Filed by Bowne Pure Compliance





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.


 


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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.


 


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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.


 


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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]



 


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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



 


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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







 


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