Exhibit 1.1
June 5, 2003
CONFIDENTIAL
VaxGen, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention:
This letter agreement (this "Agreement") confirms the engagement of
Granite Financial Group ("Granite") by VaxGen, Inc. ("VaxGen" or the "Company")
as placement agent to arrange the sale of up to $7,000,000 of shares of common
stock of VaxGen (the "Securities") on behalf of the Company (the "Financing").
The Financing shall occur through a directed registered sale under the
Securities Act of 1933, as amended (the "Securities Act"), and in compliance
with applicable laws of states and other jurisdictions ("Blue Sky Laws").
1. Retention. Subject to the terms and conditions of this Agreement,
VaxGen hereby engages Granite to act on behalf of the Company as placement agent
during the Authorization Period (as defined below) to arrange the Financing on
terms and conditions satisfactory to the Company, and Granite hereby accepts
such engagement.
2. Authorization Period. Granite's engagement shall become effective on
the date hereof and, unless extended by VaxGen and Granite, shall expire 15 days
after the signing of this Agreement. The period from the date hereof through the
expiration of this Agreement is called the" Authorization Period."
3. Compensation. If the Financing is consummated during the Authorization
Period, VaxGen shall pay Granite a placement fee in cash equal to 4.0% on any
gross proceeds received by the Company in connection with the Financing. The
placement fee shall be payable on the closing date on which such aggregate
consideration is received by the Company.
4. Reimbursements. Regardless of whether the Financing is consummated, the
Company shall reimburse Granite for all of its reasonable out-of-pocket
expenses, not to exceed $20,000 without the written consent of VaxGen, incurred
in connection with its engagement, including the fees and disbursements of
counsel for Granite and the expenses of any travel that may be necessary.
5. Representations, Warranties and Covenants of VaxGen. VaxGen represents
and warrants to, and covenants with, Granite that VaxGen shall take such actions
as may be required to cause compliance with this Agreement. Granite acknowledges
that VaxGen may cause its affiliates to perform any of its obligations
hereunder; provided, however, that VaxGen's intention to do so (or any action by
VaxGen or Granite in respect thereof) shall not relieve VaxGen from its
obligations to perform such obligations when due.
6. Indemnification. a. The Company agrees to the indemnification and other
agreements set forth in the attached Indemnification Agreement, the provisions
of which are incorporated herein by reference.
b. Granite agrees to indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission ("Commission") on
November 6, 2002 (Registration File No. 333-101057) and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company, or any such director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal,
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of Granite), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
upon any untrue or alleged untrue statement of a material fact contained in the
supplemented form of prospectus, in the form in which it will be filed with the
Commission ("Prospectus Supplement") (or any amendment or supplement thereto),
or arises out of or is based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Prospectus Supplement (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by Granite expressly for use therein and to reimburse
the Company, or any such director, officer or controlling person for any legal
and other expense reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The indemnity agreement set forth in this paragraph 6.b shall
be in addition to any liabilities that Granite may otherwise have.
7. Confidentiality. No financial advice rendered by Granite pursuant to
this Agreement may be disclosed publicly in any manner without Granite's prior
written approval, except as may be required by law, regulation or court order
but subject to the limitation below. If the Company is required or reasonably
expects to be so required to disclose any advice, VaxGen shall provide Granite
with prompt notice thereof so that Granite may seek a protective order or other
appropriate remedy and take reasonable efforts to assure that all of such advise
disclosed will be covered by such order or other remedy. Whether or not such a
protective order or other remedy is obtained, the Company will and will cause
its affiliates to disclose only that portion of such advice which the Company is
so required to disclose.
Neither Granite nor any of its officers or directors shall disclose
any material non-public information about the Company. Neither Granite nor any
of its officers or directors shall make any public statement or announcement
with respect to this Agreement, the Financing or the transactions contemplated
thereby without the prior written consent of the other party to such disclosure,
except that if Granite is required by law to make a public statement or
announcement with respect to this Agreement or the Financing, Granite may do so
and such and shall consult wit the Company in advance on the form and substance
of such disclosure.
This Agreement replaces in toto the letter agreement dated June 3,
2003 from Granite to VaxGen and as a result the letter agreement dated June 3,
2002 is no longer in effect. This Agreement contains the entire agreement and
understanding of the parties with respect to the matters covered hereunder.
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. If any provision of this Agreement is
determined to be invalid or unenforceable in any respect, such determination
will not effect such provision in any other respect or any other provision of
this Agreement
Please confirm that the foregoing correctly sets forth our agreement
by signing and returning to Granite the enclosed duplicate copy of this
Agreement.
Very truly yours,
Granite Financial Group
By:
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Name:
Title:
Accepted and agreed to as of
the date first written above
VaxGen, Inc.
By:
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Name:
Title:
INDEMNIFICATION AGREEMENT
In connection with your engagement pursuant to our letter agreement
of even date herewith (the "Engagement"), we agree to indemnify and hold
harmless Granite Financial Group ("Granite" or "you") and its affiliates, the
respective directors, officers, partners, agents and employees of Granite and
its affiliates, and each other person, if any, controlling Granite or any of its
affiliates (collectively, "Indemnified Persons"), from and against, and we agree
that no Indemnified Person shall have any liability to us or our owners,
parents, affiliates, security holders or creditors for, any losses, claims,
damages or liabilities (including actions or proceedings in respect thereof)
(collectively "Losses") (A) related to or arising out of (i) our actions or
failures to act (including statements or omissions made, or information
provided, by us or our agents) or (ii) actions or failures to act by an
Indemnified Person with our consent or in reliance on our actions or failures to
act, or (B) otherwise related to or arising out of the Engagement or your
performance thereof, except that this clause (B) shall not apply to any Losses
that are finally judicially determined to have resulted primarily from your bad
faith or gross negligence or breach of the letter agreement. If such
indemnification is for any reason not available or insufficient to hold you
harmless, we agree to contribute to the losses involved in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by us and by you with respect to the Engagement or, if such allocation
is judicially determined unavailable, in such proportion as is appropriate to
reflect other equitable considerations such as the relative fault of us on the
one hand and of you on the other hand; provided, however, that to the extent
permitted by applicable law, the Indemnified Persons shall not be responsible
for amounts which in the aggregate are in excess of the amount of all fees
actually received by you from us in connection with the Engagement. Relative
benefits to us, on the one hand, and you, on the other hand, with respect to the
Engagement shall be deemed to be in the same proportion as (i) the total value
paid or proposed to be paid or received or proposed to be received by us or our
security holders, as the case may be, pursuant to the transaction(s), whether or
not consummated, contemplated by the Engagement bears to (ii) all fees paid or
proposed to be paid to you by us in connection with the Engagement.
We will reimburse each Indemnified Person for all expenses
(including reasonable fees and disbursements of counsel) as they are incurred by
such Indemnified Person in connection with investigating, preparing for or
defending any action, claim, investigation, inquiry, arbitration or other
proceeding "Action") referred to above (or enforcing this agreement or any
related engagement agreement), whether or not in connection with pending or
threatened litigation in which any Indemnified Person is a party, and whether or
not such action is initiated or brought by you. We further agree that we will
not settle or compromise or consent to the entry of any judgment in any pending
or threatened Action in respect of which indemnification may be sought hereunder
(whether or not an Indemnified Person is a party therein) unless we have given
you reasonable prior written notice thereof and use all reasonable efforts,
after consultation with you, to obtain an unconditional release of each
Indemnified Person from all liability arising therefrom. In the event we are
considering entering into one or a series of transactions involving a merger or
other business combination or a dissolution or liquidation of all or a
significant portion of our assets, we shall promptly notify you in writing. If
requested by Granite, we shall then establish alternative means of providing for
our obligations set forth herein on terms and conditions reasonably satisfactory
to Granite.
If multiple claims are brought against you in any action with
respect to at least one of which indemnification is permitted under applicable
law and provided for under this agreement, we agree that any judgment,
arbitration award or other monetary award shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided for. In
the event that we are called or subpoenaed to give testimony in a court of law,
you agree to pay our expenses related thereto and $5,000 per person per day for
every day or part thereof that we are required to be there or in preparation
thereof. Our obligations hereunder shall be in addition to any rights that any
Indemnified Person may have at
common law or otherwise. Solely for the purpose of enforcing this agreement, we
hereby consent to personal jurisdiction and to service and venue in any court in
which any claim which is subject to this agreement is brought by or against any
Indemnified Person. We acknowledge that in connection with the Engagement you
are acting as an independent contractor with duties owing solely to us. YOU
HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF
THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS AGREEMENT.
The provisions of this agreement shall apply to the Engagement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the Engagement. This agreement and any other agreements relating
to the Engagement shall be under seal, governed by and construed in accordance
with the laws of the state of California, without regard to conflicts of law
principles thereof.
Very truly yours,
Accepted and Agreed:
GRANITE FINANCIAL GROUP. Client: VaxGen, Inc.
By: By:
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Name: Name:
Title: Title:
