will be credited against the payment due for each batch of bulk material. Xcellerex is the exclusive contract manufacturer for the bulk material for sale in Mexico until February 15, 2010. For markets where Xcellerex could be a low cost manufacturer of bulk material, we will appoint Xcellerex as the co-exclusive producer through June 2010.

     On October 20, 2009, we entered into a Materials Transfer Agreement with Laboratorio Avi-Mex S.A. de C.V. (“Avimex”), pursuant to which we will supply Avimex with certain amounts of its 2009 H1N1 vaccine candidate. Avimex will use the H1N1 vaccine to conduct clinical trials in Mexico. Avimex will make certain milestone payments to us and will pay us a transfer fee for the H1N1 vaccine based on our production cost. We also granted Avimex an irrevocable right and option to enter into a non-exclusive distribution agreement to distribute the 2009 H1N1 vaccine in Mexico.

Critical Accounting Policies and Changes to Accounting Policies

     Our discussion and analysis for our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

     The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, particularly estimates relating to accounting for stock based compensation, goodwill, valuation of net deferred tax assets, and valuation of marketable securities, have a material impact on our financial statements and are discussed in detail throughout our analysis of the results of operations discussed below.

     We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

     For a more detailed explanation of the judgments made in these areas and a discussion of our accounting estimates and policies, refer to Critical Accounting Policies and Use of Estimates included in Item 7 and Summary of Significant Accounting Policies (Note 2) included in Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2008. Since December 31, 2008, there have been no significant changes to our critical accounting estimates and policies.

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Results of Operations

     The following is a discussion of the historical consolidated financial condition and results of operations of Novavax, Inc. and its wholly owned subsidiary and should be read in conjunction with the consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q. Additional information concerning factors that could cause actual results to differ materially from those in the Company’s forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Three months ended September 30, 2009 (“2009”) compared to the three months ended September 30, 2008 (“2008”): (Amounts in the tables are presented in thousands, except percentage changes and share and per share information)

Revenues:

	2009		2008		$ Change		% Change
	(unaudited)		(unaudited)
Revenues	$	201	$	194	$	7		4	%

     Revenues for the three months ended September 30, 2009 and 2008 remained constant at $0.2 million. Revenue is comprised of revenue from government and commercial research and development contracts. During the three months ended September 30, 2009, we completed billing on one of the National Institutes of Health (“NIH”) contracts and we were awarded one additional contract. For the three months ended September 30, 2008, we recorded revenue from two contracts.

Operating costs and expenses:

	2009		2008		$ Change			% Change
	(unaudited)		(unaudited)
Research and development	$	5,256	$	8,655	$	(3,399	)		(39	)%
General and administrative		3,207		1,265		1,942			154	%
	$	8,463	$	9,920	$	(1,457	)		(15	)%

Research and Development Expenses

     Research and development costs decreased from $8.7 million for the three months ended September 30, 2008 to $5.3 million for the three months ended September 30, 2009, a decrease of $3.4 million, or 39%. Our research and development costs are incurred in support of the development of our VLP based vaccines. Research and development costs for the three months ended September 30, 2008 included $0.5 million related to the accrual of the remaining lease payments for the Company’s Taft Court facility in Rockville, Maryland and $3.0 million related to milestone fees. The balance of the decrease can be attributed to a $0.1 million decrease in employee costs from 2008 to 2009.

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General and Administrative Expenses

     General and administrative costs were $3.2 million for the three months ended September 30, 2009 compared to $1.3 million for the three months ended September 30, 2008. The increase of $1.9 million, or 154%, was primarily due to the correction of an error related to the classification of the notes receivable due from former directors to show these notes as reductions of equity in the September 30, 2008 consolidated balance sheet. For the three months ended September 30, 2008, general and administrative expenses include a $1.3 million credit to the allowance established for the notes receivable. During the three months ended September 30, 2008, we concluded that the notes receivable from the former directors should be classified as a reduction of equity. Therefore, the reserve charges taken to the statement of operations during 2006 and 2007 and during the first two quarters of 2008, totaling $1.2 million were also determined to be errors. The credit to general and administrative expenses is a result of the adjustment recorded in the quarterly results to correct the cumulative impact of the prior period errors noted above.

     General and administrative expenses for the three months ended September 30, 2009 were also impacted by an increase in professional fees incurred in connection with the Company’s expanded operations and a $0.2 million increase in facility costs associated with general and administrative functions.

Other Income (Expense), net:

	2009			2008			$ Change		% Change
	(unaudited)			(unaudited)
Interest income	$	60		$	(170	)	$	230		135	%
Interest expense		(20	)		(434	)		414		95	%
Realized gains		692			—			692		N/A
Net other income (expense)	$	732		$	(604	)	$	1,336		221	%

     Our net other income was $0.7 million for the three months ended September 30, 2009 compared to net other expense of $0.6 million for the three months ended September 30, 2008. The change in net interest other income (expense) resulted from an increase in interest income, a decrease in interest expense and realized gains related to three of the Company’s auction rate securities due primarily to their redemption at par value. Interest income for the three months ended September 30, 2008 included the impact of the correction of an error previously discussed related to notes receivable from former directors. Interest expense for the three months ended September 30, 2009 decreased to $20,000 from $0.4 million for the three months ended September 30, 2008, a decrease of $0.4 million, or 95%. The decrease in interest expense is due to early retirement of $17.0 million of the Notes in April 2009 and the payment of the balance of the Notes in July 2009.

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Discontinued Operations:

     The following table presents summarized financial information for our discontinued operations at our manufacturing facility in Philadelphia, Pennsylvania for the three months ended September 30, 2009 and 2008.

	2009		2008		$ Change			%Change
	(unaudited)		(unaudited)
Revenue	$	—	$	3,546	$	(3,546	)		(100	)%
Costs of products sold		—		975		975			100	%
Excess inventory costs over market		—		83		83			100	%
Net income	$	—	$	2,488	$	(2,488	)		(100	)%

     We recorded income from discontinued operations of $2.5 million for the three months ended September 30, 2008, which included revenue from discontinued operations of $3.5 million which related to the sale of Estrasorb. In the costs of products sold of $1.0 million in 2008, $0.5 million represents idle capacity costs at our manufacturing facility. The remaining $0.5 million represents the cost of Estrasorb sales to Graceway. In accordance with the supply agreement with Graceway, we sold Estrasorb at a price that was lower than our manufacturing costs. The excess cost over the product cost totaled $0.1 million for the nine months ended September 30, 2008. In August 2008, we completed our obligations to Graceway and exited the facility.

Net loss:

	2009			2008			$ Change		%Change
	(unaudited)						(unaudited)
Net loss	$	(7,530	)	$	(7,842	)	$	312		4	%
Net loss per share	$	(0.08	)	$	(0.12	)	$	0.04		57	%
Weighted shares outstanding		92,297,263			66,521,776			25,775,487		39	%

     Net loss for the three months ended September 30, 2009 was $7.5 million or $0.08 per share, as compared to $7.8 million or $0.12 per share for the three months ended September 30, 2008, a decrease of $0.3 million or $0.04 per share. The decreased net loss was primarily due to an overall decrease in operating expenses and the change in net other income (expenses), partially offset by the conclusion of our discontinued operations. The weighted shares outstanding increased from 66,521,776 for the three months ended September 30, 2008 to 92,297,263 for the three months ended September 30, 2009 primarily as a result of the 12.5 million shares issued to Cadila, approximately 1.1 million shares issued to ROVI, approximately 5.4 million shares sold under the January Sales Agreement through Wm Smith, approximately 2.0 million shares issued in connection with the early retirement of $17.0 million of the Notes and approximately 1.0 million shares for the payment of the balance of the Notes.

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Nine months ended September 30, 2009 (“2009”) compared to the nine months ended September 30, 2008 (“2008”): (Amounts in the tables are presented in thousands, except percentage changes and share and per share information.)

Revenues:

	2009		2008		$ Change			% Change
	(unaudited)		(unaudited)
Revenues	$	251	$	994	$	(743	)		(75	)%

     Total revenues for the nine months ended September 30, 2009 were $0.3 million, a decrease of $0.7 million from $1.0 million for the nine months ended September 30, 2008. The decrease in revenues is attributable to a decrease in contract related research and development revenues principally due to the completion of a NIH grant in January 2009.

Operating costs and expenses:

	2009		2008		$ Change			% Change
	(unaudited)		(unaudited)
Research and development	$	14,819	$	18,469	$	(3,650	)		(20	)%
General and administrative		8,661		7,675		986			13	%
	$	23,480	$	26,144	$	(2,664	)		(10	)%

Research and Development Expenses

     Research and development costs decreased from $18.5 million in 2008 to $14.8 million in 2009, a decrease of $3.7 million, or 20%. Research and development costs for the nine months ended September 30, 2008 included $0.5 million related to the accrual of the remaining lease payments for the Company’s Taft Court facility in Rockville, Maryland and $3.0 million related to milestone fees. The remaining decrease was primarily due to a $0.1 million decrease in employee related costs.

General and Administrative Expenses

     General and administrative costs were $8.7 million in 2009 compared to $7.7 million in 2008. The increase of $1.0 million, or 13%, was primarily due to the $1.0 million credit recorded in 2008 related to the correction of an error for notes receivable from two former directors.

Other (Expense) Income, net:

	2009			2008			$ Change			% Change
	(unaudited)			(unaudited)
Interest income	$	240		$	695		$	(455	)		(65	)%
Interest expense		(784	)		(1,292	)		508			39	%
Impairment loss on short-term investments		(1,338	)		—			(1,338	)		N/A
Realized gains		692			—			692			N/A
Net other (expense) income	$	(1,190	)	$	(597	)	$	(593	)		99	%

-23-

     Net other expense increased from $0.6 million for 2008 to $1.2 million for 2009, an increase of $0.6 million, or 99%. Interest income decreased to $0.2 million for 2009 from $0.7 million for 2008, a decrease of $0.5 million. The decrease is primarily due to the correction of an error previously discussed related to notes receivable from former directors and a decrease in our average cash, cash equivalents and short-term investment balances, resulting from our continuing investment in research and development activities surrounding our vaccine candidates. Interest expense decreased from $1.3 million in 2008 to $0.8 million in 2009, a decrease of $0.5 million or 39%. The decrease in interest expense is due to the early retirement of $17.0 million of the Notes in April 2009 and the payment of the balance of the Notes in July 2009. Additionally, we recorded $1.3 million as other expense related to other than temporary impairment losses on our auction rate securities, which was partially offset by $0.7 million in realized gains.

Discontinued Operations:

     The following table presents summarized financial information for our discontinued operations related to our manufacturing facility in Philadelphia, Pennsylvania for the nine months ended September 30, 2009 and 2008:

	2009		2008		$ Change			%Change
	(unaudited)		(unaudited)
Revenues	$	—	$	3,775	$	3,775			(100	)%
Costs of products sold		—		2,449		2,449			100	%
Excess inventory costs over market		—		548		548			100	%
Total operating expenses		—		2,997		(2,997	)		(100	)%
Net income	$	—	$	778	$	(778	)		(100	)%

     We recorded income from discontinued operations of $0.8 million for the nine months ended September 30, 2008 which included revenue from discontinued operations of $3.8 million related to the sale of Estrasorb. Costs of products sold, which include fixed idle capacity costs of $1.3 million at our manufacturing facility were $2.4 million. The remaining $1.1 million represents the cost of Estrasorb sales to Graceway. In accordance with the supply agreement with Graceway, we sold Estrasorb at a price that was lower than our manufacturing costs. The excess cost over market cost was $0.5 million for the nine months ended September 30, 2008. In August 2008, we completed our obligations to Graceway and exited the facility.

Net loss:

	2009			2008			$ Change		%Change
	(unaudited)			(unaudited)
Net loss	$	(24,419	)	$	(24,969	)	$	550		2	%
Net loss per share	$	(0.30	)	$	(0.40	)	$	0.10		25	%
Weighted shares outstanding		82,027,113			62,820,068			19,207,045		31	%

-24-

     Net loss for the nine months ended September 30, 2009 was $24.4 million, or $0.30 per share, as compared to $25.0 million or $0.40 per share for the nine months ended September 30, 2008, a decrease of $0.6 million. The decrease in the net loss was primarily due to a decrease in our operating expenses as a result of staff reductions and other cost cutting initiatives. This decrease was partially offset by an increase in net other expenses, a decrease in revenue, and the conclusion of our discontinued operations. The weighted shares outstanding increased from 62,820,068 for the nine months ended September 30, 2008 to 82,027,113 for the nine months ended September 30, 2009 primarily as a result of the 12.5 million shares issued to Cadila, approximately 1.1 million shares issued to ROVI, approximately 5.4 million shares sold under the January Sales Agreement through Wm Smith, approximately 2.0 million shares issued in connection with the early retirement of $17 million of the Notes and approximately 1.0 million shares for the payment of the balance of the Notes.

Liquidity and Capital Resources

     Our future capital requirements depend on numerous factors including, but not limited to, the commitments and progress of our research and development programs, the progress of preclinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, competing technological and market developments, and manufacturing costs. We plan to continue to have multiple vaccines and products in various stages of development and we believe our research and development as well as general and administrative expenses and capital requirements will continue to increase.

	Nine Months
	Ended
	September 30, 2009
	(In thousands)
Summary of Cash Flows:
Net cash (used in) provided by
Operating activities	$	(20,444	)
Investing activities		2,226
Financing activities		21,264
Net increase in cash and cash equivalents		3,046
Cash and cash equivalents at beginning of period		26,938
Cash and cash equivalents at end of period	$	29,984

     Net Cash Used In Operating Activities. Net cash used in operating activities was $20.4 million and $17.6 million during the nine months ended September 30, 2009 and 2008, respectively. The major components of net cash used in operating activities for the nine months ended September 30, 2009 were $24.4 million of net loss from continuing operations offset by non-cash charges of approximately $3.1 million and changes in operating assets and liabilities of $0.9 million. The most significant non-cash charges were stock based compensation of $1.3 million along with depreciation and amortization charges totaling $1.3 million. The decrease in net cash used in operating activities during the nine months ended September 30, 2009, as compared to the same period in the prior year, was primarily attributable to the impact of discontinued operations.

-25-

     Net Cash Provided By Investing Activities. Net cash provided by investing activities was $2.2 million and $33.2 million during the nine months ended September 30, 2009 and September 30, 2008, respectively. The major components of net cash provided by investing activities for the nine months ended September 30, 2009 consisted of $2.6 million sales of investments offset by purchases of capital expenditures of $356,000. The decrease in net cash provided by investing activities during the nine months ended September 30, 2009, as compared to the same period in the prior year, was primarily attributable to the sale of investments in 2008 to fund operations along with the impact of discontinued operations.

     Net Cash Provided by Financing Activities. Net cash provided by financing activities was $21.3 million and $16.8 million during the nine months ended September 30, 2009 and 2008, respectively. Net cash provided by financing activities for the nine months ended September 30, 2009 consisted of proceeds from the sale of common stock and the exercise of stock options totaling $36.4 million offset by payments of notes payable of $15.1 million. The increase in net cash provided by financing activities during the nine months ended September 30, 2009, as compared to the same period in the prior year, was primarily attributable to the increased proceeds from the sale of common stock.

     Based on the amount of funds on hand as of September 30, 2009, and our current business operations, we believe we will have adequate capital resources available to operate at planned levels for the next twelve months. Additional capital will be required in the future to develop our product candidates through clinical development, manufacturing, and commercialization. We may seek additional capital through further public or private equity offerings, debt financing, additional strategic alliance and licensing arrangements, collaborative arrangements, or some combination of these financing alternatives. Any capital raised by an equity offering will likely be substantially dilutive to the stockholders and any licensing or development arrangement may require us to give up rights to a product or technology at less than its full potential value. We have not secured any additional commitments for new financing at this time nor can we provide any assurance that new financing will be available on commercially acceptable terms, if at all. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate one or more of our product research and development programs, downsize our organization, or reduce our general and administrative infrastructure.

     The Company has licensed certain rights from Wyeth Holdings Corporation (“Wyeth”) and the University of Massachusetts Medical School (“UMMS”). The Wyeth license, which provided for an upfront payment, annual license fees, milestone payments and royalties on any product sales, is a non-exclusive, worldwide license to a family of patent applications covering VLP technology for use in human vaccines in certain fields of use. Payments under the agreement to Wyeth as of September 30, 2009 aggregated $5.1 million and could aggregate an additional $17.0 million in the next twelve months, depending on the achievement of clinical and commercial milestones. The UMMS license, which provides for milestone payments and royalties on product sales, is an exclusive worldwide license of VLP technology to develop VLP vaccines for the prevention of any viral diseases in humans. As of September 30, 2009, the Company made payments to UMMS in an aggregate amount that is not material. The Company believes that all payments under the UMMS agreement will not be material to the Company in the next twelve months.

-26-

Contractual Obligations and Commitments

     We utilize different financing instruments, such as debt and operating leases, to finance various equipment and facility needs. The following table summarizes our current financing obligations and commitments as of September 30, 2009 (in thousands):

				Less
				than			1 – 3			4 – 5		More than
Commitments & Obligations	Total			1 Year			Years			Years		5 Years
Operating leases	$	15,454		$	2,142		$	6,365		$	4,209	$	2,738
Notes payable		518			26			492			—		—
Purchase obligations		9,001			5,271			3,730			—		—
Total principal payments		24,973			7,439			10,587			4,209		2,738
Less: Subleases		(682	)		(336	)		(346	)		—		—
Total commitments and obligations	$	24,291		$	7,103		$	10,241		$	4,209	$	2,738

     Our purchase obligations include $7.5 million related to future purchases for services pursuant to the Master Services Agreement with Cadila. We are required to purchase from Cadila for biologic research, preclinical development, clinical development, process development, manufacturing scale up, and general manufacturing related services. Additionally our contractual obligations include $1.5 million due to a vendor for orders placed on capital equipment. We made a non-refundable payment in October 2009 as consideration towards the agreement with Xcellerex.

     Subsequent to September 30, 2009, we entered into agreements with outside providers to support clinical development in the aggregate amount of $9.0 million. We have made payments of $1.0 million towards these obligations. Under the terms of the agreements, we have the option to terminate, but we would be obligated to pay the provider for all costs incurred through the effective date of termination.

     On June 26, 2008, we amended the lease for our corporate headquarters at 9920 Belward Campus Drive in Rockville, Maryland. The amendment (1) extended the term of the lease to January 31, 2017, (2) provided that the landlord will reimburse us for up to $3.0 million in leasehold improvements (the “Allowance”) and (3) increased the monthly installments of base rent going forward by an amount equal to the monthly amortization of the Allowance over the remaining term at 11% interest, or an additional $45,132 per month. The additional monthly rent is subject to the annual 2.125% escalation included in the original lease. On June 27, 2008, we received the Allowance. The Allowance is included in deferred rent on the balance sheet at September 30, 2009, and is being amortized as a credit to rent expense over the remaining lease term.

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     In April 2009, we negotiated an amendment to our sublease with PuriCore to extend the term of the sublease until September 30, 2011, to expand the sublease premises to include all of the approximately 32,900 rentable square feet and to grant PuriCore the option to renew the sublease for an additional three-year term.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The primary objective of our investment activities is to preserve our capital until it is required to fund operations while at the same time maximizing the income we receive from our investments without significantly increasing risk. As of September 30, 2009, we had cash, cash equivalents and short-term investments of $34.4 million as follows:

Cash and cash equivalents	$30.0 million
Short-term investments classified as available for sale	$4.4 million

     Our exposure to market risk is confined to our investment portfolio. As of September 30, 2009, our short-term investments are classified as available for sale. We do not believe that a change in the market rates of interest would have any significant impact on the realizable value of our investment portfolio. Changes in interest rates may affect the investment income we earn on our investments and, therefore, could impact our cash flows and results of operations.

     We had previously invested in auction rate securities for short periods of time as part of our cash management program. Short-term investments at September 30, 2009 consist of investments in three auction rate securities with a par value of $5.6 million and a fair value of $4.4 million. We recorded an additional other than temporary impairment charge to earnings related to these securities during the first nine months of 2009 of $1.4 million (offset by recovery of $0.6 million of unrealized gain through other comprehensive income) because of the current illiquidity issues in the credit markets and management’s belief these securities cannot presently be sold at par value but are saleable at a discount from their par value. These investments are classified within current assets because we may need to liquidate these securities within the next year to fund our ongoing operations.

     We are headquartered in the United States where we have conducted the vast majority of our business activities. Accordingly, we have not had any material exposure to foreign currency rate fluctuations. We have entered into agreements with Avimex in Mexico and Cadila Pharmaceuticals in India and are negotiating definitive agreements with ROVI in Spain which may expose us to foreign currency rate fluctuations. We cannot currently determine whether the exposure will have a material impact on our operations, financial condition or cash flows.

     We do not have material debt and, as such, do not believe that we are exposed to any material interest rate risk as a result of our borrowing activities.

-28-

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     The Company’s chief executive officer and the chief financial officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13(a) — 15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly report. Based on that review and evaluation, which included the participation of management and certain other employees of the Company, the chief executive officer and the chief financial officer have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective.

Changes in Internal Control over Financial Reporting

     The Company’s management, including our principal executive officer and chief financial officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the nine months ended September 30, 2009, and has concluded that there was no change that occurred during the quarter ended September 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

-29-

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

     The Company does not have any pending legal matters at this time.

Item 1A. — Risk Factors

     There are no material changes to the Company’s risk factors as described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the SEC, other than as mentioned below.

     Novavax’s collaborations with regional partners, such as Cadila Pharmaceuticals and Avimex, expose the Company to additional risks associated with doing business outside the United States, and any adverse event could have a material negative impact on operations.

     We have formed a joint venture with Cadila in India and have entered into agreements with Avimex which could lead to the sale of our 2009 H1N1 vaccine in Mexico. We are currently negotiating definitive license agreements with ROVI in Spain. We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and local governments in other parts of the world. Risks of conducting business outside the United States include:

• Multiple regulatory requirements could affect the ability to develop, manufacture and sell products in such local markets;

• Compliance with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

• Trade protections measures and import and export licensing requirements;

• Different labor regulations;

• Changes in environmental, health and safety laws;

• Potentially negative consequences from changes in or interpretations of tax laws;

• Political instability and actual or anticipated military or potential conflicts;

• Economic instability, inflation, recession, and interest rate fluctuations;

• Minimal or diminished protection of intellectual property in some countries; and

• Possible nationalization and expropriation.

     These risks, individually or in the aggregate, could have a material adverse effect on our business, financial conditions, results of operations and cash flows.

-30-

     We have not yet reached a final agreement with ROVI regarding the definitive license of our technology to commercialize our flu vaccines or related supply agreements and we may not be successful in reaching a final agreement.

     On June 30, 2009, we announced a letter of intent to license our proprietary VLP vaccine technology to ROVI Pharmaceuticals in Spain. ROVI intends to use the technology to create a comprehensive vaccine solution for the Spanish government. The negotiation of a license agreement and related supply agreements with ROVI is ongoing and there are no assurances that we will reach a final agreement. Before we can execute a definitive agreement, we must reach agreement on all material terms, including milestones, royalties, indemnification, and termination rights. If we and ROVI cannot agree on terms acceptable to each of us, the definitive agreements will not be executed.

     If we are unable to manufacture our vaccines in sufficient quantities or are unable to obtain regulatory approvals for a manufacturing facility for our vaccines, we may experience delays in product development, clinical trials and commercial distribution.

     Completion of our clinical trials and commercialization of our vaccine product candidates require access to, or development of, facilities to scale up and manufacture our product candidates at sufficient yields. We have limited experience manufacturing any of our product candidates in the volumes that will be necessary to support large-scale clinical trials or commercial sales. Efforts to establish capabilities may not meet initial expectations as to scheduling, scale-up, reproducibility, yield, purity, cost, potency or quality.

     If we are unable to manufacture our product candidates in clinical quantities or, when necessary, in commercial quantities, at sufficient yields, then we must rely on third parties. These third-party manufacturers must also receive FDA approval before they can produce clinical material or commercial products. Our vaccines may be in competition with other products for access to these facilities and may be subject to delays in manufacture if third parties give other products greater priority. We may not be able to enter into any necessary third-party manufacturing arrangements on acceptable terms, or on a timely basis. In addition, we have to enter into technical transfer agreements and share our know-how with the third party manufacturers, which can be time consuming and may result in delays.

     Xcellerex currently constitutes the sole source of our H1N1 commercial bulk production. Our reliance on a contract manufacturer may adversely affect our operations or result in unforeseen delays or other problems beyond our control. Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture our bulk vaccines on a commercial scale, replacement of a manufacturer may be expensive and time consuming and may cause interruptions in the production of our vaccine. A third-party manufacturer may also encounter difficulties in production. These problems may include:

• Difficulties with production costs, scale-up and yields;

• Availability of raw materials and supplies;

-31-

• Quality control and assurance;

• Shortages of qualified personnel;

• Compliance with strictly enforced federal, state and foreign regulations; and

• Lack of capital funding.

     As a result, any delay or interruption could have a material adverse effect on our business, financial condition, results of operations and cash flows.

     We are continuing to build our management team and have experienced turnover within management.

     We appointed John J. Trizzino as Senior Vice President, International and Government Alliances, on July 21, 2009. Our Chief Financial Officer, Frederick Driscoll, assumed this responsibility in August 24, 2009. On October 16, 2009, our Vice President and Chief Medical Officer, Penny Heaton, M.D. resigned effective November 15, 2009 and efforts are underway to find a replacement. This lack of management continuity, the resulting lack of long-term history with our Company and the learning curve that executives experience when they join our management team, could result in operational and administrative inefficiencies and added costs. If we were to experience additional turnover at the executive level, these risks would be exacerbated.

-32-

Item 6 — Exhibits

10.1	Amended and Restated Employment Agreement of Rahul Singhvi, effective July 20, 2009 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed on July 22, 2009).
10.2	Second Amendment to Amended and Restated Employment Agreement of Raymond Hage, effective July 20, 2009 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K, filed on July 22, 2009).
10.3	Employment Agreement between Novavax, Inc. and Frederick Driscoll dated August 6, 2009 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed on August 7, 2009).
10.4	Stock Purchase Agreement between Novavax, Inc. and Laboratorios Farmaceuticos ROVI S.A., dated June 30, 2009 (incorporated by reference to Exhibit 10.10 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009).
10.5	At Market Issuance Sales Agreement, dated September 15, 2009, by and between Novavax, Inc. and Wm. Smith & Co. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K, filed on September 15, 2009).
10.6**	Materials Transfer Agreement by and between Novavax, Inc. and Laboratorio Avi-Mex S.A. de C.V., dated October 19, 2009.
10.7**	Proposal and Binding Term Sheet by and between Novavax, Inc. and Xcellerex, Inc., dated October 20, 2009.
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer, pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer, pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	This exhibit is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and is not and should not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
**	Confidential treatment has been requested for portions of this exhibit.

-33-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NOVAVAX, INC. (Registrant)
Date: November 9, 2009	By:	/s/ Rahul Singhvi
		Rahul Singhvi
		President and Chief Executive Officer (Principal Executive Officer)

Date: November 9, 2009	By:	/s/ Frederick W. Driscoll
		Vice President, Chief Financial Officer,
		and Treasurer (Principal Financial Officer)

-34-

EX-10.6

Exhibit 10.6

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

MATERIALS TRANSFER AGREEMENT

BY AND BETWEEN

NOVAVAX, INC.

AND

LABORATORIO AVI-MEX S.A. DE C.V.

DATED OCTOBER 19, 2009

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

TABLE OF CONTENTS

Article 1 Transfer of Materials		1
Section 1.1	Transfer	1
Section 1.2	Purpose	1
Section 1.3	Delivery of Materials	2
Section 1.4	Payment for Influenza Vaccine	2
Section 1.5	Evaluation; Restrictions on Transfer	2
Article 2 Representations and Warranties		3
Section 2.1	Representations and Warranties of Each Party	3
Section 2.2	Additional Representations and Warranties of Novavax	3
Section 2.3	Additional Representations, Warranties and Covenants of Avimex	4
Section 2.4	Representation by Legal Counsel	5
Section 2.5	Disclaimer	5
Article 3 MUTUAL COVENANTS		5
Section 3.1	Confidentiality.	5
Section 3.2	Compliance with Law	8
Section 3.3	Nonsolicitation of Employees	8
Article 4 REGULATORY APPROVAL		8
Section 4.1	Regulatory Matters	8
Article 5 Option		11
Section 5.1	Grant of Option	11
Section 5.2	Exercise of Option	11
Section 5.3	Effect of Option Exercise	11
Section 5.4	Escrow of Distribution Agreement	12
Article 6 Right of First Negotiation		12
Section 6.1	Grant of Right of First Negotiation	13
Article 7 Term and Termination		13
Section 7.1	Term	13
Section 7.2	Termination for Cause	13
Section 7.3	Effects of Termination	14
Section 7.4	Survival of Certain Obligations	15
Article 8 Product Liability, Indemnification, and insurance		15
Section 8.1	Indemnification by Novavax	15
Section 8.2	Indemnification by Avimex	15
Section 8.3	Product Liability Claims	16
Section 8.4	Procedure	16
Section 8.5	Insurance	17
Section 8.6	Liability Limitations	17
Article 9 MISCELLANEOUS.		17
Section 9.1	Governing Law; Jurisdiction; Dispute Resolution	17
Section 9.2	Definitions	19
Section 9.3	Force Majeure	21

Section 9.4	Additional Approvals	22
Section 9.5	Waiver and Non-Exclusion of Remedies	22
Section 9.6	Notices	22
Section 9.7	Entire Agreement	23
Section 9.8	Amendment	23
Section 9.9	Assignment	24
Section 9.10	No Benefit to Others	24
Section 9.11	Counterparts	24
Section 9.12	Severability	24
Section 9.13	Further Assurance	24
Section 9.14	Publicity	24
Section 9.15	Relationship of the Parties	24

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

MATERIALS TRANSFER AGREEMENT

          This Materials Transfer Agreement (this “Agreement”) is entered into as of October 19, 2009 (the “Effective Date”) by and between Novavax, Inc., a corporation organized under the laws of Delaware, United States (“Novavax”) and Laboratorio Avi-mex, S.A. de C.V., a private company organized under the federal laws of Mexico (“Avimex”). Each of Novavax and Avimex may be collectively referred to as the “Parties” and each individually as a “ Party.”

          WHEREAS, the Parties entered into a Use of Protocol Agreement, dated as of August 21, 2009, a copy of which is attached hereto;

          WHEREAS, Avimex desires to obtain Novavax’s Materials (as hereinafter defined) for the purpose of (a) performing certain clinical trials in Mexico (the “Evaluation”) and (b) filing for the necessary applications in the name and on behalf of Novavax to obtain the sanitary registrations of the Influenza Vaccine (as hereinafter defined) from the Federal Commission For Protection Against Sanitary Risks (“COFEPRIS”) in Mexico, to allow the commercial sale of the Influenza Vaccine in Mexico (the “Territory”) as a vaccine in humans ((a) and (b) referred to collectively as the “Purpose”); and

          WHEREAS, Avimex and Novavax have entered into that certain Confidentiality Agreement dated May 7, 2009 (the “Confidentiality Agreement”).

          NOW, THEREFORE, in consideration of the mutual agreements contained herein and intending to be legally bound, the Parties agree as follows:

ARTICLE 1

TRANSFER OF MATERIALS

          Section 1.1 Transfer. Novavax shall transfer to Avimex amounts of the Influenza Vaccine reasonably necessary to perform the Evaluation, including the Clinical Trial (as defined in Section 1.5(a)). For purposes of this Agreement, (a) “Influenza Vaccine” shall mean: Novavax’s current monovalent intra-muscular H1N1 influenza vaccine containing a virus like particle (VLP) consisting of [* * *] as designated as pandemic by the World Health Organization (WHO) Collaborating Centers for Reference and Research on Influenza located at the Centers for Disease Control and Prevention (CDC) in Atlanta, Georgia; and (b) “Materials” shall include Influenza Vaccine, any associated know-how and data and any substance that is replicated or derived therefrom. The Materials are proprietary to Novavax. Novavax will be free, at its sole discretion, to distribute the Materials to others and to use the Materials for its own purposes anywhere in the world.

          Section 1.2 Purpose. Avimex shall use the Materials solely for the Purpose in accordance with this Agreement, and shall not use the Materials in any activities except as specifically and expressly set forth in this Agreement. Avimex agrees that nothing herein shall

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be deemed to grant any right or license, express or implied, under any Novavax patents, know-how or other proprietary rights of Novavax whatsoever.

          Section 1.3 Delivery of Materials. Novavax will deliver the Influenza Vaccine necessary to complete the Clinical Trial in a reasonable time to allow for a timely start of the Clinical Trial. Avimex shall obtain all permits and approvals from any applicable Mexican governmental entity or regulatory body necessary to import the Influenza Vaccine in Mexico. Notifications to the U.S. Food and Drug Administration by Novavax regarding export and the receipt of certain U.S. Certificates of Export may be necessary.

          Section 1.4 Payment for Influenza Vaccine.

     (a) Avimex shall pay Novavax [* * *]% of Novavax’s Production Costs for all Influenza Vaccine transferred pursuant to this Agreement for purposes of conducting the clinical trials (the “Transfer Price”). Novavax will include with each shipment of Influenza Vaccine an invoice setting forth the Transfer Price for the Influenza Vaccine in each shipment. Payment shall be due to Novavx thirty (30) days after Avimex’s receipt of the Influenza Vaccine.

     (b) Avimex shall pay Novavax [* * *] upon execution of this Agreement. Such payment is not refundable under any circumstances, but is creditable against certain payments that may be owed under the Distribution Agreement.

          Section 1.5 Evaluation; Clinical Trial; Restrictions on Transfer.

     (a) Evaluation of the Product will include a clinical trial of the Product that will be conducted in Mexico (the “Clinical Trial”). Avimex and Novavax have developed or will develop the protocol for the Clinical Trial and the final protocol will be subject to approval of Novavax. Novavax shall be the sponsor of the Clinical Trial. Avimex will continue to have authority to appear before Regulatory Authorities on behalf of Novavax in connection with the Clinical Trial and seeking Regulatory Approval, provided that Avimex is in compliance with this Agreement, and Article 4 in particular.

     (b) Avimex has obtained or will obtain all regulatory approvals and licenses from any governing body in Mexico that are required to conduct the Clinical Trial at its expense. All such approvals and licenses will be in the name of Novavax, except as otherwise provided by Novavax in writing.

     (c) Avimex will pay [* * *] for passthrough and site costs for the Clinical Trial and for out of pocket expenses related to the Clinical Trial and other development and regulatory costs, including regulatory counsel, up to a maximum [* * *]. Upon execution of this Agreement, Novavax will pay to Avimex [* * *] which shall be used by Avimex to pay for passthrough and site costs in excess of Avimex’s payment above. Upon determination to begin phase 2 of the Clinical Trial (which must be agreed to by Novavax), Novavax will pay to Avimex [* * *] which shall be used by Avimex to pay for

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passthrough and site costs in excess of the prior payments set forth above. Avimex will provide to Novavax a report reflecting all passthrough and site costs, out of pocket expenses related to the Clinical Trial and other development and regulatory costs, including regulatory counsel (totaling up to [* * *]), reflecting the payments by Avimex and Novavax under this Section 1.5(c) with supporting documentation. Novavax shall also pay for all CRO costs related to the Clinical Trial.

     (d) Subject to the prior written consent of Novavax and the prior approval of all applicable Mexican Governmental Entities, Avimex may evaluate the Material in the Territory in any facilities, by persons or entities, and under any protocols approved in advance by Novavax. Any person or entity that evaluates the Material shall be subject to a written agreement of confidentiality at least as restrictive as the provisions contained in this Agreement and the Confidentiality Agreement and shall be obligated to assign to Avimex all information and intellectual property generated in connection with any use of the Materials or activities hereunder.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

          Section 2.1 Representations and Warranties of Each Party. As of the Effective Date, each of Avimex and Novavax hereby represents and warrants to the other Party hereto as follows:

     (a) it is a corporation or entity duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation or formation;

     (b) the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate or entity action and does not require any shareholder or owner action or approval;

     (c) it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and

     (d) the execution, delivery and performance by such Party of this Agreement and its compliance with the terms and provisions does not and may not conflict with or result in a breach of any of the terms and provisions of or require consent or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) the provisions of its charter or operative documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound.

          Section 2.2 Additional Representations and Warranties of Novavax. Novavax hereby represents and warrants to Avimex as of the Effective Date that:

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     (a) Novavax has the full right, power and authority to grant the right to perform the Evaluation of the Materials granted to Avimex under this Agreement; and

     (b) By virtue of the License Agreement between Novavax and Wyeth Holdings Corporation (“Wyeth”), dated July 5, 2007, Novavax does not infringe the patents owned by Wyeth that are licensed to Novavax in such License Agreement.

          Section 2.3 Additional Representations, Warranties and Covenants of Avimex. Avimex hereby represents, warrants and, where applicable, covenants to Novavax that as of the Effective Date:

     (a) Avimex has no products currently under development or commercialization for the prevention of pandemic influenza in the Territory;

     (b) Avimex will not develop or commercialize any vaccine or other product in the Territory for pandemic influenza in humans other than as contemplated by this Agreement; and

     (c) None of Avimex or any of its Subsidiaries or any of their respective representatives has corruptly (within the meaning of Applicable Law) or otherwise illegally offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value to: (1) any government or similar official for purposes of (A) (i) influencing any act or decision of such official in his or her official capacity, (ii) inducing such official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or (B) inducing such official to use his or her influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body, in order to assist Avimex or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person; (2) any political party or official thereof or any candidate for political office for purposes of (A) (i) influencing any act or decision of such party, official, or candidate in its or his or her official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or (B) inducing such party, official, or candidate to use its or his or her influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body in order to assist Avimex or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person; or (3) any Person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any official, to any political party or official thereof, or to any candidate for political office, for purposes of (A) (i) influencing any act or decision of such official, political party, party official, or candidate in his or her or its official capacity, (ii) inducing such official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of such official, political party, party official, or candidate, or (iii) securing any improper advantage; or (B) inducing such official, political party, party official, or candidate to use

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his or her or its influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body, in order to assist Avimex or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person.

          Section 2.4 Representation by Legal Counsel. Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will exist or be implied against the Party which drafted such terms and provisions.

          Section 2.5 Disclaimer. Avimex acknowledges that the Materials are experimental in nature and they are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. NOVAVAX MAKES NO REPRESENTATION OR WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHTS. THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE ALL OF WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY PRODUCT UNDER THIS AGREEMENT WILL BE SUCCESSFUL. NOVAVAX MAKES NO REPRESENTATION THAT ANY CLINICAL TRIALS CONDUCTED HEREUNDER WILL BE SUCCESSFUL.

ARTICLE 3

MUTUAL COVENANTS

          Section 3.1 Confidentiality.

     (a) Confidential Information. Except to the extent expressly permitted by this Agreement and subject to the provisions of Section 3.1(b) and Section 3.1(c) at all times during the Term and for five years following the expiration or termination of this Agreement, each Party (a “Receiving Party”) (a) will keep completely confidential and will not publish or otherwise disclose any Confidential Information furnished to it by the other Party (a “Disclosing Party”), except to those of the Receiving Party’s employees, Affiliates, consultants or representatives who have a need to know such information (collectively, “Authorized Recipients”) to perform such Party’s obligations hereunder and (b) will not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations hereunder. The Receiving Party will be liable for any breach by any of its Authorized Recipients of the restrictions set forth in this Agreement. Notwithstanding the foregoing, Novavax may disclose Confidential

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Information of Avimex (i) as contemplated by Section 4.1(e) and (ii) to Third Party Licensees to the extent necessary to comply with or conduct activities under written arrangements with such Third Party Licensees provided that such arrangements include obligations of confidentiality.

     (b) Exceptions to Confidentiality. The Receiving Party’s obligations set forth in this Agreement will not extend to any Confidential Information of the Disclosing Party:

     (i) that is or hereafter becomes part of the public domain through no wrongful act, fault or negligence on the part of a Receiving Party or its Authorized Recipients;

     (ii) that is received from a Third Party without restriction and without breach of any agreement or fiduciary duty between such Third Party and the Disclosing Party;

     (iii) that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation or restriction on use or disclosure prior to its receipt from the Disclosing Party;

     (iv) that is generally made available to Third Parties by the Disclosing Party without any restriction imposed by the Disclosing Party on disclosure, whether such restriction is by contract, fiduciary duty or by operation of law; or

     (v) that the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party without any reference to Confidential Information.

     (c) Authorized Disclosure. Each Party and its Authorized Recipients may disclose Confidential Information to the extent that such disclosure is made in response to a valid order, governmental inquiry, or request (each an “Order”) of a court of competent jurisdiction or other agency, as applicable; provided, however, that the Receiving Party must first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such Order or to obtain a protective order requiring that the Confidential Information and/or documents that are the subject of such Order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the Order was issued; and provided further that if an Order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such Order will be limited to that information that is legally required to be disclosed in such response to such Order.

     (d) Notification. The Receiving Party will notify the Disclosing Party immediately, and cooperate with the Disclosing Party as the Disclosing Party may

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reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information.

     (e) Destruction of Confidential Information. Upon the expiration or earlier termination of this Agreement, the Receiving Party will (a) destroy all tangible embodiments of Confidential Information of the Disclosing Party, including any and all copies thereof, and those portions of any documents, memoranda, notes, studies, and analyses prepared by the Receiving Party or its Authorized Recipients that contain, incorporate, or are derived from such Confidential Information and provide written certification of such destruction to the Disclosing Party in a form reasonably acceptable to the Disclosing Party, provided that the legal department of the Receiving Party will have the right to retain one copy of any such tangible embodiments for archival purposes, provided such copy will continue to be maintained on a confidential basis subject to the terms of this Agreement, and (b) immediately cease, and will cause its Authorized Recipients to cease, use of such Confidential Information as well as any information or materials that contain, incorporate, or are derived from such Confidential Information.

     (f) Use of Name and Disclosure of Terms. Each Party will keep the existence of, the terms of, and the transactions covered by this Agreement confidential and will not disclose such information to any other Person through a press release or otherwise, or mention or otherwise use the name, insignia, symbol, trademark, trade name, or logotype of the other Party or its Affiliates in any manner without the prior written consent of the other Party in each instance (which will not be unreasonably withheld). The restrictions imposed by this Section 3.1(f) will not prohibit either Party from making any disclosure that is required by Applicable Law, rule, or regulation or the requirements of a national securities exchange or another similar regulatory body including disclosing such information in any clinical trial database maintained by or on behalf of a Party. Further, the restrictions imposed on each Party under this Section 3.1(f) are not intended, and will not be construed, to prohibit a Party from identifying the other Party in its internal business communications, provided that any Confidential Information in such communications remains subject to this Section 3.1(f).

     (g) Remedies. The Parties acknowledge and agree that the restrictions set forth in this Section 3.1 are reasonable and necessary to protect the legitimate interests of the Parties and that neither Party would have entered into this Agreement in the absence of such restrictions, and that any breach or threatened breach of any provision of this Section 3.1 will result in irreparable injury to the other Party for which there will be no adequate remedy at law. Notwithstanding the arbitration provisions set forth in Section 9.1(c), in the event of a breach or threatened breach of any provision of Section 3.1 by a Party, the other Party will be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights will be cumulative and in addition to any other rights or remedies to which such Party may be entitled in law or equity. The breaching Party

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agrees to waive any requirement that the non-breaching Party (i) post a bond or other security as a condition for obtaining any such relief and (ii) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy. Nothing in this Section 3.1(g) is intended, or will be construed, to limit the Parties’ rights to equitable relief or any other remedy for a breach of any provision of this Agreement.

          Section 3.2 Compliance with Law. Each Party hereby covenants and agrees to comply with all Applicable Laws applicable to its activities connected with the development of the Influenza Vaccine. Without limiting the generality of the foregoing:

     (a) Patient Information . Each Party agrees to abide by all laws, rules, regulations, and orders of all applicable supranational, national, federal, state, provincial, and local governmental entities concerning the confidentiality or protection of patient identifiable information and/or patients’ protected health information, as defined by any other applicable legislation in the course of their performance under this Agreement.

     (b) Debarment. Each Party agrees that it will not use, in any capacity, in connection with any of its obligations to be performed under this Agreement any individual who has been debarred under the FD&C Act or the Generic Drug Enforcement Act or analogous law.

          Section 3.3 Nonsolicitation of Employees. During the Term of this Agreement and for a period of one year thereafter, each Party agrees that neither it nor any of its Affiliates will recruit, solicit or induce any employee of the other Party that is involved in the activities conducted pursuant to this Agreement to terminate his or her employment with such other Party and become employed by or consult for such other Party, whether or not such employee is a full-time employee of such other Party, and whether or not such employment is pursuant to a written agreement or is at-will. For purposes of the foregoing, “recruit”, “solicit” or “induce” does not include (a) circumstances where an employee of one Party initiates contact with the other Party or any of is Affiliates with regard to possible employment, or (b) general solicitations of employment not specifically targeted at employees of a Party or any of its Affiliates, including responses to general advertisements. In addition, during the Term of this Agreement and for a period of one year thereafter, neither Party may hire or employ any such employee of the other Party (including personnel who were employees of such other Party within a period of one year or less from the date of the proposed hiring or employment) without the prior written consent of such other Party, unless such other Party had previously terminated the employment of such former employee.

ARTICLE 4

REGULATORY APPROVAL

          Section 4.1 Regulatory Matters.

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     (a) Responsibility For Regulatory Interactions. Regulatory strategy for the Influenza Vaccine and all decision-making with respect thereto will be discussed by the Parties and approved by Novavax. Avimex will use Commercially Reasonable Efforts to obtain in a timely manner Regulatory Approvals in the name of Novavax with respect to the Influenza Vaccine. Avimex will be primarily responsible for conducting all activities relating to obtaining Regulatory Approvals in the Territory, including without limitation, preparing and submitting Regulatory Submissions and attending meetings with Regulatory Authorities; provided that Novavax may prepare filings or portions of the filings for review of Avimex if Novavax so chooses and, in any event, Novavax will be included in the process of preparing Regulatory Submissions and the contents of all Regulatory Submissions shall be subject to Novavax approval, all as set forth in Section 4.1(b). Novavax will own all right, title, and interest in, and shall be the entity named in, all Regulatory Submissions for the Influenza Vaccine in the Territory. The costs incurred in carrying out the responsibilities pursuant to this Section 4.1(a) will be born by Avimex.

     (b) Review of Regulatory Submissions.

     (i) Avimex will provide Novavax with advance copies of any substantive Regulatory Submissions made by Avimex in the Territory reasonably in advance of submission to a Regulatory Authority (and in any event no less than 10 days in advance) and will provide Novavax a meaningful opportunity to comment or to make suggestions, and Avimex will not unreasonably reject comments or suggestions from Novavax. Avimex acknowledges that Novavax may share such Regulatory Submissions with Third Party Licensees and seek input from same. Avimex will not submit any Regulatory Submissions in any Territory unless Avimex has complied with this Section 4.1(b)(i) with respect to such Regulatory Submissions and has received written consent of Novavax to such Regulatory Submissions.

     (ii) Novavax will keep Avimex reasonably informed as to the clinical development of the Influenza Vaccine outside of the Territory. In the event that any clinical trial results are not satisfactory and therefore would not support Regulatory Approval in the Territory, then Avimex and Novavax will discuss and agree whether clinical development should continue in the Territory and/or whether any clinical development plans should be amended or terminated.

     (c) Trademarks. Subject to Novavax’s prior written approval, Avimex shall develop, apply for, maintain and own one or more unique trademarks for the sale of Influenza Vaccine by Avimex in the Territory (each a “Trademark”). Trademarks may be submitted with the Regulatory Submissions as required by the applicable Regulatory Authority. Unless otherwise agreed in writing, Trademarks shall be owned by Avimex and will remain Avimex’s property at all times. No license, either express or implied, is granted to the Trademarks by virtue of this Agreement to Novavax or any other third party.

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     (d) Regulatory Cooperation.

     (i) Novavax will either provide Avimex with reasonable assistance in compiling Regulatory Submissions by providing any information, including but not limited to, reports, summaries and overviews relating to development or manufacturing of the Influenza Vaccine Product by Novavax or Novavax will compile such information to be included in such Regulatory Submission.

     (ii) Novavax will use Commercially Reasonable Efforts under any arrangement with Third Party Licensees to seek to have such Third Party Licensee provide to Avimex the same information relating to development or manufacturing of the Influenza Vaccine by the Third Party Licensee or its Affiliates as that described in Section 4.1(d)(i), provided, however, that Novavax will have no liability to Avimex for any failure to cause such Third Party to provide Avimex with such information, so long as Novavax has used the reasonable efforts described above.

     (iii) Avimex will keep Novavax reasonably informed regarding the status and progress of development activity, including without limitation, providing such Novavax with: (i) advance notice of all meetings scheduled with a Regulatory Authority (including notice within 24 hours of a request for a meeting received from a Regulatory Authority) related to the Influenza Vaccine; (ii) a copy of all substantive written correspondence from a Regulatory Authority involving a Regulatory Submission; and (iii) notice of all oral substantive correspondence from a Regulatory Authority involving a Regulatory Submission. Avimex will provide Novavax with an agenda and an invitation to attend substantive meetings with a Regulatory Authority involving a Regulatory Submission. Furthermore, the Parties will agree in advance on all substantive written communications with and, to the extent permitted by Applicable Law, will both have the right to participate in all meetings and oral communications with Regulatory Authorities. Avimex acknowledges that Novavax may share such written communications, notices and agendas with Third Party Licensees and seek input from same.

     (e) Clinical Trial Data. All clinical trial data being developed during the Evaluation and any other clinical trial data being developed by or on behalf of Novavax from the Influenza Vaccine, shall be maintained by a clinical resource organization or statistical analyst chosen by Novavax (and reasonably acceptable to Avimex) (the “Data CRO”). The Data CRO may merge all data into one master database as may be appropriate. Avimex will have free access to all data held by the Data CRO resulting from clinical trials conducted by Avimex under this Agreement. Novavax shall provide Avimex, within a reasonable amount of time after any Avimex request, with access to clinical trial data developed by or on behalf of Novavax related to the Influenza Vaccine. The use of the clinical trial data generated during the Evaluation is set forth in Section 5.3.

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     (f) Adverse Events. Within 60 days after the Effective Date, the Parties will enter into a pharmacovigilance agreement, which upon such execution will be attached as Exhibit A hereto and hereby incorporated into this Agreement by reference (the “Pharmacovigilance Agreement”). The Parties will comply with the provisions of such agreement. The Parties acknowledge and agree that Novavax maintains and will be the recognized holder of a global safety database for adverse event reports related to the Influenza Vaccine received by either Party. Novavax will cooperate with Avimex to the extent Avimex requests access to such global safety database. Except as otherwise provided in the Pharmacovigilance Agreement or as agreed to by the Parties, Novavax, or its designee, will be responsible for responding to all safety inquiries regarding the Influenza Vaccine.

ARTICLE 5

OPTION

          Section 5.1 Grant of Option. Novavax hereby grants, on the terms and conditions hereof, an irrevocable right and option to Avimex during the Term of this Agreement (the “Option”) to enter into the non-exclusive Distribution Agreement in the form attached hereto as Exhibit A (the “Distribution Agreement”).

          Section 5.2 Exercise of Option.

     (a) Voluntary Exercise of Option. So long as Avimex is in compliance with the terms of this Agreement, Avimex shall have the right, in its sole and absolute discretion, to exercise the Option at any time during the Term of this Agreement by sending a written notice to Novavax, indicating a final decision to exercise the Option (“Positive Decision Notice” or the “Option Exercise”).

     (b) Immediate Decision on Exercise of Option Upon Regulatory Approval. Within 7 calendar days of receipt of Regulatory Approval, if received during the Term, Avimex shall notify Novavax in writing whether Avimex is exercising the Option at that time. If Avimex notifies Novavax in writing that it is not exercising the Option at that time, or if Avimex does not provide any written notice to Novavax within the 7 day period, then Novavax may enter into arrangements with one or more third parties to sell Influenza Vaccine in the Territory, using the clinical trial data as described in Section 5.3, [* * *].

          Section 5.3 Effect of Option Exercise or Option Termination Unexercised; Use of Clinical Trial Data.

     (a) If the Option is exercised, and during the term of the Distribution Agreement, (i) the results (including all data) of the clinical trials conducted in the Evaluation may be used in the Territory exclusively by Avimex; and Novavax may use such results in any Regulatory Submission with any governmental or health authorities in

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any country or with any international organization anywhere in the world, except in the Territory; provided, however, if submission of the results to a regulatory authority is required by Law, regulation or that Regulatory Authority (as reasonably determined by the parties together when not clear), then Novavax may submit such results, and (ii) Novavax will not authorize any Third Party to distribute Influenza Vaccine in the Territory under the sanitary registration obtained in the name of Novavax under this Agreement with the assistance of Avimex; provided that Novavax may authorize and cooperate with a Third Party in seeking a separate sanitary registration for selling Influenza Vaccine in the Territory as long as such application does not make use of the results as provided in (i).

     (b) If Avimex does not exercise the Option during the 7 day period set forth in Section 5.2(b), or fails to provide any notice in such 7 day period, the Option terminates unexercised under Section 5.5, this Agreement is terminated by Novavax under Sections 7.2(a), (b) or (c) or by Avimex under Section 7.2(d), or the Distribution Agreement terminates at the election of Avimex or due to an uncured breach of Avimex, Novavax may, or may authorize Third Parties to, (i) use the results (including all data) of the clinical trials conducted in the Evaluation anywhere in the world without exception and/or (ii) distribute and sell Influenza Vaccine in the Territory under the sanitary registration obtained in the name of Novavax under this Agreement with the assistance of Avimex.

          Section 5.4 Execution of Distribution Agreement. The parties agree to execute the Distribution Agreement in the form attached hereto as Exhibit A upon the next business day following the date on which the option is exercised exercised under Section 5.2.

          Section 5.5 Termination of Option; Potential Payment by Novavax.

     (a) The Option shall terminate, if not yet exercised, upon expiration of the Term or as provided in Article 7 upon early termination of this Agreement under Article 7.

     (b) The Option shall terminate if Novavax desires to submit the Regulatory Submissions to seek Regulatory Approval and Avimex declines to cooperate or participate in such submission.

     (c) If (i) the Option terminates under Section 5.5(b), or Avimex does not exercise the Option during the 7 day period set forth in Section 5.2(b), or fails to provide any notice in such 7 day period, and (ii) Novavax enters into a distribution arrangement with another company based in Mexico, and (iii) such distributor sells at least [* * *] doses of Influenza Vaccine in Mexico, then Novavax shall pay to Avimex [* * *].

ARTICLE 6

RIGHT OF FIRST NEGOTIATION

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          Section 6.1 Grant of Right of Negotiation. Subject to the commitment to enter into a Collaboration and License Agreement between Novavax and Laboratories Farmaceuticos Rovi, S.A., based on the executed Head of Terms dated June 29, 2009, a redacted copy of which has been provided to Avimex, and further subject to exercise of the Option and Regulatory Approval, Novavax hereby agrees to negotiate, in good faith and on a non-exclusive basis, with Avimex for certain non-exclusive distribution rights to (i) Novavax’s seasonal human influenza vaccine (“Seasonal Vaccine”) in the Territory and (ii) the Influenza Vaccine and Seasonal Vaccine in the Latin American countries that are listed on Exhibit C. Such negotiations shall commence within three (3) months of the Option Exercise and continue for no more than thirty (30) days.

ARTICLE 7

TERM AND TERMINATION

          Section 7.1 Term. The term of this Agreement will commence on the Effective Date and, unless earlier terminated as provided in this Article 7, will continue in full force and effect until December 31, 2009 (the “Term”), unless the Option is exercised or deemed exercised, in which case, the Term ends December 31, 2010.

          Section 7.2 Termination for Cause.

     (a) Termination for Material Breach. This Agreement may be terminated effective immediately by written notice by a Party at any time during the Term if the other Party materially breaches this Agreement, which breach remains uncured for 30 days measured from the date written notice of such breach is given to the breaching Party. Such notice must specify the nature of the breach and demand its cure; provided, however, that if such breach is not capable of being cured within the stated period and the breaching Party uses Commercially Reasonable Efforts to cure such breach during such period and presents a mutually agreeable remediation plan for such breach, this Agreement will not terminate and the cure period will be extended for such period provided in the remediation plan as long as the breaching party continues to use Commercially Reasonable Efforts to pursue the cure as provided in such remediation plan. Notwithstanding anything to the contrary set forth in this Agreement, but subject to the limitations set forth in Section 8.6, termination will not be deemed to relieve a defaulting Party from any liability arising from such default.

     (b) Violation of Law. This Agreement may be terminated by Novavax on giving 15 days’ written notice to Avimex, which will be effective on the expiration date of such 15 day period in the event that the Avimex or any of its Affiliates are convicted of a felony for violating, or a final, non-appealable order is issued by a court of competent jurisdiction finding that Avimex or any of its Affiliates violated, any Applicable Laws, the Federal Foreign Corrupt Practices Act (or analogous law) or any securities laws or regulations (collectively, the “Relevant Laws”), which are of such a nature that such violation of such Relevant Laws would prevent or substantially diminish

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either Party from performing or having the ability to perform its obligations pursuant to this Agreement. Such notice of termination must be given within 15 days of Novavax becoming aware of the circumstances described in this Section 7.2(b).

     (c) Bankruptcy. This Agreement may be terminated by written notice by either Party at any time during the Term of this Agreement if the other Party will file in any court or agency, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets, or if the other Party proposes a written agreement of composition or extension of its debts, or if the other Party will be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within 60 days after the filing thereof, or if the other Party proposes or is a Party to any dissolution or liquidation, or if the other Party makes an assignment for the benefit of its creditors.

     (d) Termination for Convenience. Prior to its expiration, this Agreement may be terminated in its entirety at any time by Avimex effective upon at least 30 days prior written notice to Novavax for any reason. If Avimex terminates under this Section 7.2(d), Avimex will provide all assistance reasonably requested by Novavax for at least 90 days after the effective date of such termination to provide such assistance as may be reasonably useful or necessary for Novavax to continue with the development and testing of the Influenza Vaccine; provided that Novavax is responsible for expenses after termination. Notwithstanding the foregoing sentence, Avimex will not be required to undertake any development activities after providing notice of termination under this Section 7.2(d) for a material safety issue but will provide assistance in identifying, further characterizing and fully documenting such issue.

          Section 7.3 Effects of Termination.

     (a) Effects of Termination by Novavax. If this Agreement is terminated by Novavax under Section 7.2(a), Section 7.2(b) or Section 7.2(c), or if Avimex terminates under Section 7.2(d), then the following provisions will be effective upon such termination:

     (i) Avimex will furnish Novavax with reasonable cooperation to assure a smooth transition of any clinical or other studies in progress related to the Influenza Vaccine which Novavax determines to continue in compliance with Applicable Laws and ethical guidelines applicable to the transfer or termination of any such studies; provided that Novavax is responsible for expenses after termination. In addition, Avimex will transfer to Novavax all data and information related to the Influenza Vaccine generated or held by or on behalf of Avimex and will return all Novavax Confidential Information to Novavax;

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     (ii) Until termination is effective, Avimex will continue to perform its obligations hereunder, except with respect to activities that Novavax elects to discontinue; and

     (iii) The Option shall terminate.

     (b) Effects of Termination by Avimex. If this Agreement is terminated by Avimex pursuant to Section 7.2(a), Section 7.2(b) or Section 7.2(c), then until termination is effective, Novavax will continue to perform its obligations hereunder, except with respect to activities that Avimex elects to discontinue.

          Section 7.4 Survival of Certain Obligations. Expiration or termination of this Agreement will not relieve the Parties of any obligation accruing before such expiration or termination. The provisions of this Agreement that must, by their nature, survive expiration or termination of this Agreement to give effect to their intent, will so survive, including without limitation Article 3, Article 7, Article 8, or Article 9. Any expiration or early termination of this Agreement will be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

ARTICLE 8

PRODUCT LIABILITY, INDEMNIFICATION, AND INSURANCE

          Section 8.1 Indemnification by Novavax. Novavax will indemnify, defend and hold harmless Avimex, its Affiliates, and each of its and their respective employees, officers, directors and agents (each, an “Avimex Indemnified Party”) from and against any and all losses, damages, liabilities, settlements, penalties, fines, and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Liability”) that the Avimex Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

     (a) any Novavax representation or warranty set forth in this Agreement being untrue in any material respect when made or any material breach by Novavax of any of its covenants or obligations hereunder;

     (b) gross negligence or willful misconduct of Novavax; or

     (c) except, in each case, to the extent caused by the gross negligence or willful misconduct of Avimex or any Avimex Indemnified Party, or by breach of this Agreement by Avimex.

          Section 8.2 Indemnification by Avimex. Avimex will indemnify, defend and hold harmless Novavax, its Affiliates, Sublicensees, distributors and each of its and their respective employees, officers, directors and agents (each, a “Novavax Indemnified Party”) from

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and against any and all Liabilities that the Novavax Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

     (a) any Avimex representation or warranty set forth in this Agreement being untrue in any material respect when made or a material breach by Avimex of any of its covenants or obligations hereunder;

     (b) gross negligence or willful misconduct of Avimex; or

     (c) except in each case, to the extent caused by the gross negligence or willful misconduct of Novavax or any Novavax Indemnified Party, or by breach of this Agreement by Novavax.

          Section 8.3 Product Liability Claims. Notwithstanding anything to the contrary contained in Article 8 of this Agreement, the Parties intend for the customer(s) of all Product to provide indemnification to Avimex and Novavax for any product liability claim that may arise from the sale or use of Product. Avimex shall use its best efforts to obtain covenants of indemnification for all such product liability claims, but shall not be responsible for product liability claims by virtue of its inability to obtain such indemnification despite its best efforts.

          Section 8.4 Procedure. Each Party will notify the other in the event it becomes aware of a claim for which indemnification may be sought hereunder or for which Liability is shared pursuant to this Article 8. In case any proceeding (including any governmental investigation) is instituted involving any Party in respect of which indemnity may be sought pursuant to this Article 8, such Party (the “Indemnified Party”) will promptly notify the other Party (the “Indemnifying Party”) in writing and the Indemnifying Party and Indemnified Party will meet to discuss how to respond to any claims that are the subject matter of such proceeding. The Indemnifying Party, upon request of the Indemnified Party, will retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and will pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, the Indemnified Party will have the right to retain its own counsel, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party will have mutually agreed to the retention of such counsel and payment of fees and expenses or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both Parties by the same counsel would be inappropriate due to actual or potential differing interests between them. All such fees and expenses incurred pursuant to Section 8.1 or Section 8.2 will be reimbursed as they are incurred. The Indemnifying Party will not be liable for any settlement of any proceeding unless effected with its written consent. The Indemnifying Party will not, without the written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which the Indemnified Party is, or arising out of the same set of facts could have been, a party and indemnity could have been sought hereunder by the Indemnified Party, unless such settlement includes an unconditional release of the Indemnified Party from all liability on claims to which the indemnity relates that are the subject matter of such proceeding.

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          Section 8.5 Insurance. Each Party shall obtain and maintain, during the Term of this Agreement, commercial general liability insurance, including but not limited to products liability and clinical insurance, with reputable and financially secure insurance carriers to cover its indemnification obligations under Section 8.1 or Section 8.2, as applicable, or self-insurance, with limits of not less than 5 million U.S. dollars per occurrence and 10 million U.S. dollars in the aggregate. Each Party shall list the other Party as an additional insured party on the insurance policies described in this Section 8.5.

          Section 8.6 Liability Limitations. NOTWITHSTANDING THE FOREGOING, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT THE DAMAGES RESULT FROM A PARTY’S WILLFUL MISCONDUCT OR ARISE FROM A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS Article 8.

ARTICLE 9

MISCELLANEOUS.

          Section 9.1 Governing Law; Jurisdiction; Dispute Resolution.

     (a) Governing Law. The interpretation and construction of this Agreement will be governed by the laws of the State of Maryland and the United States of America, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

     (b) Dispute Resolution. In the event of a dispute arising out of or relating to this Agreement, either Party will provide written notice of the dispute to the other, in which event the dispute will be referred to the executive officers designated below or their successors, for attempted resolution by good faith negotiations within 15 days after such notice is received. The initial designated officers (“Initial Officers”) are initially as follows:

For Novavax:	Its Chief Executive Officer
For Avimex:	Its General Director

          If the Initial Officers are unable to resolve the dispute within 10 days, the matter shall be referred to the following:

For Novavax:	Its Chairman of the Board
For Avimex:	Its Chairman of the Board

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In the event the Chairmen of the Boards do not resolve such dispute within 5 days of the dispute being elevated to their review, either Party may, after the expiration of the 15 day period from receipt of the notice, seek to resolve the dispute through arbitration in accordance with Section 9.1(c).

          (c) Arbitration.

     (i) Arbitration Claims. Any claim, dispute, or controversy of whatever nature arising between the Parties out of or relating to this Agreement that is not resolved under Section 9.1(b) within the required 15 day time period, including without limitation, any action or claim based on tort, contract, or statute (including any claims of breach or violation of statutory or common law protections from discrimination, harassment and hostile working environment), or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement (“Arbitration Claim”), will be resolved by final and binding arbitration before a single expert with relevant industry experience selected by the Parties or, if the Parties cannot agree within ten (10) days, a panel of three experts with relevant industry experience (each, an “Arbitrator”). The panel of three Arbitrators shall be appointed in accordance with the Rules of Arbitration of the International Chamber of Commerce. The Arbitration will be administered under the Rules of Arbitration of the International Chamber of Commerce (the “Administrator”). The arbitration will be held in Mexico City, Mexico and conducted in English. The Arbitrators will be instructed by the Parties to complete the arbitration within 60 days after selection of the final Arbitrator.

     (ii) Arbitrators’ Award. The Arbitrators will, within 15 calendar days after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The decision or award rendered by the Arbitrators will be final and non-appealable, and judgment may be entered upon it in accordance with applicable law in any court of competent jurisdiction. The Arbitrators will be authorized to award compensatory damages, but will NOT be authorized (i) to award non-economic damages, such as for emotional distress, pain and suffering or loss of consortium, (ii) to award punitive damages, or (iii) to reform, modify or materially change this Agreement or any other agreements contemplated hereunder; provided, however, that the damage limitations described in parts (i) and (ii) of this sentence will not apply if such damages are statutorily imposed.

     (iii) Costs. Each Party will bear its own attorney’s fees, costs, and disbursements arising out of the arbitration and the costs of the arbitrator selected by it, and will pay an equal share of the fees and costs of the third arbitrator; provided, however, the Arbitrators will be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party

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reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs of the Administrator and the Arbitrators.

     (iv) Compliance with this Agreement. Unless the Parties otherwise agree in writing, during the period of time that any arbitration proceeding is pending under this Agreement, the Parties will continue to comply with all those terms and provisions of this Agreement that are not the subject of the pending arbitration proceeding.

     (v) Injunctive or Other Equity Relief. Nothing contained in this Agreement will deny any Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing arbitration proceeding.

          Section 9.2 Definitions. Capitalized terms not defined herein shall have the meaning set forth below:

     (a) “Affiliate” means, with respect to a Person, any Person that controls, is controlled by, or is under common control with such first Person. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) to own, directly or indirectly, more than 50% of the outstanding voting securities or other ownership interests of such Person.

     (b) “Applicable Law” means all applicable statutes, ordinances, regulations, rules, or orders of any kind whatsoever of any Regulatory Authority, as amended from time to time in the Territory, and, if applicable, under the laws of the United States.

     (c) “Change of Control” means any of the following: (i) the sale or disposition of all or substantially all of the assets of a Party to a Third Party, (ii) the acquisition by a Third Party or any group of Persons acting in concert, other than an employee benefit plan (or related trust) sponsored or maintained by a Party or any of its Affiliates, of more than 50% of such Party’s outstanding shares of voting capital stock (e.g., capital stock entitled to vote generally for the election of directors), (iii) the appointment or election to the board of directors of a Party of members constituting a majority of such board who were not appointed, approved or recommended for election by the board of directors as constituted immediately prior to the appointment or election of such majority, or (iv) the merger or consolidation of a Party with or into another corporation or entity, other than, in the case of (ii) or (iii), an acquisition or a merger or consolidation of a Party in which holders of shares of such Party’s voting capital stock immediately prior to the acquisition, merger or consolidation have at least 50% of the ownership of voting capital stock of the

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acquiring Third Party or the surviving entity in such merger or consolidation, as the case may be, immediately after the merger or consolidation. Notwithstanding the foregoing, a Change of Control will not be deemed to occur on account of the acquisition of securities of a Party by an institutional investor, or Affiliate thereof, that acquires a Party’s securities in a transaction or series of related transactions as a passive investment which does not affect the management of such Party, or a sale of assets, merger or other transaction effected exclusively for the purpose of changing the corporate domicile of a Party.

     (d) “Commercially Reasonable Efforts” means those efforts and resources normally used by a Third Party similarly situated to a Party hereunder for a product or compound owned by such Third Party or to which such Third Party has rights of the type such Party has hereunder, taking into account, without limitation, issues of safety and efficacy, product profile, the proprietary position of the product or compound, the regulatory environment and status of the compound, and other relevant scientific factors, market conditions then prevailing, including the competitive environment, profitability, the extent of market exclusivity, the cost to develop the compound or product, health economic claims, and other similar factors reasonably determined by the Third Party to be relevant. Without limiting the foregoing, Commercially Reasonable Efforts as it applies to the development the Influenza Vaccine hereunder means adherence to the activities and time lines (to the extent adherence to such activities and time lines is controllable by the Party responsible for performing such activities) set forth in the protocols, as may be amended from time to time based on the results of studies conducted with the Materials, as may be amended from time to time, and regulatory factors.

     (e) “Confidential Information” means, with respect to a Party, all information (and all tangible and intangible embodiments thereof), which is Controlled by such Party, is disclosed by such Party to the other Party pursuant to this Agreement, and is designated as confidential in writing by the disclosing Party whether by letter or by use of an appropriate stamp or legend, prior to, at the time or promptly after any such information is disclosed by the disclosing Party to the other Party. In addition, any information which is orally, electronically or visually disclosed by a Party, or is disclosed in writing without an appropriate letter, stamp or legend, will constitute Confidential Information if the disclosing Party, within 30 days after such disclosure, delivers to the receiving Party a written document or documents describing the information disclosed and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the Person(s) to whom such disclosure was made.

     (f) “Control” or “Controlled” means, with respect to any intellectual property right of a Party, that the Party or its Affiliate owns or has a license to such intellectual property right and has the ability to grant access, a license, or a sublicense to such intellectual property right to the other Party as provided in this Agreement without violating an agreement with or other rights of any Third Party.

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     (g) “Person” means any individual, corporation, company, limited liability company, partnership, limited liability partnership, trust, estate, proprietorship, joint venture, association, organization, or entity.

     (h) “Production Costs” means the fully loaded cost of all raw materials, consumables and supplies, labor, and production time.

     (i) “Regulatory Approval” means the approval and market authorization of a Regulatory Authority in a country necessary to develop, manufacture, or commercialize, including pricing and reimbursement approval where required, the Influenza Vaccine in the Territory.

     (j) “Regulatory Authority” means any international (e.g., EMEA), national, regional, state, or local regulatory agency, department, bureau, commission, council, or other governmental entity in the Territory involved in the granting of Regulatory Approval for the Influenza Vaccine in the Territory.

     (k) “Regulatory Submission” means applications for obtaining Regulatory Approval and registration, notification, and other submissions made to or with a Regulatory Authority that are necessary or reasonably desirable to develop, manufacture, or commercialize the Influenza Vaccine in the Territory, whether obtained before or after Regulatory Approval in the Territory. Regulatory Submissions include, without limitation, investigative new drug applications and NDAs, and amendments and supplements to any of the foregoing and their foreign counterparts, applications for pricing and reimbursement approvals, and all proposed labels, labeling, package inserts, monographs, and packaging for the Influenza Vaccine in the Territory.

     (l) “Third Party” means any Person other than Novavax, Avimex and their respective Affiliates.

     (m) “Third Party Licensee” means a Third Party to whom Novavax has licensed any rights to the Influenza Vaccine in any country outside the Territory.

          Section 9.3 Force Majeure. No liability will result from, and no right to terminate will arise, in whole or in part, based upon any delay in performance or non-performance, in whole or in part, by either of the Parties to this Agreement to the extent that such delay or non-performance is caused by an event of Force Majeure. “Force Majeure” means an event that is beyond the reasonable control of a non-performing Party (the “Force Majeure Party”), including an act of God, act of the other Party, war, riot, civil commotion, terrorist act, malicious damage, epidemic, quarantine, fire, flood, storm, natural disaster or compliance with any law or governmental order, rule, regulation or direction, whether or not it is later held to be invalid or inapplicable. The Force Majeure Party will within ten days of the occurrence of the Force Majeure event, give written notice to the other Party stating the nature of the Force Majeure event, its anticipated duration and any action being taken to avoid or minimize its effect. Any suspension of performance will be of no greater scope and of no longer duration than is

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reasonably required and the Force Majeure Party will use reasonable effort to remedy its inability to perform; provided, however, if the suspension of performance continues or is anticipated to continue for 30 days after the date of the occurrence, the unaffected Party will have the right but not the obligation to perform on behalf of the Force Majeure Party for a period of such Force Majeure and such additional period as may be reasonably required to assure a smooth and uninterrupted transition of such activities. If such failure to perform would constitute a material breach of this Agreement in the absence of such event of Force Majeure, and continues for six months from the date of the occurrence and the Parties are not able to agree on appropriate amendments within such period, such other Party will have the right, notwithstanding the first sentence of this Section 9.3, to terminate this Agreement immediately by written notice to the Force Majeure Party, in which case neither Party will have any liability to the other except for those rights and liabilities that accrued prior to the date of termination and the consequences of termination pursuant to Section 7.3(a) or Section 7.3(b), as applicable, as if such termination was a termination as to which such consequences applied.

          Section 9.4 Additional Approvals. Avimex and Novavax will cooperate and use respectively all reasonable efforts to make all other registrations, filings and applications, to give all notices and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications authorizations, permits and waivers, if any, and to do all other things necessary or desirable for the consummation of the transactions as contemplated hereby. Neither Party will be required, however, to divest or out-license products or assets or materially change its business if doing so is a condition of obtaining any governmental approvals of the transactions contemplated by this Agreement.

          Section 9.5 Waiver and Non-Exclusion of Remedies. A Party’s failure to enforce, at any time or for any period of time, any provision of this Agreement, or to exercise any right or remedy will not constitute a waiver of that provision, right or remedy or prevent such Party from enforcing any or all provisions of this Agreement and exercising any rights or remedies. To be effective any waiver must be in writing. The rights and remedies provided in this Agreement are cumulative and do not exclude any other right or remedy provided by law or otherwise available except as expressly set forth in this Agreement.

          Section 9.6 Notices.

     (a) Notice Requirements. Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement must be in writing, must refer specifically to this Agreement and will be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 9.6(b) or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 9.6(a). Such Notice will be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second business day (at the place of delivery) after deposit with an internationally recognized overnight delivery service. This Section 9.6(a) is not

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intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

          (b) Address for Notice.

For Novavax:
Novavax, Inc.
9920 Belward Campus Drive
Rockville, MD 20850
United States
Fax:	240-268-2148
Attn:	Senior Vice President, International and Government Alliances
With a copy to:
Ballard Spahr LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Fax:	215-864-9073
Attn:	Jennifer Miller
For Avimex:
Laboratorio Avi-Mex S.A. de C.V.
Maiz #18. Col. Granjas Esmeralda CP 09810
Mexico City, Mexico
Fax:	(55) 54450462
Attn:	Bernardo Lozano Dubernard, General Director

          Section 9.7 Entire Agreement. This Agreement, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements, whether written or oral, with respect to the subject matter of this Agreement. Each Party confirms that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this Agreement. Nothing in this Agreement is intended to limit or exclude any liability for fraud. All Exhibits or Schedules referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement. In the event of any inconsistency between any such Exhibits or Schedules and this Agreement, the terms of this Agreement will govern.

          Section 9.8 Amendment. Any amendment or modification of this Agreement must be in writing and signed by authorized representatives of both Parties.

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          Section 9.9 Assignment. Avimex may not assign its rights or delegate its obligations under this Agreement, in whole or in part, by operation of law, via a Change in Control, or otherwise, without the prior written consent of Novavax which can be given or withheld in Novavax’s discretion. Novavax may not assign its rights or delegate its obligations under this Agreement, in whole or in part, without the consent of Avimex, provided, however, that this Agreement may be assigned by Novavax in connection with a Change in Control.

          Section 9.10 No Benefit to Others. The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they will not be construed as conferring any rights in any other persons except as otherwise expressly provided in this Agreement.

          Section 9.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which taken together will be deemed to constitute one and the same instrument. An executed signature page of this Agreement delivered by facsimile transmission will be as effective as an original executed signature page.

          Section 9.12 Severability. To the fullest extent permitted by applicable law, the Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect. If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision will be given no effect by the Parties and will not form part of this Agreement. To the fullest extent permitted by applicable law and if the rights or obligations of any Party will not be materially and adversely affected, all other provisions of this Agreement will remain in full force and effect and the Parties will use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with applicable law and achieves, as nearly as possible, the original intention of the Parties.

          Section 9.13 Further Assurance. Each Party will perform all further acts and things and execute and deliver such further documents as may be necessary or as the other Party may reasonably require to implement or give effect to this Agreement.

          Section 9.14 Publicity. It is understood that the Parties will issue a press release announcing the execution of this Agreement in such form as the Parties mutually agree. The Parties will consult with each other reasonably and in good faith with respect to the text and timing of any subsequent press releases relating to this Agreement or the activity hereunder prior to the issuance thereof, provided that a Party may not unreasonably withhold consent to such releases, and that either Party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure or which are consistent with information disclosed in prior releases properly made hereunder.

          Section 9.15 Relationship of the Parties. The status of a Party under this Agreement will be that of an independent contractor. Nothing contained in this Agreement will

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EXCHANGE COMMISSION.

be construed as creating a partnership, joint venture, or agency relationship between the Parties or, except as otherwise expressly provided in this Agreement, as granting either Party the authority to bind or contract any obligation in the name of or on the account of the other Party or to make any statements, representations, warranties, or commitments on behalf of the other Party. All Persons employed by a Party or any of its Affiliates are employees of such Party or its Affiliates and not of the other Party or such other Party’s Affiliates and all costs and obligations incurred by reason of any such employment will be for the account and expense of such Party or its Affiliates, as applicable.

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     IN WITNESS WHEREOF, duty authorized representatives of the Parties have duly executed this Agreement to be effective as of the Effective Date.

NOVAVAX, INC.			Laboratorio Avi-mex, S.A. de C.V.
By:	/s/ Rahul Singhvi		By:	/s/ Bernard Lozano
	Name:	Rahul Singhvi		Name:	Bernard Lozano
	Title:	President and CEO		Title:	General Director

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Exhibit A

Form of Distribution Agreement

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
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EXCHANGE COMMISSION.

DISTRIBUTION AGREEMENT

     THIS DISTRIBUTION AGREEMENT (this “Agreement”) dated                      ___, 20__ (the “Effective Date”), is entered into by and between Novavax, Inc., a corporation organized under the laws of Delaware, United States (the “Supplier”), and Laboratorio Avi-Mex, S.A. de C.V., a private company organized under the federal laws of Mexico (the “Distributor”). Each of Supplier and Distributor may be collectively referred to as the “Parties” and each individually as a “Party”.

WITNESSETH:

     WHEREAS, Supplier is a manufacturer of the Product (as defined herein), and desires that Product be sold to customers in the Territory (as defined herein);

     WHEREAS, Supplier and Distributor are parties to that certain Materials Transfer Agreement dated October 19, 2009 (the “Materials Transfer Agreement”), pursuant to which Distributor was granted an option to enter into this Agreement, which option was exercised on                      ___, 20__;

     WHEREAS, Distributor desires to purchase Product for resale to its customers in the Territory and to otherwise act as a sales representative for Product in the Territory; and

     WHEREAS, Supplier desires that Distributor act in such capacities in the Territory.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein and intending to be legally bound, the parties hereby agree as follows.

ARTICLE 1

DEFINITIONS

     Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below.

     “Affiliate” means any corporation, firm, partnership, or other entity, whether de jure or de facto, that directly or indirectly controls, is controlled by or is under common control with a party to this Agreement.

     “Change of Control” means any of the following: (i) the sale or disposition of all or substantially all of the assets of a Party to a Third Party, (ii) the acquisition by a Third Party or any group of Persons acting in concert, other than an employee benefit plan (or related trust) sponsored or maintained by a Party or any of its Affiliates, of more than 50% of such Party’s outstanding shares of voting capital stock (e.g., capital stock entitled to vote generally for the election of directors), (iii) the appointment or election to the board of directors of a Party of members constituting a majority of such board who were not appointed, approved or recommended for election by the board of directors as constituted immediately prior to the

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appointment or election of such majority, or (iv) the merger or consolidation of a Party with or into another corporation or entity, other than, in the case of (ii) or (iii), an acquisition or a merger or consolidation of a Party in which holders of shares of such Party’s voting capital stock immediately prior to the acquisition, merger or consolidation have at least 50% of the ownership of voting capital stock of the acquiring Third Party or the surviving entity in such merger or consolidation, as the case may be, immediately after the merger or consolidation. Notwithstanding the foregoing, a Change of Control will not be deemed to occur on account of the acquisition of securities of a Party by an institutional investor, or Affiliate thereof, that acquires a Party’s securities in a transaction or series of related transactions as a passive investment which does not affect the management of such Party, or a sale of assets, merger or other transaction effected exclusively for the purpose of changing the corporate domicile of a Party.

     [* * *]

     “Net Sales” means the gross amount invoiced for any sale of the Product by Distributor, to a non-Affiliate in a bona fide arm’s length transaction, less the following deductions, in each case to the extent specifically related to the Product and taken by the Distributor or otherwise paid for or accrued by the Distributor in accordance with GAAP (“Permitted Deductions”):

     (i) trade, cash, promotional and quantity discounts and wholesaler fees;

     (ii) taxes on sales (such as excise, sales or use taxes or value added taxes) to the extent imposed upon and paid directly with respect to the sales price (and excluding national, sales or local taxes based on income);

     (iii) freight, insurance, packing costs and other transportation charges to the extent included in the invoice price to the buyer;

     (iv) amounts repaid or credits taken by reason of damaged goods, rejections, defects, expired dating, recalls, returns or because of retroactive price reductions; and

     (v) charge back payments and rebates granted to (a) managed healthcare organizations, (b) federal, state and/or provincial and/or local governments or other agencies, (c) purchasers and reimbursers, or (d) trade customers, including wholesalers and chain and pharmacy buying groups.

     It is understood that accruals taken as a deduction against Net Sales will be periodically reviewed by Supplier in accordance with GAAP and if any accrual is reversed by Distributor a corresponding credit will be made to Net Sales in the period in which the reversal is made.

     “Product” means Novavax’s current monovalent intra-muscular H1N1 influenza vaccine containing a virus like particle (VLP) consisting of [* * *]

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as designated as pandemic by the World Health Organization (WHO) Collaborating Centers for Reference and Research on Influenza located at the Centers for Disease Control and Prevention (CDC) in Atlanta, Georgia.

     [* * *]

     “Regulatory Authority” means the Federal Commission for Protection Against Sanitary Risks in Mexico.

     “Territory” means the country of Mexico.

     “Third Party” means any entity or person other than a party to this Agreement or an Affiliate of either the Supplier or the Distributor.

     “Third Party Licensee” means a Third Party to whom Supplier has licensed any rights to the Product in any country outside the Territory.

     Section 1.2 Additional Definitions. Each of the following definitions is set forth in the section of this Agreement indicated below:

Administrator	Section 9.1(c)(i)
Agreement	First Paragraph
Arbitration Claim	Section 9.1(c)(i)
Arbitrator	Section 9.1(c)(i)
Authorized Recipients	Section 12.1
Confidential Information	Section 12.1
Delivered	Section 5.1
Delivery	Section 5.1
Disclosing Party	Section 12.1
Distributor	First Paragraph
Distributor Indemnified Party	Section 8.1
Effective Date	First Paragraph
Final Report	Section 4.3(c)
Force Majeure	Section 14.3
Force Majeure Party	Section 14.3
Indemnified Party	Section 11.4
Indemnifying Party	Section 11.4
Initial Officers	Section 14.1(b)
Initial Order	Section 4.2
JSC	Section 6.1
Liability	Section 8.1
Materials Transfer Agreement	Recitals
Order	Section 3.1(c)
Product Liability Claim	Section 11.3
Recall	Section 9.3
Receiving Party	Section 12.1

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Shipped Product	Section 5.1
Supplier	First Paragraph
Supplier Indemnified Party	Section 11.2
Term	Section 13.1
Transfer Price	Section 4.3(a)

     Section 1.3 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” in any form shall mean including without limitation.

ARTICLE 2

APPOINTMENT AS DISTRIBUTOR

     Section 2.1 Distribution Rights. Supplier hereby grants Distributor the non-exclusive right to purchase the Product described in Exhibit A attached hereto during the Term of this Agreement from the Supplier and to sell or resell the Product to any customer located in the Territory. The rights of the Distributor are subject to the terms and conditions of this Agreement. No rights whatsoever are granted to distribute Product outside the Territory, whether directly or indirectly through purchasers in the Territory for resale or other distribution outside the Territory. Distributor hereby agrees to market, promote, sell, service and support the Product in conformity with and subject to the terms and conditions of this Agreement and further agrees not to sell or otherwise distribute Product to purchasers in the Territory for resale or other distribution outside the Territory. Distributor agrees that nothing herein shall be deemed to grant any right or license, express or implied, under any patents, know-how or other proprietary rights or intellectual property owned or controlled by Supplier.

     Section 2.2 Consideration for Distribution Rights. As consideration for the rights granted pursuant to Section 2.1, Distributor shall pay Supplier the following non-refundable, non-creditable payments:

     (a) [* * *] within twenty (20) days of [* * *]; and

     (b) [* * *] within twenty (20) days of [* * *].

     Section 2.3 Nature of Relationship. The relationship established between Supplier and Distributor by this Agreement is that of supplier and representative. Distributor is an independent contractor under this Agreement and shall not have the right to assume or create any obligation of any kind, either express or implied, on behalf of Supplier, except as expressly provided for in this Agreement. Nothing in this Agreement shall be deemed to establish or

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otherwise create a relationship of principal and agent, employer and employee, or otherwise between Supplier and Distributor.

     Section 2.4 Right to Sell Other Product. During the Term, the Distributor will have the right and discretion to sell, and enter into distribution agreements to resell, products of Third Parties; provided, however, that Distributor may not distribute other pandemic influenza vaccines for use in humans that are directly competitive with the Product unless specifically agreed to in writing in advance by Supplier. Distributor shall avoid all circumstances and actions that would place Distributor in a position of adverse interest or divided loyalty with respect to its obligations under this Agreement.

ARTICLE 3

RESPONSIBILITIES

     Section 3.1 Responsibilities of Distributor. Distributor shall at all times during the Term of this Agreement:

          (a) assume all market risk relating to Product in the Territory (being the risk the Product does not sell in the Territory);

          (b) except as set forth in Supplier’s warranties, assume all risks relating to inventory, including risk related to Product quality (but not with respect to product recalls), order processing errors, mistakes in the communication of Product specifications, customer credit, customer liability or other and related matters;

          (c) actively and diligently promote the sale of the Product by, among other things, solicitation of inquiries and calls on customers and prospective customers to obtain inquiries, and by rendering such services as may be required to present and sell the Product;

          (d) maintain at all times a stock of Product at the warehouse location in Mexico City, Mexico necessary to supply reasonable estimated demand by Distributor, and to maintain delivery times not to exceed two (2) weeks to customers, with consideration given to normal time delays outside the reasonable control of the Distributor. Such Product is to be stored according to Supplier’s instructions and dispatched under the inventory principles of FIFO (first in first out);

          (e) develop and implement a quality control process for Product handling in the Territory;

          (f) cooperate with and represent Supplier in promotional efforts;

          (g) maintain records and summary reports regarding such communications with customers and prospective customers, and shall provide such items to Supplier upon request of Supplier;

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          (h) furnish to Supplier such other reports and information relating to the purpose of this Agreement (which includes but is not limited to sales activities, market prices, Product and strategies of competitors, possible new Product, future customer needs, market trends, and related matters) that may reasonably be requested from time to time by Supplier or that Distributor shall become aware of during the Term of this Agreement;

          (i) deliver the Product in the packaging provided;

          (j) perform administrative support functions such as maintenance of accurate and current customer records, order processing, customer credit review, customer invoicing, and accounts receivable processing for all sales of the Product to customers in the Territory;

          (k) comply with all tax, including value-added taxes, import and export and custom laws, rules and regulations in the Territory; and

          (l) immediately notify Supplier in writing of any claim or notice received that alleges that the Product infringes any patent, trademark, copyright, trade secret, or similar law in order to allow Supplier to defend such claims.

     Section 3.2 Responsibilities of Supplier. Supplier shall at all times during the Term of this Agreement:

          (a) supply Product to Distributor in accordance with this Agreement;

          (b) provide to Distributor, without charge, such technical information materials regarding the Product as Supplier deems reasonably necessary; and full information with respect to all Product specification changes.

          (c) assume no market risk (risk that Product does not sell in the Territory); and

          (d) assume responsibility for all costs and risks related to the manufacture and sale of Product not expressly assumed by Distributor under this Agreement.

     Section 3.3 Regulatory Information. Supplier accepts the responsibility to provide the Distributor with complete information regarding limitations on the use of the Product. Responsibilities of the parties with regard to obtaining and maintaining all governmental approvals, except those related to customs and importation, necessary for the Distributor to sell the Product in the Territory are set forth in the Materials Transfer Agreement.

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ARTICLE 4

TERMS OF SALE OF PRODUCT

     Section 4.1 Purchase of Product. Distributor shall purchase all Product ordered from Supplier pursuant to Section 4.2 and shall retain it in its own inventory at the warehouse in Mexico City, Mexico. Distributor shall deliver such Product to its customers, and shall be responsible for sending invoices to such customers and for collecting any purchase price or other charges due therefor. Supplier shall not be responsible for, or incur any liability in respect to, sales by Distributor to its end customers.

     Section 4.2 Orders; Minimum Initial Order. On the Effective Date, Distributor is deemed to have ordered [* * *] doses of [* * *] mg of the Product (provided Supplier has the capacity and yield levels to produce such amounts and subject to proration if the final dose of the Product is greater or less than [* * *] mg per dose) (the “Initial Order”). Subject to further agreement of the parties, Supplier may order, purchase and sell additional doses of Product under the terms and conditions of this Agreement.

     Section 4.3 Payment Terms.

     (a) Prepayments. Distributor shall pay Supplier a 20% prepayment of the Transfer Price of the Initial Order within ten (10) days of the Initial Order.

     (b) Transfer Price. Distributor shall pay to Supplier a “Transfer Price” equal to [* * *] per dose for the first [* * *] doses of the Product delivered to Supplier and [* * *] per dose for all other doses of the Product delivered to Supplier within 30 days of delivery; provided that the Transfer Price shall be reduced for the first [* * *] doses of Product delivered the amounts paid by Distributor to Supplier pursuant to (x) Section 1.4(b) of the Materials Transfer Agreement and (y) Section 4.3(a) of this Agreement.

     (c) Additional Purchase Price (Adjustment to Net Sales Percentage). Within thirty (30) days of Distributor’s sale of all of the Product in the Initial Order, Distributor shall submit to Supplier a comprehensive and detailed written report, with back-up documentation as Supplier may reasonably request, detailing and documenting, all purchases and sales of the Product, the Net Sales therefrom, and the relevant calculations in accordance with the foregoing (the “Final Report”). The Final Report shall set forth the additional purchase price to be paid by Distributor to Supplier, if any, which shall be calculated as follows:

     (i) [* * *]% of Net Sales of sales of the first [* * *] doses of the Product sold;

     (ii) Plus [* * *]% of Net Sales of sales of all other doses of the Product sold;

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     (iii) Less an amount, if a positive number, equal to the product of (A) [* * *]% of the amount that the average Net Sales price per dose sold exceeds [* * *] and (B) the number of doses sold;

     (iv) Less the prepayment paid by Distributor to Supplier pursuant to Section 4.3(a));

     (v) Less the amounts paid by Distributor to Supplier pursuant to Section 1.4(b) of the Materials Transfer Agreement; and

     (vi) Less the amount paid by Distributor to Supplier pursuant to Section 4.3(b).

     Section 4.4 Letter of Credit. On the date of execution of this Agreement, Distributor will provide an irrevocable letter of credit, in form and substance and issued by a banking institution reasonably acceptable to Supplier, in the amount of the aggregate of the PrePayment and Transfer Price to be paid by Distributor for the Initial Order. Supplier shall be entitled to draw on the Letter of Credit, with no action required on the part of Distributor, if Distributor fails to make timely payment of the PrePayment or the Transfer Price.

     Section 4.5 Taxes. Any foreign, federal, state, county or local sales, use, value-added or excise tax or similar charge, including customs and import duties, or other tax assessment (other than that assessed against income), license fee (other than royalties owed to Third Parties) or other charge lawfully assessed or charged on the sale or transportation of Shipped Product sold pursuant to this Agreement after Delivery to Distributor shall be paid by Distributor.

     Section 4.6 Currency. All purchase transactions between Supplier and Distributor shall be denominated in, and all reports and calculations of payments shall be made in United States Dollars.

ARTICLE 5

SHIPMENT AND DELIVERY

     Section 5.1 Shipment. Delivery shall occur for Product purchased from Supplier (“Shipped Product”) [* * *] (“Delivery” or “Delivered”).

     Section 5.2 Delivery. For Delivery of Shipped Product, Supplier and Distributor will agree to shipping instructions.

     Section 5.3 Export Licenses: Import Certificates; Customs and Regulatory Approvals.

          (a) Distributor’s Responsibilities. Distributor, at its cost, shall obtain all authorizations required to import the Shipped Product into the Territory; and pay all applicable freight, import and custom duties, taxes and fees.

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          (b) Supplier’s Responsibilities. Supplier shall: (i) obtain any export license required to export the Shipped Product to the Territory and obtain all required export authorizations; and (ii) take all reasonable steps to cooperate with Distributor in complying with any import, export or custom regulations applicable to the Shipped Product, to the extent consistent with applicable law, including filling out necessary paperwork or reports to obtain any applicable waiver, exemption or reduction of such duties in a timely manner.

     Section 5.4 Title and Risk of Loss. Title to and risk of loss of Shipped Product shall pass to Distributor at the place and time of Delivery. Any loss or damage to Shipped Product prior to Delivery shall be at Supplier’s risk.

ARTICLE 6

JOINT STEERING COMMITTEE.

     Section 6.1 Overview. The Parties will establish a Joint Steering Committee (“JSC”) that will be responsible for overseeing the marketing, pricing and distribution of the Product in the Territory, and will serve as a forum for exchanging data, information, and Development strategy(ies) regarding the Product. The Parties anticipate that the JSC will perform the functions ascribed to it in this Section 6.1; provided, however, that the functions and operations of the JSC may be altered from time to time during the Term by the mutual agreement of the Parties to appropriately address ongoing requirements with respect to the marketing and distribution of the Product.

     Section 6.2 Membership. The JSC will consist of three senior representatives from each Party, including at least one executive level officer from each Party. Supplier and Distributor will each designate a co-chair for the JSC. The co-chairs will be responsible for calling meetings and setting the agenda (which will include a list of all participants expected at a meeting) and circulating such agenda at least ten days prior to each meeting and distributing minutes of the meetings within 30 days following such meeting (which minutes will be in the English language), but will not otherwise have any greater power or authority than any other member of the JSC. Each member must have expertise in regulatory matters, medical affairs, clinical research, commercialization, marketing, distribution or such other expertise as appropriate to the activities of the JSC. From time to time, the JSC may invite personnel of the Parties or other outside consultants who are agreed upon by the Parties, in each case having commercial, marketing, reimbursement or other expertise to participate in discussions of the JSC as appropriate to assist in the activities of the JSC.

     Section 6.3 Responsibilities. The JSC’s responsibilities will include, among others: (i) reviewing Distributor’s strategy for marketing and selling the Product in the Territory; (ii) overseeing the implementation or any marketing or distribution strategy in the Territory (including strategies related to reimbursement, advertising and promotion, brand integrity, sale and launch sequence); (iii) overseeing the strategy and implementation of the branding of the Product in the Territory, including the selection and maintenance of any trademarks to be used in connection with the Product in the Territory (provided that Supplier approval is required for all

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trademarks) and (iv) establishing usage instructions for the trademarks. No license, either express or implied, is granted to any trademarks between the parties by virtue of this Agreement. Any trademarks of the parties shall remain each Party’s property at all times.

     Section 6.4 Meetings. During the Term, the JSC will meet at such frequency as will be established by the Parties. Meetings of the JSC will alternate between the offices of the Parties or their Affiliates, unless otherwise agreed upon by the members of the JSC, or may be held telephonically or by video conference. All meetings of the JSC will be conducted in English. Meetings of the JSC will be effective only if at least one representative of each Party is in attendance or participating in the meeting. Members of the JSC may participate in and vote at meetings by telephone. Each Party will be responsible for expenses incurred by its employees and its members of the JSC in attending or otherwise participating in JSC meetings. Each Party will use reasonable efforts to cause its representatives to attend the meetings of the JSC. If a representative of a Party is unable to attend a meeting, such Party may designate an alternate with equivalent experience and authority as such representative to attend such meeting in place of the absent representative.

     Section 6.5 Minutes. The minutes of each JSC meeting must provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations approved by the JSC. Minutes of each JSC meeting will be approved or disapproved, and revised as necessary, at the next meeting. Minutes will be kept in English.

     Section 6.6 Elevation and Dispute Resolution. Each Party’s representatives on the JSC will collectively have one vote on all matters that are within the responsibility of such committee. The members of each committee will use reasonable efforts to reach consensus on all decisions. In the event that the members of the JSC are unable to agree on a particular issue, such issue will be referred to Distributor’s Chief Executive Officer and Supplier’s Chief Executive Officer. Subject to the remaining provisions of this Section 6.6, all matters relating to the marketing and distribution of the Products must be determined by consensus of the Parties. The Parties will from time to time identify a panel of mutually agreed consultants with expertise in vaccine distribution to assist the JSC in the resolution of issues taking into consideration the interests of each Party and, upon the request of either Party, such experts will be requested to advise as to distribution issues where consensus cannot be reached, with the advice of such experts not to be unreasonably rejected except with respect to any decision that requires consent of Supplier (e.g., trademarks).

ARTICLE 7

REPORTS, RECORDS AND AUDIT

     Section 7.1 Reports. By the 5^th day of each month, Distributor shall deliver to Supplier a true and accurate report, giving a comprehensive and detailed written report, with back-up documentation as Supplier may reasonably request, detailing and documenting, for the preceding calendar month, all sales of the Product, the Net Sales therefrom, deductions applicable to determine Net Sales thereof, a calculation of the amount due to Supplier for the relevant period. Each report also will contain Distributor’s good faith, non-binding estimate of

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total Net Sales for all Products by Distributor for each of the next three calendar months beginning with the calendar month in which such report is delivered.

     Section 7.2 Records; Audit. During the term of this Agreement and for three (3) years thereafter, Distributor shall keep complete and accurate records of sales of Products and such other matters as may affect the determination of any amount payable to Supplier hereunder in sufficient detail to enable certified public accountants engaged by Supplier to determine any amounts payable to Supplier under this Agreement. Distributor shall permit certified public accountants engaged by Supplier, at Supplier’s expense (except as provided below), to examine, not more than once in any six-month period, its books, ledgers, and records during regular business hours for the purpose of and to the extent necessary to verify any report required under this Agreement or the accuracy of any amount payable hereunder. Payment of any underpayment shall be made as soon as practicable upon receipt of the report of the accountants. Should any examination conducted by Supplier or its representatives pursuant to the provisions of this paragraph result in an increase of more than 10% of any payment due Supplier hereunder, Distributor shall be obligated to reimburse any out of pocket expenses incurred by Supplier with respect to such examination within thirty (30) days after receipt of an invoice therefor from Supplier.

ARTICLE 8

WARRANTIES

     Section 8.1 Warranties Provided by Supplier. The warranties provided by Supplier to Distributor with respect to the Product are:

          (a) Product Warranty. Supplier warrants that the Product sold by it is free from defects in materials and workmanship and conform to the specifications as described in the applicable package insert that accompany the Product. Supplier makes no other warranty, expressed or implied, with respect to the Product, including any warranty of merchantability or fitness for any particular purpose. Notification of any breach of warranty must be made within 30 days after receipt as to shipment-related claims and within 90 days for all other claims. No claim shall be honored if Distributor fails to notify Supplier within the period specified.

          (b) Limitations of Liability. Supplier makes no express warranty, and excludes and disclaims, to the extent permitted by applicable law, any and all implied warranties including, without limitation, implied warranties in connection with the design, sale and merchantability or fitness of the Product for any particular purpose or use, except for the specific warranties related to the Product provided herein.

     Section 8.2 Right to Extend Warranties to Distributors and Customers.

          (a) Supplier extends to Distributor the warranties with respect to all Product sold to Distributor pursuant to this Agreement, and specifically authorizes and consents to the right of Distributor to pass on such warranty protection to its customers;

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provided, however, Supplier shall have no obligations with respect to Product warranties except those obligations as set forth in Section 8.1.

          (b) Supplier shall take responsibility, as between Distributor and Supplier, for all customer warranty claims properly honored by Distributor that falls under the terms of Supplier’s warranties set forth above in Section 8.1. The parties will work together to develop procedures and mechanisms, as necessary, to effectuate the foregoing.

     Section 8.3 Representations and Covenants of Distributor.

          (a) With respect to the Product, Distributor shall:

     (i) not make any representation, warranty, or guaranty in connection with the Product other than as authorized by Supplier, unless Distributor agrees, in writing, to assume full liability for such representation, warranty or guaranty;

     (ii) advise Supplier of any claim for damages or breach of warranty in respect to the Product asserted by a customer purchasing such Product from Distributor and shall cooperate with Supplier in the defense or handling of such claims; and

     (iii) promptly furnish Supplier with product samples and any related information when a warranty claim is made by a customer.

          (b) Distributor represents and warrants to Supplier that, and Distributor covenants that, none of Distributor or any of its Subsidiaries or any of their respective representatives has or will corruptly (within the meaning of Applicable Law) or otherwise illegally offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value to: (1) any government or similar official for purposes of (A) (i) influencing any act or decision of such official in his or her official capacity, (ii) inducing such official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or (B) inducing such official to use his or her influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body, in order to assist Distributor or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person; (2) any political party or official thereof or any candidate for political office for purposes of (A) (i) influencing any act or decision of such party, official, or candidate in its or his or her official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or (B) inducing such party, official, or candidate to use its or his or her influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body in order to assist Distributor or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person; or (3) any Person, while knowing that all or a

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portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any official, to any political party or official thereof, or to any candidate for political office, for purposes of (A) (i) influencing any act or decision of such official, political party, party official, or candidate in his or her or its official capacity, (ii) inducing such official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of such official, political party, party official, or candidate, or (iii) securing any improper advantage; or (B) inducing such official, political party, party official, or candidate to use his or her or its influence with a governmental entity or regulatory body to affect or influence any act or decision of such governmental entity or regulatory body, in order to assist Distributor or any of its Subsidiaries in obtaining or retaining business for or with, or directing business to, any Person, or will do any of the foregoing.

ARTICLE 9

REGULATORY COMPLIANCE, CUSTOMER COMPLAINTS AND RECALL

     Section 9.1 No Modification. Distributor shall not modify, repackage, reformulate or alter any Shipped Product, including its label, except with specific written authorization from Supplier.

     Section 9.2 Customer Complaints. In the event either party receives a customer complaint regarding Shipped Product, such party shall promptly notify the other of such complaint. If the Shipped Product giving rise to such complaint was sold by Distributor, then Distributor shall evaluate the complaint and promptly notify Supplier in writing regarding such evaluation. Any adverse events shall be reported and handled as provided in the Pharmacovigilance Agreement between the parties, a copy of which is attached to this Agreement as Exhibit A.

     Section 9.3 Event of Recall and Withdrawal. The parties’ responsibilities with regard to any request, directive or order that Shipped Product be recalled or withdrawn issued or impending from any governmental or regulatory authority in the Territory, or any court order of competent jurisdiction orders such recall or withdrawal, or if either party reasonably determines after consultation with the other that a recall or withdrawal is necessary or advisable shall be controlled by the Pharmacovigilance Agreement.

ARTICLE 10

REPRESENTATIONS

     Section 10.1 Of Supplier. Supplier represents and warrants to Distributor as follows:

          (a) it is a corporation duly organized and validly existing under the laws of Delaware, U.S.A.;

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          (b) it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

          (c) the execution, delivery and performance by it of this Agreement and its compliance with the terms and provisions hereof does not and will not conflict with or result in a breach of any other agreement or relationship; and

          (d) it has the right to transfer full unencumbered title to all Product sold to Distributor under this Agreement.

     Section 10.2 Of Distributor. Distributor represents and warrants to Supplier as follows:

          (a) it is a private company organized and validly existing under the federal laws of Mexico;

          (b) it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and

          (c) the execution, delivery and performance by it of this Agreement and its compliance with the terms and provisions hereof does not and will not conflict with or result in a breach of any other agreement or relationship.

ARTICLE 11

PRODUCT LIABILITY, INDEMNIFICATION, AND INSURANCE

     Section 11.1 Indemnification by Supplier. Supplier will indemnify, defend and hold harmless Distributor, its Affiliates, and each of its and their respective employees, officers, directors and agents (each, a “Distributor Indemnified Party”) from and against any and all losses, damages, liabilities, settlements, penalties, fines, and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Liability”) that the Distributor Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

     (a) any Supplier representation or warranty set forth in this Agreement being untrue in any material respect when made or any material breach by Supplier of any of its covenants or obligations hereunder;

     (b) gross negligence or willful misconduct of Supplier; or

     (c) except, in each case, to the extent caused by the gross negligence or willful misconduct of Distributor or any Distributor Indemnified Party, or by breach of this Agreement by Distributor.

     Section 11.2 Indemnification by Distributor. Distributor will indemnify, defend and hold harmless Supplier, its Affiliates, Sublicensees, distributors and each of its and their respective employees, officers, directors and agents (each, a “Supplier Indemnified Party”) from

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and against any and all Liabilities that the Supplier Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

     (a) any Distributor representation or warranty set forth in this Agreement being untrue in any material respect when made or a material breach by Distributor of any of its covenants or obligations hereunder;

     (b) gross negligence or willful misconduct of Distributor; or

     (c) except in each case, to the extent caused by the gross negligence or willful misconduct of Supplier or any Supplier Indemnified Party, or by breach of this Agreement by Supplier.

     Section 11.3 Product Liability Claims. Notwithstanding anything to the contrary contained in Article 8 of this Agreement, the parties intend for the customer(s) of all Product to provide indemnification to Distributor and Supplier for any product liability claim that may arise from the sale or use of Product. Distributor shall use its best efforts to obtain covenants of indemnification for all such product liability claims, but shall not be responsible for product liability claims by virtue of its inability to obtain such indemnification despite its best efforts.

     Section 11.4 Procedure. Each Party will notify the other in the event it becomes aware of a claim for which indemnification may be sought hereunder or for which Liability is shared pursuant to this Article 8. In case any proceeding (including any governmental investigation) is instituted involving any Party in respect of which indemnity may be sought pursuant to this Article 8 such Party (the “Indemnified Party”) will promptly notify the other Party (the “Indemnifying Party”) in writing and the Indemnifying Party and Indemnified Party will meet to discuss how to respond to any claims that are the subject matter of such proceeding. The Indemnifying Party, upon request of the Indemnified Party, will retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and will pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, the Indemnified Party will have the right to retain its own counsel, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party will have mutually agreed to the retention of such counsel and payment of fees and expenses or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both Parties by the same counsel would be inappropriate due to actual or potential differing interests between them. All such fees and expenses incurred pursuant to Section 8.1 or Section 8.2 will be reimbursed as they are incurred. The Indemnifying Party will not be liable for any settlement of any proceeding unless effected with its written consent. The Indemnifying Party will not, without the written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which the Indemnified Party is, or arising out of the same set of facts could have been, a party and indemnity could have been sought hereunder by the Indemnified Party, unless such settlement includes an unconditional release of the Indemnified Party from all liability on claims to which the indemnity relates that are the subject matter of such proceeding.

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     Section 11.5 Insurance. Each Party shall obtain and maintain, during the Term of this Agreement, commercial general liability insurance, including but not limited to products liability and clinical insurance, with reputable and financially secure insurance carriers to cover its indemnification obligations under Section 8.1 or Section 8.2as applicable, or self-insurance, with limits of not less than 5 million U.S. dollars per occurrence and 10 million U.S. dollars in the aggregate. Each Party shall list the other Party as an additional insured party on the insurance policies described in this Section 8.5.

     Section 11.6 Liability Limitations. NOTWITHSTANDING THE FOREGOING, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT THE DAMAGES RESULT FROM A PARTY’S WILLFUL MISCONDUCT OR ARISE FROM A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS Article 8.

ARTICLE 12

CONFIDENTIALITY

     Section 12.1 Confidential Information. Except to the extent expressly permitted by this Agreement and subject to the provisions of Section 3.1(b) and Section 3.1(c) at all times during the Term and for five years following the expiration or termination of this Agreement, each Party (a “Receiving Party”) (a) will keep completely confidential and will not publish or otherwise disclose any Confidential Information furnished to it by the other Party (a “Disclosing Party”), except to those of the Receiving Party’s employees, Affiliates, consultants or representatives who have a need to know such information (collectively, “Authorized Recipients”) to perform such Party’s obligations hereunder and (b) will not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations hereunder. The Receiving Party will be liable for any breach by any of its Authorized Recipients of the restrictions set forth in this Agreement. Notwithstanding the foregoing, Supplier may disclose Confidential Information of Distributor to Third Party Licensees to the extent necessary to comply with or conduct activities under written arrangements with such Third Party Licensees provided that such arrangements include obligations of confidentiality.

     Section 12.2 Exceptions to Confidentiality. The Receiving Party’s obligations set forth in this Agreement will not extend to any Confidential Information of the Disclosing Party:

     (i) that is or hereafter becomes part of the public domain through no wrongful act, fault or negligence on the part of a Receiving Party or its Authorized Recipients;

     (ii) that is received from a Third Party without restriction and without breach of any agreement or fiduciary duty between such Third Party and the Disclosing Party;

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     (iii) that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation or restriction on use or disclosure prior to its receipt from the Disclosing Party;

     (iv) that is generally made available to Third Parties by the Disclosing Party without any restriction imposed by the Disclosing Party on disclosure, whether such restriction is by contract, fiduciary duty or by operation of law; or

     (v) that the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party without any reference to Confidential Information.

     Section 12.3 Authorized Disclosure. Each Party and its Authorized Recipients may disclose Confidential Information to the extent that such disclosure is made in response to a valid order, governmental inquiry, or request (each an “Order”) of a court of competent jurisdiction or other agency, as applicable; provided, however, that the Receiving Party must first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such Order or to obtain a protective order requiring that the Confidential Information and/or documents that are the subject of such Order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the Order was issued; and provided further that if an Order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such Order will be limited to that information that is legally required to be disclosed in such response to such Order.

     Section 12.4 Notification. The Receiving Party will notify the Disclosing Party immediately, and cooperate with the Disclosing Party as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information.

     Section 12.5 Destruction of Confidential Information. Upon the expiration or earlier termination of this Agreement, the Receiving Party will (a) destroy all tangible embodiments of Confidential Information of the Disclosing Party, including any and all copies thereof, and those portions of any documents, memoranda, notes, studies, and analyses prepared by the Receiving Party or its Authorized Recipients that contain, incorporate, or are derived from such Confidential Information and provide written certification of such destruction to the Disclosing Party in a form reasonably acceptable to the Disclosing Party, provided that the legal department of the Receiving Party will have the right to retain one copy of any such tangible embodiments for archival purposes, provided such copy will continue to be maintained on a confidential basis subject to the terms of this Agreement, and (b) immediately cease, and will cause its Authorized Recipients to cease, use of such Confidential Information as well as any information or materials that contain, incorporate, or are derived from such Confidential Information.

     Section 12.6 Use of Name and Disclosure of Terms. Each Party will keep the existence of, the terms of, and the transactions covered by this Agreement confidential and will not disclose such information to any other Person through a press release or otherwise, or mention or otherwise use the name, insignia, symbol, trademark, trade name, or logotype of the other Party

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or its Affiliates in any manner without the prior written consent of the other Party in each instance (which will not be unreasonably withheld). The restrictions imposed by this Section 3.1(f) will not prohibit either Party from making any disclosure that is required by applicable law, rule, or regulation or the requirements of a national securities exchange or another similar regulatory body including disclosing such information in any clinical trial database maintained by or on behalf of a Party. Further, the restrictions imposed on each Party under this Section 3.1(f) are not intended, and will not be construed, to prohibit a Party from identifying the other Party in its internal business communications, provided that any Confidential Information in such communications remains subject to this Section 3.1(f).

     Section 12.7 Remedies. The Parties acknowledge and agree that the restrictions set forth in this Article 12 are reasonable and necessary to protect the legitimate interests of the Parties and that neither Party would have entered into this Agreement in the absence of such restrictions, and that any breach or threatened breach of any provision of this Article 12 will result in irreparable injury to the other Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach of any provision of Article 12 by a Party, the other Party will be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights will be cumulative and in addition to any other rights or remedies to which such Party may be entitled in law or equity. The breaching Party agrees to waive any requirement that the non-breaching Party (i) post a bond or other security as a condition for obtaining any such relief and (ii) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy. Nothing in this Section 3.1(g) is intended, or will be construed, to limit the Parties’ rights to equitable relief or any other remedy for a breach of any provision of this Agreement.

     Section 12.8 Survival. The provisions of this Article shall survive the expiration or sooner termination of this Agreement.

ARTICLE 13

TERM AND TERMINATION

     Section 13.1 Term. The term of this Agreement shall commence on the Effective Date and will remain in effect until December 31, 2010, unless terminated earlier under the provisions herein (the “Term”).

     Section 13.2 Termination for Cause.

     (a) Termination for Material Breach. This Agreement may be terminated effective immediately by written notice by a Party at any time during the Term if the other Party materially breaches this Agreement, which breach remains uncured for 30 days measured from the date written notice of such breach is given to the breaching Party. Such notice must specify the nature of the breach and demand its cure; provided, however, that if such breach is not capable of being cured within the stated period and the

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breaching Party uses Commercially Reasonable Efforts to cure such breach during such period and presents a mutually agreeable remediation plan for such breach, this Agreement will not terminate and the cure period will be extended for such period provided in the remediation plan as long as the breaching party continues to use Commercially Reasonable Efforts to pursue the cure as provided in such remediation plan. Notwithstanding anything to the contrary set forth in this Agreement, but subject to the limitations on liability set forth in Articles 8 and 11, termination will not be deemed to relieve a defaulting Party from any liability arising from such default.

     (b) Violation of Law. This Agreement may be terminated by Novavax on giving 15 days’ written notice to Avimex, which will be effective on the expiration date of such 15 day period in the event that the Avimex or any of its Affiliates are convicted of a felony for violating, or a final, non-appealable order is issued by a court of competent jurisdiction finding that Avimex or any of its Affiliates violated, any Applicable Laws, the Federal Foreign Corrupt Practices Act (or analogous law) or any securities laws or regulations (collectively, the “Relevant Laws”), which are of such a nature that such violation of such Relevant Laws would prevent or substantially diminish either Party from performing or having the ability to perform its obligations pursuant to this Agreement. Such notice of termination must be given within 15 days of Novavax becoming aware of the circumstances described in this Section 13.2(b).

     (c) Bankruptcy. This Agreement may be terminated by written notice by either Party at any time during the Term of this Agreement if the other Party will file in any court or agency, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets, or if the other Party proposes a written agreement of composition or extension of its debts, or if the other Party will be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within 60 days after the filing thereof, or if the other Party proposes or is a Party to any dissolution or liquidation, or if the other Party makes an assignment for the benefit of its creditors.

     Section 13.3 Rights and Duties on Termination. On termination of this Agreement:

          (a) Distributor shall have no further right to purchase or sell Product; provided, however, that Distributor to and Supplier may agree to wind-down provisions allowing Distributor to sell, or return Supplier, Product in its inventory or placed at customer locations, after termination of this Agreement; and

          (b) Supplier shall have the right to retain any sums already paid by Distributor under this Agreement, and Distributor shall pay all sums accrued that are then due under this Agreement.

     Section 13.4 Survival of Certain Obligations. Expiration or termination of this Agreement will not relieve the Parties of any obligation accruing before such expiration or termination. The provisions of this Agreement that must, by their nature, survive expiration or

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termination of this Agreement to give effect to their intent, will so survive, including without limitation Articles 11 and 12 and Sections 7.2, 14.1, 14.2, 14.5 and 14.13. Any expiration or early termination of this Agreement will be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

ARTICLE 14

MISCELLANEOUS.

     Section 14.2 Governing Law; Jurisdiction; Dispute Resolution.

     (a) Governing Law. The interpretation and construction of this Agreement will be governed by the laws of the State of Maryland, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

     (b) Dispute Resolution. In the event of a dispute arising out of or relating to this Agreement, either Party will provide written notice of the dispute to the other, in which event the dispute will be referred to the executive officers designated below or their successors, for attempted resolution by good faith negotiations within 15 days after such notice is received. The initial designated officers (“Initial Officers”) are initially as follows:

For Novavax:	Its Chief Executive Officer
For Avimex:	Its Chief Executive Officer

          If the Initial Officers are unable to resolve the dispute within 10 days, the matter shall be referred to the following:

For Novavax:	Its Chairman of the Board
For Avimex:	Its Chairman of the Board

In the event the Chairmen of the Boards do not resolve such dispute within 5 days of the dispute being elevated to their review, either Party may, after the expiration of the 15 day period from receipt of the notice, seek to resolve the dispute through arbitration in accordance with Section 15.2.

     Section 14.2 Arbitration.

     (a) Arbitration Claims. Any claim, dispute, or controversy of whatever nature arising between the Parties out of or relating to this Agreement that is not resolved under Section 9.1(b) within the required 30 day time period, including without limitation, any action or claim based on tort, contract, or statute (including any claims of breach or violation of statutory or common law protections from discrimination, harassment and hostile working environment), or concerning the interpretation, effect, termination,

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validity, performance and/or breach of this Agreement (“Arbitration Claim”), will be resolved by final and binding arbitration before a single expert with relevant industry experience selected by the Parties or, if the Parties cannot agree within ten (10) days, a panel of three experts with relevant industry experience (each, an “Arbitrator”). The panel of three Arbitrators shall be appointed in accordance with the Rules of Arbitration of the International Chamber of Commerce. The Arbitration will be administered under the Rules of Arbitration of the International Chamber of Commerce (the “Administrator”). The arbitration will be held in Mexico City, Mexico and conducted in English. The Arbitrators will be instructed by the Parties to complete the arbitration within 90 days after selection of the final Arbitrator.

     (b) Arbitrators’ Award. The Arbitrators will, within 15 calendar days after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The decision or award rendered by the Arbitrators will be final and non-appealable, and judgment may be entered upon it in accordance with applicable law in any court of competent jurisdiction. The Arbitrators will be authorized to award compensatory damages, but will NOT be authorized (i) to award non-economic damages, such as for emotional distress, pain and suffering or loss of consortium, (ii) to award punitive damages, or (iii) to reform, modify or materially change this Agreement or any other agreements contemplated hereunder; provided, however, that the damage limitations described in parts (i) and (ii) of this sentence will not apply if such damages are statutorily imposed.

     (c) Costs. Each Party will bear its own attorney’s fees, costs, and disbursements arising out of the arbitration and the costs of the arbitrator selected by it, and will pay an equal share of the fees and costs of the third arbitrator; provided, however, the Arbitrators will be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs of the Administrator and the Arbitrators.

     (d) Compliance with this Agreement. Unless the Parties otherwise agree in writing, during the period of time that any arbitration proceeding is pending under this Agreement, the Parties will continue to comply with all those terms and provisions of this Agreement that are not the subject of the pending arbitration proceeding.

     (e) Injunctive or Other Equity Relief. Nothing contained in this Agreement will deny any Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing arbitration proceeding.

     Section 14.3 Force Majeure. No liability will result from, and no right to terminate will arise, in whole or in part, based upon any delay in performance or non-performance, in whole or

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in part, by either of the Parties to this Agreement to the extent that such delay or non-performance is caused by an event of Force Majeure. “Force Majeure” means an event that is beyond the reasonable control of a non-performing Party (the “Force Majeure Party”), including an act of God, act of the other Party, war, riot, civil commotion, terrorist act, malicious damage, epidemic, quarantine, fire, flood, storm, natural disaster or compliance with any law or governmental order, rule, regulation or direction, whether or not it is later held to be invalid or inapplicable. The Force Majeure Party will within ten days of the occurrence of the Force Majeure event, give written notice to the other Party stating the nature of the Force Majeure event, its anticipated duration and any action being taken to avoid or minimize its effect. Any suspension of performance will be of no greater scope and of no longer duration than is reasonably required and the Force Majeure Party will use reasonable effort to remedy its inability to perform; provided, however, if the suspension of performance continues or is anticipated to continue for 30 days after the date of the occurrence, the unaffected Party will have the right but not the obligation to perform on behalf of the Force Majeure Party for a period of such Force Majeure and such additional period as may be reasonably required to assure a smooth and uninterrupted transition of such activities. If such failure to perform would constitute a material breach of this Agreement in the absence of such event of Force Majeure, and continues for six months from the date of the occurrence and the Parties are not able to agree on appropriate amendments within such period, such other Party will have the right, notwithstanding the first sentence of this Section 14.3, to terminate this Agreement immediately by written notice to the Force Majeure Party, in which case neither Party will have any liability to the other except for those rights and liabilities that accrued prior to the date of termination and the consequences of termination pursuant to Section 13.3, as if such termination was a termination as to which such consequences applied.

     Section 14.4 Waiver and Non-Exclusion of Remedies. A Party’s failure to enforce, at any time or for any period of time, any provision of this Agreement, or to exercise any right or remedy will not constitute a waiver of that provision, right or remedy or prevent such Party from enforcing any or all provisions of this Agreement and exercising any rights or remedies. To be effective any waiver must be in writing. The rights and remedies provided in this Agreement are cumulative and do not exclude any other right or remedy provided by law or otherwise available except as expressly set forth in this Agreement.

     Section 14.5 Notices.

     (a) Notice Requirements. Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement must be in writing, must refer specifically to this Agreement and will be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 9.6(b) or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 9.6(a). Such Notice will be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second business day (at the place of delivery) after deposit with an

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internationally recognized overnight delivery service. This Section 9.6(a) is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

(b) Address for Notice.

For Novavax:
Novavax, Inc.
9920 Belward Campus Drive
Rockville, MD 20850
United States
Fax: 240-268-2148
Attn: Senior Vice President, International
          and Government Alliances

With a copy to:
Ballard Spahr LLP
1735 Market Street, 51^st Floor
Philadelphia, PA 19103
Fax: 215-864-9073
Attn: Jennifer Miller

For Avimex:
Laboratorio Avi-Mex S.A. de C.V.
Maiz #18. Col. Granjas Esmeralda CP 09810
Mexico City, Mexico
Fax: (55) 54450462
Attn: Bernardo Lozano Dubernard, Director General

     Section 14.6 Entire Agreement. This Agreement, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements, whether written or oral, with respect to the subject matter of this Agreement. Each Party confirms that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this Agreement. Nothing in this Agreement is intended to limit or exclude any liability for fraud. All Exhibits or Schedules referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement. In the event of any inconsistency between any such Exhibits or Schedules and this Agreement, the terms of this Agreement will govern.

     Section 14.7 Amendment. Any amendment or modification of this Agreement must be in writing and signed by authorized representatives of both Parties.

     Section 14.8 Assignment. Distributor may not assign its rights or delegate its obligations under this Agreement, in whole or in part, by operation of law, via a Change in Control, or otherwise, without the prior written consent of Supplier which can be given or withheld in Supplier’s discretion. Supplier may not assign its rights or delegate its obligations

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under this Agreement, in whole or in part, without the consent of Distributor, provided, however, that this Agreement may be assigned by Supplier in connection with a Change in Control.

     Section 14.9 No Benefit to Others. The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they will not be construed as conferring any rights in any other persons except as otherwise expressly provided in this Agreement.

     Section 14.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which taken together will be deemed to constitute one and the same instrument. An executed signature page of this Agreement delivered by facsimile transmission will be as effective as an original executed signature page.

     Section 14.11 Severability. To the fullest extent permitted by applicable law, the Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect. If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision will be given no effect by the Parties and will not form part of this Agreement. To the fullest extent permitted by applicable law and if the rights or obligations of any Party will not be materially and adversely affected, all other provisions of this Agreement will remain in full force and effect and the Parties will use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with applicable law and achieves, as nearly as possible, the original intention of the Parties.

     Section 14.12 Further Assurance. Each Party will perform all further acts and things and execute and deliver such further documents as may be necessary or as the other Party may reasonably require to implement or give effect to this Agreement.

     Section 14.13 Publicity. It is understood that the Parties will issue a press release announcing the execution of this Agreement in such form as the Parties mutually agree. The Parties will consult with each other reasonably and in good faith with respect to the text and timing of any subsequent press releases relating to this Agreement or the activity hereunder prior to the issuance thereof, provided that a Party may not unreasonably withhold consent to such releases, and that either Party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure or which are consistent with information disclosed in prior releases properly made hereunder.

[SIGNATURES ON THE FOLLOWING PAGE.]

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     IN WITNESS WHEREOF, duty authorized representatives of the Parties have duly executed this Agreement to be effective as of the Effective Date.

NOVAVAX, INC.		LABORATORIO AVI-MEX, S.A. DE C.V.
By:		By:
	Name:		Name:
	Title:		Title:

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Exhibit A

Pharmacovigilance Agreement

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
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Exhibit B

Use of Protocol Agreement

[* * *]

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CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
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Exhibit C

List of Latin American Countries

[* * *]

EX-10.7

Exhibit 10.7

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...Speeding medicines to people

170 Locke Drive, Marlborough, MA 01752 • Tel: 508-480-9235 • Fax: 508-480-9238 •www.xcellerex.com

Xcellerex Proposal and Binding Term Sheet
for Novavax Inc.

Clinical and Commercial Production of Novavax’s Influenza Virus-Like
Particles Expressed in SF9 Cell Line

October 19, 2009

This Proposal and Binding Term Sheet (“Term Sheet”) contains information belonging to Xcellerex, Inc. (“Xcellerex”) and information belonging to Novavax, Inc. (“Novavax”) that is confidential. This information is only intended for the use of the other above named entity, the recipient, as provided in this proposal and binding term sheet. The recipient may not disclose, and shall use all reasonable efforts to prevent the inadvertent disclosure of the Confidential Information to any third party without the prior written consent of the entity who owns such information. In addition, the recipient may not use the information for any purposes except for the express purposes set forth in this proposal and binding term sheet. For purposes of any prior confidentiality agreement between Novavax and Xcellerex, this document shall constitute confidential information even if not so marked on every page of the documents and may only be used for the purposes specified. The Confidentiality Agreement between Novavax and Xcellerex dated March 20, 2009 (the “CDA”) shall govern the exchange of Confidential Information (as defined in the CDA) set forth herein and pursuant to this Term Sheet, and this Term Sheet shall be deemed to be Confidential Information of both parties. If you receive this document in error, please immediately contact us by telephone to arrange for return of the original documents to us.

Confidential

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Executive Summary

Novavax, Inc. (“Novavax”) is a clinical stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide using advanced proprietary virus-like particle (VLP) technology and manufacturing such vaccines using a proprietary process.

Novavax is developing a monovalent Influenza VLP Vaccine for the pandemic human H1N1 influenza virus (A/California/7/2009), which is commonly referred to as the “swine” flu (the “Product”). The process uses recombinant baculovirus to infect an insect cell culture and express VLPs that contain Hemagglutinin (HA), Neuraminidase (NA), and Matrix (M1) Protein. The proteins self-assemble as they are secreted from the insect cells as particles that resemble influenza virus, but do not contain flu RNA.

The current proposal is for Xcellerex’s commercial production of the bulk drug substance of the Product (the “Bulk Material”) for Novavax for use and sale in Mexico. Xcellerex shall produce the Bulk Material in as many consecutive batches as it deems necessary to produce [* * *] doses of equivalent Bulk Material, but Xcellerex anticipates an initial campaign of an estimated [* * *] consecutive batches. Notwithstanding anything in this Term Sheet to the contrary, in no event shall Xcellerex be required to manufacture more than [* * *] consecutive batches of Bulk Material. Novavax shall order all lots of Bulk Material to be made in continuous consecutive batches for [* * *] doses of equivalent Bulk Material. The parties intend for Xcellerex to be the exclusive contract manufacturer of the Bulk Material for sale in Mexico until February 15, 2010, unless otherwise agreed to by the parties. For other markets where Xcellerex would be the low cost provider of Bulk Material, Novavax agrees to appoint Xcellerex as the co-exclusive supplier of Bulk Material in such market through June 2010, or as mutually agreed, except in territories where Novavax has already granted rights.

Payment and other legal terms are as outlined in Attachment 3.

Proposal Assumptions

The following proposal is for contract services to manufacture commercial material for Novavax and its licensees/partners during the Term. The “Term” shall end on the earlier of: 1) the delivery of [* * *] dose equivalent of Bulk Material; or 2) delivery of Bulk Material from [* * *] batches; or 3) February 15, 2010; or 4) mutual termination or termination as provided in Attachment 3. For avoidance of doubt, in no event shall Xcellerex be required to supply Bulk Material after the expiration of the Term, and in no event shall Novavax be required to pay for Bulk Material delivered after the expiration of the Term.

A.	Materials and Supplies
•	Insect cell lines, being delivered to Xcellerex for use in development or manufacturing programs, require acceptance testing to confirm culture purity and identity prior to receipt and use in cGMP manufacturing areas at Xcellerex.
•	The parties shall agree on the materials to be supplied for manufacture of Product, and whose responsibility it will be to supply the materials. Novavax will supply, at Novavax’s expense, to Xcellerex the raw materials set forth on Attachment 7 and any other materials agreed to by the parties (the “Novavax Materials”), and Xcellerex shall order and supply, at Xcellerex’s expense, the raw materials set forth on Attachment 7 and any other materials agreed to by the parties (the “Xcellerex Materials,” and, together with the Novavax Materials, the “Materials”), in each case for the execution of no more than [* * *] batches under the Work Plan. Attachment 7 Sets forth the parties initial list of Novavax Materials and Xcellerex Materials. In order that the

Confidential

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relative cost of the Novavax Materials and the Xcellerex Materials will be [* * *]%, the parties agree that within 10 days of execution of this Term Sheet, the parties will agree to a budget for the Materials to be provided by each party including the associated expense. Any expense in excess of a party’s agreed upon budget must be approved by the other party and, upon approval, will be split [* * *]% and arrangement will be made to provide Novavax with the appropriate credit to the Per Dose Fee for its portion of the excess expenses. The Novavax Materials will be arranged to arrive at Xcellerex’s facility 10 days in advance of each batch whenever possible, and, where necessary, qualified and released by Novavax quality assurance personnel prior to their expected use in the manufacturing process. In accordance with, and subject to, Attachment 3, Novavax will receive a credit against the Per Dose Fee for Bulk Material upon delivery based on the actual cost for the Novavax Materials supplied by Novavax.

•	The Bill of Materials for the Work Plan will be completed by Novavax and Xcellerex and will include a designation of which Materials are Novavax Materials and which Materials are Xcellerex Materials. The Parties rely upon Novavax’s information for the completion of the Bill of Materials.
•	To the extent Novavax Materials are not used by Xcellerex in performance hereunder, the unused Novavax Materials will be handled as set forth in Attachment 3.
B.	Analytical
•	The analytical methods required for evaluating Bulk Material quality during the project have yet to be fully specified. A review of the analytical requirements including assay qualifications, and assays required for in-process testing will be required. Attachment 1 contains a list of assays typically performed by Xcellerex.
C.	Capital Equipment
•	A list of equipment required by Xcellerex to perform the work in this Term Sheet is included on Attachment 4. Novavax will purchase the equipment so indicated on Attachment 4 and cause it to be shipped to Xcellerex. All equipment purchased by Novavax and shipped to Xcellerex shall be owned by Novavax, shall be used exclusively for the work hereunder and shall be returned to Novavax, at Novavax’s cost, upon completion of the work under the Term Sheet. Xcellerex shall insure all equipment in its possession, including the equipment to be returned to Novavax. Novavax shall file UCC-1 financing statements on the equipment for bailment.
•	In the event equipment in addition to that listed on Attachment 4 or already in Xcellerex’s possession is required, the parties shall mutually agree to a resolution regarding such equipment in good faith. Novavax shall not have any additional capital equipment requirements beyond what is indicated in Attachment 4 without mutual consent.
D.	Volumes
•	All volumes listed are considered to be working volumes.
E.	The Manufacturing process to be used by Xcellerex is described in Attachment 2.

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Novavax Contact:

Technical Contact:

Quality Contact:

Business Contact:

Xcellerex Contacts

Project Coordinator:

Regulatory Contact:

Business Contact:

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Section	Description	Duration Estimate	Estimated Cost
1.0	Project/process scope definition, creation of quality agreement	Weeks [* * *]	Included
2.0	Technology Transfer	[* * *] Weeks	Included
3.0	Working Virus Stock and Seed Production	[* * *] weeks (includes testing)	Included
4.0	Assay Transfer for in-process testing	[* * *] Weeks	Included
	Report
5.0	Generation and Preparation of cGMP Documentation	[* * *] Weeks	Included
	Report
6.0	Process Equipment Installation and Qualification	[* * *] Weeks	Included
	Report
7.0	cGMP Consecutive Manufacturing Runs	[* * *] Weeks	Included
	•     [* * *]

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DRAFT Process Flow Scheme
To be confirmed with Novavax prior to commencement of work

[* * *]

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Initial Dose Assumptions and Total Price for the Project
based on assumptions provided by Novavax

	Requirements	Amounts
1	Total Number of Doses Required per Manufacturing Campaign	Minimum [* * *]
2	Price Per Dose	[* * *] per dose

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Draft Work Plan

[* * *]

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General Terms and Conditions

This Term Sheet, including all of the seven attachments to the Term Sheet, shall be binding on the parties. Any additional terms related to the transactions described herein, shall be set forth more fully in an additional agreement to be negotiated in good faith by the parties (the “Agreement”); provided that the terms of this Term Sheet shall be incorporated into the Agreement, and this Term Sheet shall remain binding on the parties until such time as an Agreement has been executed by both parties. The parties shall use good faith and commercially reasonable efforts to enter into the Agreement as soon as practicable, but in no event more than 21 days from the date hereof, and the Agreement shall include terms, conditions, representations, warranties, indemnifications and covenants usual for agreements of this type. The parties also will issue a press release, as drafted in Attachment 6, upon signing this Term Sheet announcing the partnership and the intent to produce H1N1 vaccine. In the event the parties are unable to enter into the Agreement, this Term Sheet shall remain binding on the parties until the earlier of (i) the parties mutually agree in writing to terminate this Term Sheet, (ii) delivery of [* * *] dose equivalent of Bulk Material, (iii) delivery of Bulk Material from [* * *] batches, (iv) February 15, 2010, or (v) termination as provided in Attachment 3.

NOVAVAX, INC.			XCELLEREX, INC.
BY:	/s/ Rahul Singhvi		BY:	/s/ Jon Lieber
	NAME:	Rahul Singhvi		NAME:	Jon Lieber
	TITLE:	President and CEO		TITLE:	CFO
DATE: October 19, 2009			DATE: October 19, 2009

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Attachment 1

[* * *]

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Attachment 2

DRAFT Novavax Process Description for VLP Manufacturing [to be confirmed and agreed with
Novavax and transferred to Xcellerex prior to commencement of Work Plan]

CONFIDENTIAL INFORMATION OF NOVAVAX

[* * *]

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Attachment 3

In consideration for services performed by Xcellerex, the payments made by Novavax and the other representations and covenants of each of the parties, Novavax and Xcellerex would agree to the following terms:

• All payments shall be by wire transfer in immediately available funds to an account designated by Xcellerex based upon invoice(s) as provided by Xcellerex if required. Novavax will issue a P.O. prior to initiation of the first batch, [* * *] at the latest.

• The anticipated initial non-binding production schedule for the initial [* * *] batches is as follows:

[* * *]

• All payments are due within 30 days of invoice which shall be issued upon delivery and acceptance of Bulk Material. By [* * *], Novavax will provide a letter of credit to Xcellerex in an amount equal to [* * *]. The letter of credit will roll over with each batch and payment so that it will remain in place until the earlier of (a) payment in full by Novavax under this Term Sheet for [* * *] doses equivalent of Bulk Material, or (b) delivery of Bulk Material from [* * *] batches, or (c) 30 days after termination of the Term Sheet. In the event any payment for accepted Bulk Material is not made by Novavax within 30 days of acceptance, then Xcellerex will be entitled to draw on such Letter of Credit. Xcellerex shall be entitled to suspend performance during any period in which Novavax owes Xcellerex in excess of [* * *] provided that 30 days have elapsed since the oldest invoice then outstanding.

• Novavax shall be responsible for any taxes related to the ownership or use of the equipment purchased and owned by Novavax. All taxes associated with the sale by Novavax of Bulk Material, including VAT, will be the responsibility of Novavax.

• Payments received more than three business days after the due date will be subject to interest daily based on the prime rate as published in the Wall Street Journal.

• Novavax shall pay to Xcellerex [* * *] in immediately available funds via wire transfer upon execution of this Term Sheet.

• Novavax shall pay to Xcellerex [* * *] in immediately available funds via wire transfer on [* * *], 2009. Such payments collectively referred to as the “Prepayments” and are non-refundable but are creditable against the Per Dose Fees as set forth below.

• Novavax shall pay a “Per Dose Fee” equal to [* * *] per dose of equivalent Bulk Material that is delivered to and accepted by Novavax or its designated Mexican buyer, less a credit for the

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	actual cost of all Novavax Materials used by Xcellerex in the applicable batch; and less a credit against the total amount of Prepayments at the rate of [* * *] for each of the first [* * *] batches. The formulas for Per Dose Fee payments are as follows: Per Dose Fee for [* * *] batches = ([* * *] X equivalent number of doses of Bulk Material in the applicable batch that are delivered and accepted) — actual cost of Novavax Materials used in the applicable batch — [* * *]. Per Dose Fee for [* * *] batches = ([* * *] X equivalent number of doses of Bulk Material in the applicable batch that are delivered and accepted) — actual cost of Novavax Materials used to manufacture the applicable batch.
•	To the extent that Novavax does not get the benefit of a full credit for the total amount of Prepayments because Xcellerex delivers [* * *] doses of equivalent Bulk Material in fewer than [* * *] batches, Novavax shall receive a credit against future purchases of Xcellerex equipment or services that may be provided by Xcellerex to Novavax.
•	Xcellerex will use commercially reasonable efforts to deliver Bulk Material as soon as possible.
•	Delivery terms are FOB [* * *] (INCOTERMS 2000).
•	Based on the performance of the work hereunder, the parties may discuss future manufacturing work by Xcellerex.
•	To the extent Xcellerex does not use all Novavax Materials ordered for the production of Bulk Material, Xcellerex shall return all Novavax Materials to Novavax free of charge, except that Novavax shall pay shipping charges and designate the shipper with respect to such Novavax Materials.
•	Xcellerex shall have no liability with respect to any defect in Bulk Material that results from defective Materials or for delay in manufacturing campaigns or delivery of Bulk Material due to delays from suppliers beyond Xcellerex’s reasonable control.
•	In no event shall either party be liable hereunder for consequential, incidental, indirect, exemplary, special or punitive damages.
•	As provided in the Term Sheet, Novavax will provide certain equipment to Xcellerex that will be returned to Novavax upon completion of the work.
•	[* * *]
•	Novavax may terminate this Term Sheet prior to January 15, 2010 without material uncured breach by Xcellerex because (a) the clinical trial of Product fails or is delayed, either for safety reasons or insufficient immunogenicity data, (b) because Novavax and its Mexican partner decide not to submit an application for regulatory approval in Mexico, or (c) because the application for regulatory approval is rejected or not approved in a timely manner, in which case,

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	Xcellerex shall be entitled to keep the full amount of any Prepayments made up to the termination date, plus Xcellerex shall return all unused Novavax Materials purchased by Novavax at no charge, except that Novavax shall pay shipping charges and designate the shipper with respect to such Novavax Materials, and Xcellerex shall receive no further payments. If this Term Sheet is terminated after December 2, 2009 and prior to or on January 15, 2010, and subsequently Novavax has the opportunity to sell doses of Bulk Material to a third party, then Xcellerex will deliver the Bulk Material that had been manufactured prior to termination and Novavax shall pay the Per Dose Fee for the delivered product. Xcellerex will not be obligated to store completed Bulk Material after April 30, 2010.
•	On or before December 2, 2009, for any reason, Novavax may terminate this Term Sheet. If terminated, (a) Xcellerex shall be entitled to keep the full amount of any Prepayments made up to the date of notice plus the value of the Novavax Materials used up to such date, and shall receive no further payments (except as set forth in (d) below); (b) Xcellerex shall return all unused Novavax Materials purchased by Novavax at no charge, except that Novavax shall pay shipping charges and designate the shipper with respect to such Novavax Materials; (c) Xcellerex shall deliver all completed Bulk Material to Novavax; and (d) Novavax may use such Bulk Material for research, development and regulatory purposes or sell such Bulk Material and, to the extent that Novavax sells any such Bulk Material, Novavax shall pay to Xcellerex the Per Dose Fee (taking into consideration the per batch credits for Novavax Materials used in the applicable batch and the [* * *] credit).
•	To the extent that Xcellerex is practicing any methods or procedures provided by Novavax and to the extent that Xcellerex is manufacturing Product, Novavax represents and warrants that Xcellerex’s manufacture of Bulk Material shall not infringe the intellectual property rights of any third party.
•	To the extent that Xcellerex is practicing any methods or procedures not provided by Novavax, Xcellerex represents and warrants that Xcellerex’s manufacture of Bulk Material, and Novavax’s sale of Bulk Material, shall not infringe the intellectual property rights of any third party. This representation and warranty shall only apply to an infringement caused solely by the practice of methods or procedures not provided by Novavax.
•	Each Party represents and warrants that, as of the date of the execution of this Term Sheet, it is not aware of any activities it or the other Party is engaged in that would breach this Term Sheet or cause Xcellerex’s manufacture of Bulk Material to infringe the intellectual property rights of any third party.

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• Novavax is entitled to have development resources and a quality person on Xcellerex premises during the term and during production of Bulk Material as long as such person does not interfere with operations at Xcellerex and has been appropriately trained on and follows Xcellerex policies and procedures.

• All Bulk Material provided by Xcellerex shall meet the specifications as set forth in Attachment 5 (the “Specifications”). All Bulk Material shall be manufactured in accordance with cGMP and all work shall be performed in accordance with all applicable laws and regulations. All Bulk Material will be delivered with a completed batch review from Xcellerex quality group and will be subject to inspection and acceptance by Novavax or its designated Mexican partner no later than two business days from the date of shipment from Xcellerex. For purposes of this Term Sheet, “cGMP” and “GMP” shall mean any applicable current Good Manufacturing Practices as defined in the US Federal Food, Drug and Cosmetics Act of 1938, and the regulations and guidances promulgated thereunder, as may be amended from time to time, which are in effect as of the date the services are rendered.

• All intellectual property or technology of each of the parties existing prior to this Term Sheet or developed outside the scope of this Term Sheet shall remain the property of the owning party and the other party shall have no rights with respect to any such intellectual property or technology except that each party will have the right to perform the work as described in the Term Sheet and Novavax will have the right to export, use and sell all Bulk Material. If either party creates or discovers any new intellectual property (patentable or not) or technology of any kind during the course of performing the work under and pursuant to the Term Sheet (the “Developed Technology”), ownership of intellectual property will follow the laws of inventorship. Novavax will own Developed Technology made by Novavax (the “Nvax Developed Technology”); Xcellerex will own Developed Technology made by Xcellerex (the “XRX Developed Technology”); and Developed Technology that is jointly invented will be owned jointly (the “Joint Developed Technology”). Each of Novavax and Xcellerex shall promptly notify the other of any Developed Technology to the other. Novavax is hereby granted a fully-paid, royalty free, sub-licenseable, nonexclusive license to all XRX Developed Technology to manufacture, use and sell, and have manufactured, used and sold, any Novavax VLP product anywhere in the world. Xcellerex is hereby granted a fully-paid, royalty free, sub-licenseable, nonexclusive license to all Nvax Developed Technology to manufacture, use and sell, and have manufactured, used and sold products other than a VLP product anywhere in the world. For avoidance of doubt, the foregoing license grant (A) to Novavax shall not apply to the bioreactor

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

and mixer technologies and equipment known as XDR™, XDM™ and FLEXFACTORY®, the Xcellerex process control methods and electronic batch record technology and PDMax™, and any improvements to any of the foregoing and (B) to Xcellerex shall not apply to Novavax’s VLP technology, including the process of creating VLP product, and Novavax’s baculovirus manufacturing process, and any improvements to any of the foregoing.

•

Neither party may make any public statement, issue any press release or any other publication regarding this Proposed Term Sheet, the Agreement, or the transactions contemplated hereunder and thereunder without the prior consent of the other party, except as set forth in Attachment 6.

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Attachment 4

[* * *]

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Attachment 5

Specifications

[* * *]

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Attachment 6

Press Release

Novavax and Xcellerex Announce Collaboration to Develop Large-scale
Manufacturing Process for 2009 H1N1 Influenza VLP Vaccine
Partnership will enable rapid, cost-effective, large-scale production
of novel Novavax VLP vaccine utilizing Xcellerex’s FlexFactory ^®
manufacturing solution for Mexico

Rockville, MD and Marlborough, MA — October 21, 2009 — Novavax, Inc. (NASDAQ: NVAX) and Xcellerex, Inc. has entered into a strategic collaboration to accelerate the development of Novavax’s vaccine manufacturing process to commercial scale and begin immediate production of Novavax’s novel 2009 H1N1 influenza vaccine for potential commercial sale. Earlier this week, Novavax launched a two-stage, 4,000-patient clinical study of its H1N1 flu vaccine in Mexico to support registration in that country. The two companies will utilize Novavax’s unique virus-like particle (VLP) vaccine technology to produce initial commercial quantities of H1N1 vaccine with Xcellerex’s FlexFactory biomanufacturing platform. Xcellerex will provide development expertise and product manufacturing in exchange for manufacturing supply fees from Novavax.

“We are pleased to apply our state-of-the-art FlexFactory manufacturing technology to enable the rapid, commercial-scale production of H1N1 flu vaccine by Novavax. Our technology offers Novavax a cost-effective and flexible manufacturing solution for this public health crisis by achieving full commercial-scale production of VLP-based vaccines much more rapidly than traditional vaccine production methods,” stated Joseph Zakrzewski, Xcellerex’s President and Chief Executive Officer.

“This strategic partnership represents a major step forward for Novavax and will allow us to increase the scale of our VLP vaccine manufacturing process and expand capacity to satisfy potential demand for our H1N1 VLP vaccine in Mexico. This alliance will also enable us to establish commercial-scale production capabilities for our VLP-based seasonal influenza vaccine program and significantly advance our timeline for full scale manufacturing,” said Rahul Singhvi, Novavax’s President and Chief Executive Officer.

About VLPs

Virus-like particles (VLPs) mimic the external structure of viruses but lack the live genetic material that causes viral replication and infection. VLPs can be designed quickly to match individual viral strains and be produced efficiently using portable cell-culture technology. Novavax VLP-based vaccine candidates are produced more rapidly than egg-based vaccines by using proprietary, portable, recombinant cell-culture technology.

About FlexFactory

Xcellerex’s FlexFactory is an innovative, portable manufacturing platform, based on the innovative application of (1) single-use technologies; (2) controlled environmental modules (CEMs); and (3) advanced and proven process automation including electronic batch records. The FlexFactory effectively eliminates clean and steam-in-place and clean room infrastructure, greatly simplifies facility design, reducing manufacturing footprint and capital investment, and creates breakthrough gains in operating efficiency, flexibility and environmental friendliness.

About Novavax

Novavax, Inc. is a clinical-stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide, including H1N1, using advanced proprietary virus-like-particle (VLP) technology. The company produces potent VLP -based, recombinant vaccines utilizing new and efficient manufacturing approaches. Novavax is committed to using its VLP technology to create country-specific vaccine solutions. It recently launched a joint venture with Cadila Pharmaceuticals, named CPL Biologicals, to develop and manufacture vaccines, biological therapeutics and diagnostics in India.

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About Xcellerex, Inc.

     Xcellerex is revolutionizing the way biomolecules are developed, manufactured and commercialized. The company’s unique single-use component technology platform transforms biomanufacturing economics, enabling the development of biotherapeutics and vaccines, and dramatically improving the ability of Xcellerex and its partners to deploy manufacturing capacity. Xcellerex leverages its technology and services platform by: 1) commercializing its FlexFactories^® (complete, turnkey, modular production trains) and XDR™ (unique, single use component bioreactor systems); 2) building a portfolio of proprietary biotherapeutics and vaccines through creative alliances and in licensing; and 3) creatively structuring transactions around FlexFactories, XDRs and its pipeline. Learn more at http://www.xcellerex.com

Forward-Looking Statements

     Statements herein relating to future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding scale-up and commercial manufacturing of Novavax’s 2009 H1N1 vaccine and other anticipated milestones are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Factors that may cause actual results to differ materially from the results discussed in the forward-looking statements or historical experience include risks and uncertainties, including that Xcellerex has not manufactured Novavax’ 2009 H1N1 vaccine at commercial levels and Novavax has not manufactured any vaccine at a commercial level; unanticipated costs and delays during the scale-up process; the manufacturing process will be subject to inspection and validation, which could also result in delays; the 2009 H1N1 vaccine must be manufactured quickly, or it may not be sold until after the 2009/2010 flu season has ended; the 2009 H1N1 vaccine has not yet received regulatory approval in Mexico, the intended market; competition from already approved vaccines for the 2009 H1N1 flu; business abilities and judgment of personnel and corporate partners; and the availability of qualified personnel. Further information on the factors and risks that could affect Novavax’ business, financial conditions and results of operations, is contained in Novavax’ filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov. These forward-looking statements speak only as of the date of this press release, and Novavax assumes no duty to update forward-looking statements.

Contact:
Xcellerex, Inc.	Novavax Inc.
Jon Lieber,	Tricia J. Richardson
Chief Financial Officer	Snr. Investor Relations Manager
Tel. 508-683-2239	240 268 2031
Xcellerex Inc.
Robert Gottlieb
RMG Associates
857-891-9091

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Attachment 7

[* * *]

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Rahul Singhvi, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Novavax, Inc;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2009	By:	/s/ Rahul Singhvi
		Rahul Singhvi
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Frederick W. Driscoll, certify that:

1 I have reviewed this Quarterly Report on Form 10-Q of Novavax, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2009	By:	/s/ Frederick W. Driscoll
		Frederick W. Driscoll
		Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Novavax, Inc. (the “Company”) on Form 10-Q as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rahul Singhvi, as President and Chief Executive Officer, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report.

Date: November 9, 2009	By:	/s/ Rahul Singhvi
		Rahul Singhvi
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Novavax, Inc. (the “Company”) on Form 10-Q as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick W. Driscoll, as Vice President, Chief Financial Officer, and Treasurer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report.

Date: November 9, 2009	By:	/s/ Frederick W. Driscoll
		Frederick W. Driscoll
		Vice President, Chief Financial Officer, and Treasurer