Exhibit 10.1
EXECUTION COPY
NOTE REPURCHASE AGREEMENT
THIS NOTE REPURCHASE AGREEMENT (this “Agreement”) to repurchase VaxGen, Inc.
51/2% Convertible Senior Subordinated Notes Due April 1, 2010 is made as of
October 27, 2008, by and between Drawbridge Special Opportunities Fund LP, a
Delaware limited partnership (“Holder”), on the one hand, and VaxGen, Inc., a
Delaware corporation (“Company”), on the other hand.
W I T N E S S E T H:
WHEREAS, the Holder is the owner and holder of that certain 51/2% Convertible
Senior Subordinated Note Due April 1, 2010 (the “Note”) identified on Schedule A
hereto, issued under an Indenture, dated as of April 5, 2005 (the “Indenture”),
between the Company and U.S. Bank National Association, as trustee (the
“Trustee”);
WHEREAS, the Note, to date, has not matured; and
WHEREAS, the Holder desires to sell the Note, and the Company in turn desires to
repurchase the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Holder and the Company hereby agree as
follows:
1. Sale of Note. Subject to the terms and conditions of this Agreement, the
Company agrees to purchase from the Holder, and the Holder agrees to sell to the
Company, the Note identified on Schedule A hereto, in the principal amount and
for an aggregate purchase price set forth on Schedule A hereto. The purchase and
sale of the Note shall take place at the offices of Cooley Godward Kronish, 3175
Hanover Street, Palo Alto, California 94304 at 10:00 A.M. (local time), on
October 28, 2008 (which time and place are designated as the “Closing” and the
date thereof the “Settlement Date”). At the Closing, the Holder shall deliver to
the Company the Note, duly endorsed or accompanied by an assignment duly
endorsed and in a form acceptable to the Trustee, against payment of the
aggregate purchase price described on Schedule A hereto (the “Purchase Price”),
by wire transfer in the amounts and using the wire transfer instructions to be
provided separately to the Company by Holder. Upon receipt by the Holder of the
Purchase Price, the Company shall become the legal and beneficial owner of the
Note and of all rights and interest therein or related thereto and to the monies
due and to become due under the terms of the Note. The Holder hereby agrees that
upon receipt of the Purchase Price, the Note shall be cancelled and the Company
shall have no further obligation to the Holder thereunder.

 

 

--------------------------------------------------------------------------------

 

2. Representations and Warranties of the Holder. The Holder hereby represents
and warrants to the Company with respect to the Note issued to the Holder that:
2.1 Ownership of Note. The Holder has, and at the Closing will have, good and
valid right, title and interest (legal and beneficial) in and to the Note, free
and clear of all liens, pledges, security interests, charges, contractual
obligations, claims or encumbrances of any kind. Upon payment for the Note in
accordance with this Agreement, the Holder will convey the Note to the Company
free and clear of all liens, pledges, security interests, charges, contractual
obligations, claims or encumbrances of any kind.
2.2 Organization; Authorization. The Holder has full power and authority to
enter into this Agreement. The execution, delivery and performance by the Holder
of this Agreement has been duly authorized by all requisite action by the
Holder, and this Agreement constitutes a valid and binding obligation of the
Holder, enforceable against the Holder in accordance with its terms, except as
enforcement may be limited by principles of equity and by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to, limiting or
affecting creditors’ rights and remedies generally.
2.3 No Consent Required. No consent, authorization, approval, order, license,
certificate or permit or act of or from, or declaration or filing with, any
foreign, federal, state, local or other governmental authority or regulatory
body or any court or other tribunal or any party to any contract, agreement,
instrument, lease or license to which the Holder is a party, is required for the
execution, delivery or performance by the Holder of this Agreement or any of the
other agreements, instruments and documents being or to be executed and
delivered hereunder or in connection herewith or for the consummation of the
transactions contemplated hereby.
2.4 Disclosure of Information. The Holder has received all the information it
considers necessary or appropriate to determine whether to sell the Note to the
Company pursuant to this Agreement. The Holder acknowledges (i) the Company has
not made any representation or warranty, express or implied, except as set forth
herein, regarding any aspect of the sale and purchase of the Note, the operation
or financial condition of the Company or the value of the Note, (ii) that it is
not relying upon the Company in making its decision to sell the Note to the
Company pursuant to this Agreement and (iii) that the Company is relying upon
the truth of the representations and warranties in this Section 2 in connection
with the purchase of the Note hereunder.
2.5 Tax Consequences. The Holder has had an opportunity to review the federal,
state and local tax consequences of the sale of the Note to the Company and the
transactions contemplated by this Agreement with its own tax advisors. The
Holder is relying solely on such advisors and not on any statements or
representations of the Company.

 

-2-

--------------------------------------------------------------------------------

 

2.6 No Conflict. Neither the execution and delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, nor compliance with
or fulfillment of the terms, conditions and provisions hereof or thereof will
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default (with or without notice or lapse of time, or both), or an
event creating rights of acceleration, termination or cancellation or a loss of
rights under (i) any material note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which the Holder is a party or by which the Holder or any of its
properties is bound, (ii) any judgment or decree applicable to, or affecting,
the Holder or (iii) any statute, law or rule to which the Holder is subject.
2.7 No Broker. No broker, finder or other person acting under the authority of
the Holder is entitled to any broker’s commission or other fee in connection
with the transfer of the Note for which the Holder would be responsible, in
whole or in part.
3. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Holder that:
3.1 Organization; Authorization. The Company has full power and authority to
enter into this Agreement. The execution, delivery and performance by the
Company of this Agreement has been duly authorized by all requisite action by
the Company, and this Agreement constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforcement may be limited by principles of equity and by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to, limiting or
affecting, creditors’ rights and remedies generally.
3.2 No Consent Required. No consent, authorization, approval, order, license,
certificate or permit or act of or from, or declaration or filing with, any
foreign, federal, state, local or other governmental authority or regulatory
body or any court or other tribunal or any party to any contract, agreement,
instrument, lease or license to which the Company is a party, is required for
the execution, delivery or performance by the Company of this Agreement or any
of the other agreements, instruments and documents being or to be executed and
delivered hereunder or in connection herewith or for the consummation of the
transactions contemplated hereby.
3.3 No Conflict. Neither the execution and delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, nor compliance with
or fulfillment of the terms, conditions and provisions hereof or thereof will
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default (with or without notice or lapse of time, or both), or an
event creating rights of acceleration, termination or cancellation or a loss of
rights under (i) any material note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which the Company is a party or by which the Company or any of its
properties is bound, (ii) any judgment or decree applicable to, or affecting,
the Company or (iii) any statute, law or rule to which the Company is subject.

 

-3-

--------------------------------------------------------------------------------

 

3.4 No Litigation. There is no action, suit, proceeding, judgment, claim or
investigation pending or, to the knowledge of the Company, threatened against
the Company which could reasonably be expected in any manner to challenge or
seek to prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement.
3.5 No Broker. No broker, finder or other person acting under the authority of
the Company is entitled to any broker’s commission or other fee in connection
with the transfer of the Note for which the Company would be responsible, in
whole or in part.
4. Securities Act; Transfer Restrictions. The Company hereby acknowledges that
the (i) Note is not registered pursuant to the Securities Act of 1933, as
amended, and (ii) the Note and the common stock underlying the Note may only be
disposed of in compliance with Federal and State securities laws.
5. Miscellaneous.
5.1 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of New York, without regard to its choice of law provisions.
The parties hereto hereby agree that any action brought under this Agreement or
related to the transactions contemplated hereby shall be brought in a Federal or
State court located in the County of San Francisco in the State of California.
5.2 Counterparts. This Agreement may be executed in two or more counterparts and
by facsimile or electronic signature, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
5.3 Publicity. The Holder will use reasonable commercial efforts to keep the
terms and existence of this transaction confidential, provided that the Holder
may share the details of this transaction in confidence with its attorneys,
auditors, affiliates, investors and financial and tax advisors, and may advise
other potential purchasers of the Note that the Note has been repurchased by the
Company. The Holder shall not be prohibited from referring communications with
any other party regarding the transactions contemplated hereby to the Company.
5.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

-4-

--------------------------------------------------------------------------------

 

5.5 Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed facsimile if
sent during the normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid or (iv) one (1) day
after deposit with a nationally-recognized overnight courier, specifying
next-day delivery, with written verification of receipt. All communications
shall be sent to the respective parties at the addresses set forth on the
signature pages attached hereto (or at such other addresses as shall be
specified by notice given in accordance with this Section 5.5).
5.6 Amendment and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of Holder and the Company.
5.7 Further Assurances. Each party hereby agrees to execute any additional
documents and take any additional actions as may be reasonably necessary to
carry out the terms of this Agreement.
5.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
5.9 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
[signature page follows]

 

-5-

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement
effective as of the date and year first above written.

          DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP

By: Drawbridge Special Opportunities GP LLC, its general partner
          By:   /s/ Constantine Dakolias             Name:   Constantine
Dakolias            Title:   President     

Address for notices:
Drawbridge Special Opportunities Fund LP
1345 Avenue of the Americas
New York, New York 10105
Attn: Constantine Dakolias
Phone No: 212-798-6050
Facsimile No.: 212-798-6099

          VAXGEN, INC.
    By:   /s/ James P. Panek     Name:   James P. Panek    Title:   President
and Chief Executive Officer     

Address for notices:
VaxGen, Inc.
349 Oyster Point Boulevard
South San Francisco, CA 94080
Attn: Mr. James Panek
Facsimile No.: (650) 624-4785

 

-6-

--------------------------------------------------------------------------------

 

SCHEDULE A

Title of Securities:  
5 1/2% Convertible Senior Subordinated Notes due April 1 2010 (the “Notes”)

Principal Amount of Notes:  
$5,000,000

Purchase Price:  
$4,150,000 ($830 for each $1,000 principal amount of Notes), plus accrued and
unpaid interest thereon to the Settlement Date;

Accrued Interest:  
$20,625.03 plus an additional $763.89 per day in the event that the Settlement
Date is extended to a later date by mutual agreement of the parties; provided,
however, that the parties hereby agree that if the Settlement Date is extended
to a date later than October 28, 2008 as a result of Holder being unable to
deliver the applicable Note to the Company or its counsel on or before the
Closing on the Settlement Date, no additional interest shall accrue after such
Settlement Date with respect to such applicable Note.

Aggregate Purchase Price:  
$4,170,625.03 plus an additional $763.89 per day in the event that the
Settlement Date is extended to a later date by mutual agreement of the parties;
provided, however, that the parties hereby agree that if the Settlement Date is
extended to a date later than October 28, 2008 as a result of Holder being
unable to deliver the applicable Note to the Company or its counsel on or before
the Closing on the Settlement Date, no additional interest shall accrue after
such Settlement Date with respect to such applicable Note.

Settlement Date:  
October 28, 2008

 

-7-