Exhibit 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is made this third day of April
2007, by and between VaxGen, Inc. ("VaxGen") and the Department of Health and
Human Services, including the Office of Public Health Emergency Medical
Countermeasures ("OPHEMC") within the Office of the Assistant Secretary for
Preparedness and Response, and the National Institute of Allergy and Infectious
Diseases ("NIAID") within the National Institutes of Health (collectively,
"HHS").
VaxGen is a corporation organized under the laws of the State of Delaware
with its principal place of business at 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000-0000. HHS is an Executive Department of the United
States Government with its headquarters at 000 Xxxxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000. The signatories to this Agreement hereinafter are
referred to singularly or collectively as, respectively, a "Party" or the
"Parties."
This Agreement is made as a compromise between the Parties for the
complete and final settlement of the dispute and litigation before the Civilian
Board of Contract Appeals ("CBCA"), known as VaxGen, Inc. v. Department of
Health and Human Services, CBCA No. 674, arising under Contract No.
HHSO100200500001C ("OPHEMC Contract"), as well as any and all other claims and
disputes between the Parties related to the XXXXXX Xxxxxxxx, Xxxxxxxx Xx.
X00-Xx-00000 ("First NIAID Contract"), and/or Contract No. N01-Al-30053 ("Second
NIAID Contract").
PREAMBLE
WHEREAS, in September 2002, NIAID awarded VaxGen the First NIAID Contract
for research and development associated with a new anthrax vaccine. VaxGen has
completed performance of the First NIAID Contract.
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WHEREAS, in September 2003, NIAID awarded VaxGen the Second NIAID Contract
for further research and development associated with the new anthrax vaccine.
WHEREAS, in November 2004, the Office of Research and Development
Coordination within the HHS Office of Public Health Emergency Preparedness
awarded VaxGen the OPHEMC Contract for the development, production and delivery
of the new anthrax vaccine. During the course of contract performance, and as
the result of an agency reorganization, administration of the contract was
transferred to OPHEMC.
WHEREAS, on March 30, 2006, VaxGen submitted a certified claim to HHS,
pursuant to the Contract Disputes Act of 1978, for an equitable adjustment to
the price and schedule for alleged formal and constructive changes under the
OPHEMC Contract.
WHEREAS, on April 21, 2006, the OPHEMC Contracting Officer issued a final
decision denying VaxGen's certified claim in its entirety under the OPHEMC
Contract.
WHEREAS, on December 19, 2006, the OPHEMC Contracting Officer issued a
notice to VaxGen terminating the OPHEMC Contract for default. In the notice of
default termination, the Contracting Officer stated, among other things, that
"[t]he supplies terminated may be purchased against VaxGen's account, and VaxGen
will be held liable for any excess costs. . . . The government reserves all
rights and remedies provided by law or under contract, in addition to charging
excess costs."
WHEREAS, on December 21, 2006, the NIAID Contracting Officer issued a Stop
Work order to VaxGen, suspending performance of the Second NIAID Contract. On
January 5, 2007, and again on March 21, 2007, the NIAID Contracting Officer
extended the duration of the stop work order.
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WHEREAS, on January 22, 2007, the NIAID Contracting Officer notified
VaxGen that the agency was suspending payment of a total of $6,477,141.64 in
outstanding invoice payments under the Second NIAID Contract, as an offset to
potential future VaxGen liability for excess reprocurement costs related to the
default termination of the OPHEMC Contract.
WHEREAS, on February 8, 2007, VaxGen submitted a certified claim to HHS,
pursuant to the Contract Disputes Act of 1978, challenging the suspension of
invoice payments under the Second NIAID Contract.
WHEREAS, on March 14, 2007, VaxGen filed a Notice of Appeal at the CBCA
regarding the default termination of the OPHEMC Contract.
WHEREAS, HHS and VaxGen wish to avoid the necessity, risk, and expense of
further litigation and to resolve and settle all claims, liabilities, disputes,
and obligations between them arising under, out of, related to, or pertaining in
any way to the First NIAID Contract, the Second NIAID Contract, and/or the
OPHEMC Contract (the "Claims and Disputes").
NOW, THEREFORE, in consideration of the payment, mutual promises, and
releases contained herein and other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the Parties agree as follows:
1.0 SETTLEMENT
1.1 HHS shall pay VaxGen Eleven Million Dollars ($11,000,000) (the
"Settlement Funds") in full settlement of the Claims and Disputes. HHS shall
make, and VaxGen shall receive, such payment by taking the following actions:
(a) NIAID shall issue a bilateral modification to the Second NIAID Contract that
incorporates by reference and attaches this Agreement, and that obligates the
Settlement Funds to the Second NIAID Contract; (b) VaxGen shall submit a proper
invoice for the Settlement Funds (attached); and (c) NIAID shall authorize
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payment of the Settlement Funds to VaxGen and shall take all other actions
necessary to process and ensure payment within 30 days of NIAID's receipt of
VaxGen's invoice for the Settlement Funds.
1.2 HHS shall terminate the Second NIAID Contract for the convenience of
the Government. To accomplish this, NIAID shall issue a bilateral modification
to the Second NIAID Contract that incorporates by reference and attaches this
Agreement, and that institutes the termination for convenience on a no-cost
basis.
1.3 The Parties agree that VaxGen, and its successors, its assigns, and
its affiliates, shall have the right to access and use those research results,
reports, and data, relating exclusively to those studies where only VaxGen's
investigational recombinant anthrax vaccine was used, developed by or on behalf
of NIAID (for example, through the Animal Working Group process) prior to the
date of this Agreement. The parties further agree VaxGen shall have the right to
access and use research results, reports, and data developed by VaxGen under the
First NIAID Contract or the Second NIAID Contract.
1.4 HHS shall convert the termination for default of the OPHEMC Contract
to a termination for the convenience of the Government. To accomplish this,
OPHEMC shall issue a bilateral modification to the OPHEMC Contract that
incorporates by reference and attaches this Agreement, and that institutes the
termination for convenience on a no-cost basis.
1.5 Upon receipt by VaxGen of the Settlement Funds within the time
required by Paragraph 1.1(c), the Parties shall execute, and file with the CBCA,
a Joint Motion to Dismiss with Prejudice the Appeal regarding the default
termination of the OPHEMC Contract.
1.6 The Parties' performance of the obligations set forth herein shall
finally settle and resolve any and all claims, demands and defenses that either
Party asserted or could have
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asserted against the other Party, arising out of, under, or in any way relating
to the Claims and Disputes.
2.0 COMPROMISE
2.1 This Agreement is the result of a compromise and shall never be
construed as an admission by the Parties of any liability, wrongdoing, or
responsibility on their part or on the part of their predecessors, successors,
assignees, agents, parents, subsidiaries, affiliates, attorneys, officers,
directors, or employees. Indeed, the Parties expressly deny any such liability,
wrongdoing, or responsibility.
2.2 The Parties agree that this Agreement shall not be cited or otherwise
referred to in any other proceedings, except as is necessary to enforce this
Agreement.
3.0 RELEASES
3.1 VaxGen for itself, its predecessors, its successors, its assigns, its
affiliates, its subcontractors (of every tier), and its vendors for the first
NIAID Contract, the Second NIAID Contract, and the OPHEMC Contract,
respectively, hereby relinquishes, releases, waives, and forever discharges all
claims, demands, and defenses of whatever kind that it has asserted or could
have asserted against HHS arising out of, under, or in any way relating to the
Claims and Disputes, including without limitation (a) any unpaid costs under the
First NIAID Contract, (b) the certified claim dated February 8, 2007 under the
Second NIAID Contract, (c) the certified claim dated March 30, 2006 under the
OPHEMC Contract, and (d) the CBCA appeal filed March 14, 2007 under the OPHEMC
Contract.
3.2 HHS for itself, its predecessors, its successors, its assigns, and its
affiliates, including NIAID and OPHEMC, hereby relinquishes, releases, waives,
and forever discharges all claims, demands, and defenses of whatever kind that
it has asserted or could have asserted
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against VaxGen arising out of, under, or in any way relating to the Claims and
Disputes, including but not limited to future excess reprocurement costs related
to the default termination of the OPHEMC Contract.
4.0 ADDITIONAL TERMS AND CONDITIONS
4.1 This Agreement sets forth and constitutes the entire agreement between
the Parties with respect to its subject matter and supersedes any and all prior
agreements, understandings, promises, warranties, and representations made by
each to the other concerning its subject matter. This Agreement may be modified
only by a written document signed by the Parties. No waiver of this Agreement or
any of its promises, obligations, terms or conditions is valid unless it is
written and signed by the Party against whom the waiver is to be enforced.
4.2 This Agreement may be executed in identical counterparts, each of
which shall constitute an original and all of which shall constitute one and the
same Agreement. Copies of all or part of this Agreement, including signatures
thereto, which are copies or transmitted by facsimile or electronic mail are
presumed valid.
4.3 This Agreement is binding on the Parties, their predecessors,
successors, parents, subsidiaries, affiliates, assignees, agents, directors,
officers, employees, shareholders and attorneys. Each of the signatories of this
Agreement represents and warrants that he/she is authorized to execute this
Agreement on behalf of his/her respective Party and by such signature to bind
that Party to this Agreement.
4.4 Each Party agrees, upon the request of the other Party, to execute
such additional documents and perform such other acts, as are reasonably
necessary or appropriate to accomplish the intent of the Parties as expressed in
this Agreement.
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IN WITNESS WHEREOF, we have hereunto set our hands and seals as of the
date above written.
VAXGEN, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
Chief Executive Officer
DEPARTMENT OF HEALTH AND HUMAN SERVICES
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
Contracting Officer
HHS/OS/ASPR/OPHEMC
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxx
Contracting Officer
HHS/NIH/NIAID
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