Note 16 - Commitments and Contingencies

Operating Leases

The Company conducts its operations from leased facilities, under operating leases with terms expiring in 2017 for its Rockville, Maryland facility and in 2023 for its Gaithersburg, Maryland facilities. The leases obligate the Company to also pay building operating costs. In November 2011, the Company entered into lease and sublease agreements, under which the Company will lease its new manufacturing, laboratory and office space in Gaithersburg, Maryland. The agreements provide that, among other things, as of January 1, 2012, the Company sublease from the previous tenant, and subsequently lease from the landlord approximately 74,000 total square feet, with rent payments for such space to the landlord commencing April 1, 2014. On April 1, 2012, one of the two subleases with the previous tenant for space totaling approximately 21,000 square feet ended and was replaced by a lease with the landlord. On April 1, 2013, the other sublease with the previous tenant for space totaling approximately 53,000 square feet will end and be replaced by a lease with the landlord. Under the terms of one lease agreement, the landlord provided the Company with a tenant improvement allowance of $2.5 million and an additional tenant improvement allowance of $3 million, which additional tenant improvement allowance is paid back to the landlord during the remainder of the term of such lease agreement through additional rent payments (collectively, the "Improvement Allowance"). In 2012, the Company has been funded $4.3 million under the Improvement Allowance. The Company records a deferred rent liability to account for the funding under the Improvement Allowance and to record rent expense on a straight-line basis for these operating leases. In addition, the Company entered into an agreement with the previous tenant to purchase certain laboratory equipment to be used at the facility. The Company is currently considering its plans for the Rockville, Maryland facility subsequent to relocation to the Gaithersburg, Maryland facilities, which plans include remarketing the facility through the end of the remaining lease term of January 31, 2017. The Company also leased space in Malvern, Pennsylvania, its former corporate headquarters, under an operating lease with a term expiring in 2014. The Company has subleased this facility under an amended sublease agreement expiring in 2014.

Future minimum rental commitments under non-cancelable leases as of December 31, 2012 are as follows (in thousands):

Year	Operating Leases		Sublease			Net Operating Leases
2013	$	2,431	$	(295	)	$	2,136
2014		3,797		(201	)		3,596
2015		4,171		-			4,171
2016		4,271		-			4,271
2017		2,442		-			2,442
Thereafter		14,517		-			14,517
Total minimum lease payments	$	31,629	$	(496	)	$	31,133

Total rent expenses approximated $3.2 million, $1.6 million and $1.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Purchase Obligations

In March 2009, the Company and Cadila entered into a master services agreement pursuant to which the Company may request services from Cadila in the areas of biologics research, pre-clinical development, clinical development, process development, manufacturing scale-up and general manufacturing related services in India. In July 2011, and subsequently in March 2013, in each case the Company and Cadila amended the master services agreement to extend the term by one year for which services can be provided by Cadila under this agreement. Under the revised terms, if, by March 31, 2014, the amount of services provided by Cadila is less than $7.5 million, the Company will pay Cadila the portion of the shortfall amount that is less than or equal to $2.0 million and 50% of the portion of the shortfall amount that exceeds $2.0 million. When calculating the shortfall, the amount of services provided by Cadila includes amounts that have been paid under all project plans, the amounts that will be paid under ongoing executed project plans and amounts for services that had been offered to Cadila, that Cadila was capable of performing, but exercised its right not to accept such project. The term of the master services agreement is five years, but may be terminated by either party if there is a material breach that is not cured within 30 days of notice or, at any time after three years, provided that 90 days prior notice is given to the other party. As of December 31, 2012, the Company's remaining obligation to Cadila under the master services agreement is $6.9 million.

Contingencies

License Agreement with Wyeth Holdings Corporation

The Company entered into a license agreement in 2007 with Wyeth Holdings Corporation, a subsidiary of Pfizer Inc. ("Wyeth"). The license is a non-exclusive, worldwide license to a family of patent applications covering VLP technology for use in human vaccines in certain fields, with expected patent expiration in early 2022. The agreement provides for an upfront payment, annual license fees, milestone payments and royalties on any product sales. If each milestone is achieved for any particular vaccine candidate, the Company would likely be obligated to pay an aggregate of $14 million to Wyeth for each product developed and commercialized under the agreement. Annual license fees under the agreement total $0.2 million per annum. The royalty to be paid by the Company under the agreement, if a product is approved by the FDA for commercialization, will be based on single digit percentage of net sales. Payments under the agreement to Wyeth as of December 31, 2012 aggregated $5.7 million, of which the Company paid the annual license fees during the three years ended December 31, 2012. The agreement will remain effective as long as at least one claim of the licensed patent rights cover the manufacture, sale or use of any product unless terminated sooner at the Company's option or by Wyeth for an uncured breach by the Company.

Employment Agreements

The Company has entered into employment agreements with certain of its executive officers and key employees. The employment agreements have one year terms that automatically renew annually and provide for base salaries and other incentives. The agreements include a provision whereby if the Company terminates the employment of such an employee other than for cause, including pursuant to a change of control under its severance plan, or the employee leaves the Company for good reason, such employee shall be entitled to receive payment of existing salary and benefits for a period that ranges from 12 to 24 months.