Convertible Senior Note (2000)Full Document 

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THIS NOTE AND THE SHARES OF COMMON STOCK OF NOVAVAX, INC. (OR OTHER SECURITIES)
WHICH MAY BE ISSUABLE AS INTEREST ON OR UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY OF THE STATES OF THE UNITED STATES, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL  SUCH SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR
 THE HOLDER HEREOF PROVIDES  A WRITTEN OPINION OF LEGAL COUNSEL, WHICH
COUNSEL AND OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO
NOVAVAX, INC., TO THE EFFECT THAT THE PROPOSED TRANSFER OF SUCH SECURITIES MAY
BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, OR (B) A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") REASONABLY
SATISFACTORY TO NOVAVAX, INC. TO THE EFFECT THAT UNDER THE SECURITIES ACT THE
PROPOSED TRANSFER OF THE SECURITIES WITHOUT REGISTRATION WILL NOT RESULT IN A
RECOMMENDATION BY THE STAFF OF THE COMMISSION THAT ACTION BE TAKEN WITH RESPECT
THERETO, OR (C) SUCH OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO
NOVAVAX, INC. THAT THE PROPOSED TRANSFER OF SUCH SECURITIES MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT.

                           4% CONVERTIBLE SENIOR NOTE

No. 1                                                          December 19, 2000
$20,000,000

         NOVAVAX, INC., a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to the order of KING PHARMACEUTICALS, INC., a
Tennessee corporation, or its registered assigns ("PAYEE"), the principal amount
of Twenty Million Dollars ($20,000,000), on December 19, 2007, with interest
from the date hereof on the unpaid balance of such principal amount as provided
herein, which interest is payable semi-annually on June 30 and December 31 of
each year commencing June 30, 2001, and on the date such unpaid balance shall
become due and payable in full (whether at maturity or at a date fixed for
repurchase or by declaration or otherwise) (each an "INTEREST PAYMENT DATE").
Capitalized terms used and not

   2

defined in this Note shall have the meanings assigned to them in the Investor
Rights Agreement dated as of December 19, 2000 (the "INVESTOR RIGHTS AGREEMENT")
by and between the Company and King Pharmaceuticals, Inc.

         Interest payable on this Note shall be computed on the basis of a
360-day year of twelve 30-day months and applied to the actual number of days
elapsed and shall accrue at a fixed rate equal to four percent (4%) per annum.
All payments with respect to this Note shall be credited first to the payment of
accrued but unpaid interest and then to the repayment of principal. The rate of
interest payable hereunder shall in no event exceed the maximum rate permitted
by applicable law.

         Payments of principal on this Note shall be made in lawful money of the
United States in immediately available funds at the address of Payee set forth
below.

         Except as provided in the following sentence, payments of interest on
this Note shall be made in lawful money of the United States in immediately
available funds at the address of Payee set forth below. If the Average Closing
Price calculated with respect to an Interest Payment Date is equal to or greater
than the Initial Conversion Price and no Event of Default shall have occurred
and be continuing as of such Interest Payment Date, the Company, at its option,
shall have the right to pay up to the full amount of the Stock Interest Portion
of the interest due on such Interest Payment Date by issuing to Payee the number
of fully paid and nonassessable shares of Common Stock which is determined by
dividing such Stock Interest Portion by the Average Closing Price calculated
with respect to such Interest Payment Date and by delivering a certificate or
certificates for shares of such Common Stock in such denomination or
denominations as Payee may request at the address specified by Payee. For
purposes of the foregoing provision:

         "AVERAGE CLOSING PRICE" means, with respect to any Interest Payment
Date, the average Closing Price per share, rounded up to four (4) decimal
points, of the Common Stock during the twenty (20) consecutive trading days
ending with and including the third trading day immediately preceding such
Interest Payment Date.

         "CLOSING PRICE" means, with respect to each share of Common Stock, for
any day, the reported last sales price regular way per share or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case (a) on the American Stock Exchange
as reported in THE WALL STREET JOURNAL (or other similar newspaper) for American
Stock Exchange Composite Transactions or, if the Common Stock is not listed or
admitted to trading on such exchange, on the principal (as determined by the
Board of Directors) national securities

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