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Serving Emerging Growth Sectors For Over 50 Years
November 6, 2006
CONFIDENTIAL
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President & Chief Executive Officer
Vasogen Inc.
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Dear ▇▇. ▇▇▇▇▇▇:
This letter (the "AGREEMENT") constitutes the agreement between ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC ("R&R" or the "PLACEMENT AGENT") and Vasogen Inc. (the
"COMPANY"), that R&R shall serve as the exclusive placement agent for the
Company, on a "reasonable best efforts" basis, in connection with the proposed
placement of up to $40,000,000 (the "PLACEMENT") of registered securities (the
"SECURITIES") of the Company, including shares (the "SHARES") in the capital of
the Company's Shares (the "COMMON SHARES") and warrants to purchase Common
Shares, if required to complete the Placement. The terms of such Placement and
the Securities shall be mutually agreed upon by the Company and the purchasers
(each, a "PURCHASER" and collectively, the "PURCHASERS") and nothing herein
constitutes that R&R would have the power or authority to bind the Company or
any Purchaser or an obligation for the Company to issue any Securities or
complete the Placement. This Agreement and the documents executed and delivered
by the Company and the Purchasers in connection with the Placement shall be
collectively referred to herein as the "TRANSACTION DOCUMENTS." The date of the
closing of the Placement shall be referred to herein as the "CLOSING DATE." The
Company expressly acknowledges and agrees that R&R's obligations hereunder are
on a reasonable best efforts basis only and that the execution of this
Agreement does not constitute a commitment by R&R to purchase the Securities
and does not ensure the successful placement of the Securities or any portion
thereof or the success of R&R with respect to securing any other financing on
behalf of the Company.
SECTION 1. COMPENSATION AND OTHER FEES.
As compensation for the services provided by R&R hereunder, the Company
agrees to pay to R&R:
(A) The fees set forth below with respect to the Placement:
a) A cash fee payable immediately upon the closing of the Placement and
equal to 6% of the aggregate gross proceeds raised in the Placement,
except for proceeds from the holders of the senior convertible notes
due October 7, 2007 issued by Vasogen Ireland Limited, a wholly owned
subsidiary of the Company (the "Notes") who may choose to participate
in the Placement or any of their affiliates or assignees (the
"Noteholders"), as to which the cash fee to the Placement Agent shall
be 3%.
b) Warrants to purchase Common Shares equal to 6% of the aggregate
number of Shares sold in the Placement (3% as to Shares sold to
Noteholders), plus any Shares underlying any convertible Securities or
Vasogen, Inc.
11/6/2006
Page 2
units sold in the Placement, but excluding warrants, if any, issued to
Purchasers in connection with the Placement. Such warrants shall have
the same terms as the warrants (if any) issued to the Purchasers in the
Placement except that such warrants shall have term of 3 years, have an
exercise price of 120% of the volume weighted average price on the
Nasdaq Global Market on the day on which the Placement is priced and
shall not be transferable except as permitted by NASD Rule 2710.
(B) The Company also agrees to reimburse R&R's expenses (with
supporting invoices/receipts) up to a maximum of $20,000. Such reimbursement
shall be payable immediately upon (but only in the event of) the closing of the
Placement.
SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agent
that:
(A) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form F-10
(Registration File No.333-130578) under the Securities Act of 1933, as amended
(the "Securities Act"), which became effective on January 5, 2006, for the
registration under the Securities Act of the Securities. At the time of such
filing, the Company met the requirements of Form F-10 under the Securities Act.
Such registration statement meets the requirements set forth in Form F-10 under
the Securities Act. The Company will file with the Commission pursuant to
General Instruction II.L of Form F-10, and the rules and regulations (the
"Rules and Regulations") of the Commission promulgated under the Securities
Act, a supplement to the form of prospectus included in such registration
statement relating to the placement of the Shares and the plan of distribution
thereof and has advised the Placement Agent of all further information
(financial and other) with respect to the Company required to be set forth
therein. Such registration statement, including the exhibits thereto, as
amended at the date of this Agreement, is hereinafter called the "Registration
Statement"; such prospectus in the form in which it appears in the Registration
Statement is hereinafter called the "Base Prospectus"; and the supplemented
form of prospectus, in the form in which it will be filed with the Commission
pursuant to General Instruction II.L of Form F-10 (including the Base
Prospectus as so supplemented) is hereinafter called the "Prospectus
Supplement." Any reference in this Agreement to the Registration Statement, the
Base Prospectus or the Prospectus Supplement shall be deemed to refer to and
include the documents incorporated by reference therein (the "Incorporated
Documents") pursuant to Item 4 of Form F-10 which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before
the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be; and any reference in this Agreement
to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Base Prospectus
or the Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference. All references in this Agreement to financial statements
and schedules and other information which is "contained," "included,"
"described," "referenced," "set forth" or "stated" in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. No stop order
suspending the effectiveness of the Registration Statement or the use of the
Base Prospectus or the Prospectus Supplement has been issued, and no proceeding
for any such purpose is pending or has been initiated or, to the Company's
knowledge, is threatened by the Commission.
Vasogen, Inc.
11/6/2006
Page 3
(B) The Registration Statement (and any further documents to be
filed with the Commission) contains all exhibits and schedules as required by
the Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material
respects with the Securities Act and the Exchange Act and the applicable Rules
and Regulations and did not and, as amended or supplemented, if applicable,
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Base Prospectus and the Prospectus Supplement, each
as of its respective date, comply or will comply in all material respects with
the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectusand the Prospectus Supplement, as
amended or supplemented, did not and will not contain as of the date thereof
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated
Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Canadian
securities laws, rules and regulations, and none of such documents, when they
were filed with the Ontario Securities Commission, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein (with respect to Incorporated Documents
incorporated by reference in the Base Prospectus or Prospectus Supplement), in
light of the circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the Base
Prospectus or Prospectus Supplement, when such documents are filed with the
Commission, will conform in all material respects to the requirements of the
Exchange Act and the applicable Rules and Regulations, as applicable, and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the date
thereof which represent, individually or in the aggregate, a fundamental change
in the information set forth therein is required to be filed with the
Commission. There are no documents required to be filed with the Commission in
connection with the transaction contemplated hereby that (x) have not been
filed as required pursuant to the Securities Act or (y) will not be filed
within the requisite time period. There are no contracts or other documents
required to be described in the Base Prospectus or Prospectus Supplement, or to
be filed as exhibits or schedules to the Registration Statement, which have not
been or will not be described or filed as required.
(C) The Company has delivered, or will as promptly as practicable
deliver, to the Placement Agent complete conformed copies of the Registration
Statement and of each consent and certificate of experts, as applicable, filed
as a part thereof, and conformed copies of the Registration Statement (without
exhibits), the Base Prospectus and the Prospectus Supplement, as amended or
supplemented, in such quantities and at such places as the Placement Agent
reasonably requests. Neither the Company nor any of its directors and officers
has distributed and none of them will distribute, prior to the Closing Date,
any offering material in connection with the offering and sale of the Common
Shares other than the Base Prospectus, the Prospectus Supplement, the
Registration Statement, copies of the documents incorporated by reference
therein and any other materials permitted by the Securities Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules
shall be deemed a part hereof, the Company hereby makes the representations and
warranties set forth below to the Placement Agent.
(A) ORGANIZATION AND QUALIFICATION. All of the direct and indirect
subsidiaries (individually, a "SUBSIDIARY") of the Company are set forth on
Schedule 3(A). The Company owns, directly or indirectly, all of the capital
shares or other equity interests of each Subsidiary free and clear, subject to
the terms of the Notes, of any "LIENS" (which for purposes of this Agreement
shall mean a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction), and all the issued and
outstanding shares of capital Shares of each Subsidiary are validly issued and
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11/6/2006
Page 4
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and, in
the case of the Company, in compliance with the applicable laws of Canada
regarding its incorporation, and in the case of the Subsidiaries, in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
compliance or good standing, as applicable, as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"MATERIAL ADVERSE EFFECT") and no "PROCEEDING" (which for purposes of this
Agreement shall mean any action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened) has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(B) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of each of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its shareholders in connection therewith
other than in connection with the "REQUIRED APPROVALS" (as defined in
subsection 3(D) below). Each Transaction Document has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
(C) NO CONFLICTS. Subject to compliance with the terms of the
Notes, the execution, delivery and performance of the Transaction Documents by
the Company, the issuance and sale of the Securities and the consummation by
the Company of the other transactions contemplated hereby and thereby do not
and will not (i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals (as defined below), conflict with or
result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including applicable Canadian
and US securities laws and regulations), or by which any property or asset of
Vasogen, Inc.
11/6/2006
Page 5
the Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(D) FILINGS, CONSENTS AND APPROVALS. Subject to compliance with the
terms of the Notes, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other "PERSON" (defined as an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind, including,
without limitation, any Trading Market (as defined below)) in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than such filings or consents as are required to be made or
obtained under applicable US and Canadian securities laws, including
notification to the Toronto Stock Exchange (collectively, the "REQUIRED
APPROVALS").
(E) ISSUANCE OF THE SECURITIES; REGISTRATION. The Securities will
be duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The
Company has reserved or will have reserved prior to Closing, from its duly
authorized capital the maximum number of shares of Common Shares issuable
pursuant to the Transaction Documents. The issuance by the Company of the
Securities will have been registered under the Securities Act and all of the
Securities will be freely tradable by the Purchasers without restriction,
subject to compliance with the "control block distribution" of National
Instrument 45-106--Prospectus and Registration Exemptions and trading by
Affiliates (as defined in Paragraph 3(H)) of the Company (other than any
restrictions arising solely from an act or omission of a Purchaser). The
Securities are being issued pursuant to the Registration Statement. The
Registration Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice that the
Commission has issued or intends to issue a stop-order with respect to the
Registration Statement or that the Commission otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily
or permanently, or intends or has threatened in writing to do so. The "Plan of
Distribution" section under the Registration Statement permits the issuance and
sale of the Securities hereunder. Upon receipt of the Securities, the
Purchasers will have good and marketable title to such Securities and, as of
the Closing Date, the Securities will be freely tradable on the "TRADING
MARKET" (which, for purposes of this Agreement shall mean the following markets
or exchanges on which the Common Shares are listed or quoted for trading on the
date in question: the Nasdaq Capital Market, , the Nasdaq Global Market or
theToronto Stock Exchange).
(F) CAPITALIZATION. The capitalization of the Company is as set
forth on Schedule 3(F). The Company has not issued any Common Shares since its
most recent periodic report filed with the Ontario Securities Commission, other
than pursuant to the exercise of employee stock options under the Company's
stock option plans, the issuance of Common Shares to former directors under the
Company's Directors' Share Unit Plan and pursuant to the conversion or exercise
of securities exercisable, exchangeable or convertible into Common Shares, in
particular, the Notes ("COMMON SHARE EQUIVALENTS"). Subject to the Notes, no
Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities, pursuant to the Notes and as described in Schedule
3(F), there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any Common Shares, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional
Common Shares or Common Share Equivalents. Subject to compliance with the terms
of the Notes and the warrants issued in connection with the Notes, the issuance
and sale of the Securities will not obligate the Company to issue shares of
Vasogen, Inc.
11/6/2006
Page 6
Common Shares or other securities to any Person (other than the Purchasers) and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities. All of the
outstanding Common Shares of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all applicable US and
Canadian securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Subject to obtaining Required Approvals, no further
approval or authorization of any shareholder, the Board of Directors of the
Company or others will be required for the issuance and sale of the Securities.
There are no shareholders agreements, voting agreements or other similar
agreements with respect to the Company's Common Shares to which the Company is
a party or, to the knowledge of the Company, between or among any of the
Company's shareholders.
(G) SEC REPORTS; FINANCIAL STATEMENTS. The Company has complied in
all material respects with requirements to file all reports, schedules, forms,
statements and other documents required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the "SEC REPORTS") on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis during the periods involved ("GAAP"),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR
DEVELOPMENTS. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its Sharesholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital Shares and (v) the Company has not issued any equity securities to
any officer, director or "AFFILIATE" (defined as any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a Person, as such terms are used in and construed
under Rule 144 under the Securities Act), except pursuant to existing Company
Shares option plans and Directors' Share Unit Plan. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3(H), no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their
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11/6/2006
Page 7
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made that has not been publicly disclosed 1
Trading Day prior to the date that this representation is made.
(I) LITIGATION. There is no action, suit, inquiry, notice of
violation, Proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
applicable Canadian and US securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act. None of the Company's
or its Subsidiaries' employees is a member of a union that relates to such
employee's relationship with the Company, and neither the Company nor any of
its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their
employees are good. No executive officer, to the knowledge of the Company, is,
or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(J) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.
(K) COMPLIANCE. Subject to bona fide disputes on contracts entered
into in the ordinary course of business, neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal,
state and local laws applicable to its business and all such laws that affect
the environment, except in each case as could not reasonably be expected to
have a Material Adverse Effect.
(L) REGULATORY PERMITS. The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
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11/6/2006
Page 8
(M) TITLE TO ASSETS. The Company and the Subsidiaries do not own
any real property and the Subsidiaries have good and marketable title in all
personal property owned by them that is material to the business of the Company
and the Subsidiaries, in each case free and clear of all Liens, except for
Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and Liens for the payment of federal, state
or other taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance.
(N) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other similar intellectual property rights necessary
or material for use in connection with their respective businesses as described
in the SEC Reports and which the failure to so have could have a Material
Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the
Company nor any Subsidiary has received a notice (written or otherwise) that
the Intellectual Property Rights used by the Company or any Subsidiary violates
or infringes upon the rights of any Person. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(O) INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage. To the best knowledge of the
Company, such insurance contracts and policies are accurate and complete.
Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
(P) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth
in the SEC Reports, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner, other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) for other employee benefits, including Shares option agreements under any
stock option plan of the Company.
(Q) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The Company is in material compliance with all
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 which are applicable to it as of
the date hereof and will be as of the closing date of the Placement.
(R) CERTAIN FEES. Except as otherwise provided in this Agreement,
no brokerage or finder's fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.
Vasogen, Inc.
11/6/2006
Page 9
(S) TRADING MARKET RULES. Subject to acceptance of notice of the
Placement by the Toronto Stock Exchange, the issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.
(T) INVESTMENT COMPANY. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
(U) REGISTRATION RIGHTS. Except as provided under the Registration
Rights Agreement dated October 7, 2005, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities
of the Company.
(V) LISTING AND MAINTENANCE REQUIREMENTS. The Company's Common
Shares are registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and the Company has taken no action designed to, or which to its knowledge is
likely to have the effect of, terminating the registration of the Common Shares
under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. Except as publicly
disclosed, the Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Shares are or have
been listed or quoted to the effect that the Company is not in compliance with
the listing or maintenance requirements of such Trading Market. Except as
publicly disclosed, the Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
(W) APPLICATION OF TAKEOVER PROTECTIONS. As of the Closing Date,
the Company and its Board of Directors will have taken all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its jurisdiction of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation as a
result of the Company's issuance of the Securities and the Purchasers'
ownership of the Securities.
(X) SOLVENCY. Based on the financial condition of the Company as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder, (i) the Company's fair
saleable value of its assets exceeds the amount that will be required to be
paid on or in respect of the Company's existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company's
assets do not constitute unreasonably small capital to carry on its business
for the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it
to liquidate all of its assets, after taking into account all anticipated uses
of the cash, would be sufficient to pay all amounts on or in respect of its
debt when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect of its
debt). Subject to the risks disclosed in the SEC reports, the Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. The SEC Reports
set forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, "INDEBTEDNESS"
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
Vasogen, Inc.
11/6/2006
Page 10
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $50,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary
is in default with respect to any Indebtedness.
(Y) TAX STATUS. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, the Company and each Subsidiary has filed all necessary
federal, local and foreign tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of a tax deficiency which has
been asserted or threatened against the Company or any Subsidiary.
(Z) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign political activity, (ii) made any unlawful payment to foreign
government officials or employees or to any foreign political parties or
campaigns from corporate funds, (iii) failed to disclose fully any contribution
made by the Company (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any
material respect any provision of the United States Foreign Corrupt Practices
Act of 1977, as amended.
(AA) ACCOUNTANTS. The Company's accountants are set forth on
Schedule 3(AA) of the Disclosure Schedule. To the knowledge of the Company,
such accountants, who the Company expects will express their opinion with
respect to the financial statements to be included in the Company's next Annual
Report on Form 10-K, are a registered public accounting firm as required by the
Securities Act.
(BB) REGULATION M COMPLIANCE. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities (other than for the
placement agent's placement of the Securities), or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.
(CC) APPROVALS. Subject to compliance with the requirements of the
Toronto Stock Exchange, the issuance and listing on the Nasdaq of the Shares
issuable pursuant to the Placement requires no further approvals, including but
not limited to, the approval of shareholders.
(DD) NASD AFFILIATIONS. There are no affiliations with any NASD
member firm among the Company's officers, directors or, to the knowledge of the
Company, any five percent (5%) or greater shareholder of the Company, except as
set forth in the Base Prospectus.
SECTION 4. INDEMNIFICATION. The Company and R&R agree to the
indemnification and other agreements set forth in the Indemnification
Provisions (the "INDEMNIFICATION") attached hereto as Addendum A, the
provisions of which are incorporated herein by reference and shall survive the
termination or expiration of this Agreement.
SECTION 5. ENGAGEMENT TERM. R&R's engagement hereunder will be for the
period of 60 days. The engagement may be terminated by either the Company or
R&R at any time upon 10 days' written notice. Notwithstanding anything to the
contrary contained herein, the provisions concerning confidentiality,
Vasogen, Inc.
11/6/2006
Page 11
indemnification, contribution and the Company's obligations to pay fees and
reimburse expenses contained herein and the Company's obligations contained in
the Indemnification Provisions will survive any expiration or termination of
this Agreement. R&R agrees not to use any confidential information concerning
the Company provided to them by the Company for any purposes other than those
contemplated under this Agreement.
SECTION 6. R&R INFORMATION. The Company agrees that any information or
advice rendered by R&R in connection with this engagement is for the
confidential use of the Company only in their evaluation of the Placement and,
except as otherwise required by law, the Company will not disclose or otherwise
refer to the advice or information in any manner without R&R's prior written
consent.
SECTION 7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and
shall not be construed as creating rights enforceable by any person or entity
not a party hereto, except those entitled hereto by virtue of the
Indemnification Provisions hereof. The Company acknowledges and agrees that R&R
is not and shall not be construed as a fiduciary of the Company and shall have
no duties or liabilities to the equity holders or the creditors of the Company
or any other person by virtue of this Agreement or the retention of R&R
hereunder, all of which are hereby expressly waived, except for a duty to act
in good faith.
SECTION 8. CLOSING. The obligations of the Placement Agent and the
Purchasers, and the closing of the sale of the Securities hereunder are subject
to the accuracy, when made and on the Closing Date, of the representations and
warranties on the part of the Company contained herein, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(A) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agent.
Any filings required to be made by the Company in shall have been timely filed
with the Commission.
(B) The Placement Agent shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Registration Statement,
the Base Prospectus or the Prospectus Supplement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel
for the Placement Agent, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(C) All corporate proceedings and other legal matters incident to
the authorization, form, execution, delivery and validity of each of this
Agreement, the Securities, the Registration Statement, the Base Prospectus and
the Prospectus Supplement and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement Agent, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(D) The Placement Agent shall have received from outside counsel to
the Company such counsel's written opinion, addressed to the Placement Agent
and the Purchasers dated as of the Closing Date, in form and substance
reasonably satisfactory to the Placement Agent, which opinion shall include a
"10b-5" representation from such counsel in the form attached as Addendum B.
Vasogen, Inc.
11/6/2006
Page 12
(E) (i) Neither the Company nor any of its Subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Base Prospectus, any loss or
interference with its business from fire, explosion, flood, terrorist act or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth
in or contemplated by the Base Prospectus and (ii) except for monthly repayment
of debt under the Notes and related Common Share issuances, since such date
there shall not have been any change in the share capital or long-term debt of
the Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the business, general affairs,
management, financial position, shareholders' equity, results of operations or
prospects of the Company and its Subsidiaries, otherwise than as set forth in
or contemplated by the Base Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Placement Agent, so
material and adverse as to make it impracticable or inadvisable to proceed with
the sale or delivery of the Securities on the terms and in the manner
contemplated by the Base Prospectus and the Prospectus Supplement.
(F) The Common Shares are registered under the Exchange Act and, as
of the Closing Date, the Shares issuable pursuant to the Placement shall be
listed and admitted and authorized for trading on Nasdaq, and satisfactory
evidence of such actions shall have been provided to the Placement Agent.
Except as publicly disclosed, the Company shall have taken no action designed
to, or likely to have the effect of terminating the registration of the Common
Shares under the Exchange Act or delisting or suspending from trading the
Common Shares from NASDAQ Global Market, NASDAQ Capital Market or the Toronto
Stock Exchange nor has the Company received any information suggesting that the
Commission or Nasdaq is contemplating terminating such registration or listing.
(G) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Shares Exchange, the Nasdaq Global Market or the
American Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum or maximum prices or maximum ranges for
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, (iii) the United States shall have become engaged in hostilities
in which it is not currently engaged, the subject of an act of terrorism, there
shall have been an escalation in hostilities involving the United States, or
there shall have been a declaration of a national emergency or war by the
United States, or (iv) there shall have occurred any other calamity or crisis
or any change in general economic, political or financial conditions in the
United States or elsewhere, if the effect of any such event in clause (iii) or
(iv) makes it, in the sole judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the terms
and in the manner contemplated by the Base Prospectus and the Prospectus
Supplement.
(H) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Securities or materially and adversely affect or
potentially and adversely affect the business or operations of the Company; and
no injunction, restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance or sale of the Securities or materially
and adversely affect or potentially and adversely affect the business or
operations of the Company.
(I) The Company shall have prepared and filed with the Commission a
Current Report on Form 6-K with respect to the Placement, including as an
exhibit thereto this Agreement.
Vasogen, Inc.
11/6/2006
Page 13
(J) The Company shall have entered into subscription agreements
with each of the Purchasers and such agreements shall be in full force and
effect and shall contain representations and warranties of the Company as
agreed between the Company and the Purchasers.
(K) The NASD shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition,
the Company shall, if requested by the Placement Agent, make or authorize
Placement Agent's counsel to make on the Company's behalf, an Issuer Filing
with the NASDR, Inc. Corporate Financing Department pursuant to NASD Rule 2710
with respect to the Registration Statement and pay all filing fees required in
connection therewith.
(L) Prior to the Closing Date, the Company shall have furnished to
the Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Placement Agent.
SECTION 9. GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely in such State. This Agreement may
not be assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns. Any
right to trial by jury with respect to any dispute arising under this Agreement
or any transaction or conduct in connection herewith is waived. Any dispute
arising under this Agreement may be brought into the courts of the State of New
York or into the Federal Court located in New York, New York and, by execution
and delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
aforesaid courts. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
SECTION 10. ENTIRE AGREEMENT/MISC. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. If any provision of this
Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This
Agreement may not be amended or otherwise modified or waived except by an
instrument in writing signed by both R&R and the Company. The representations,
warranties, agreements and covenants contained herein shall survive the closing
of the Placement and delivery and/or exercise of the Securities, as applicable.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or a .pdf format file, such signature shall create a valid and
Vasogen, Inc.
11/6/2006
Page 14
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
SECTION 11. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a business day, (b) the next business day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number on the signature pages attached hereto on a
day that is not a business day or later than 6:30 p.m. (New York City time) on
any business day, (c) the business day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature
pages hereto.
Vasogen, Inc.
11/6/2006
Page 15
Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to R&R the enclosed copy of this Agreement.
Very truly yours,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: CEO
ADDRESS FOR NOTICE:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Accepted and Agreed to as of
the date first written above:
VASOGEN INC.
By: /s/ ▇. ▇▇ ▇▇▇▇
----------------------
Name: ▇. ▇▇ ▇▇▇▇
Title: Vice-President, Corporate & Legal Affairs
ADDRESS FOR NOTICE:
Vasogen, Inc.
Indemnification Provisions
11/6/2006
ADDENDUM A
INDEMNIFICATION PROVISIONS
In connection with the engagement of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC ("R&R") by
Vasogen Inc. (the "COMPANY") pursuant to a letter agreement dated November 6,
2006, between the Company and R&R, as it may be amended from time to time in
writing (the "AGREEMENT"), the Company and R & R hereby agree as follows:
1. To the extent permitted by law, the Company will indemnify R&R and its
affiliates, shareholders, directors, officers, employees and controlling
persons (within the meaning of Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities Exchange Act of 1934) against
all losses, claims, damages, expenses and liabilities, as the same are
incurred (including the reasonable fees and expenses of counsel), relating
to or arising out of its activities hereunder or pursuant to the
Agreement, except to the extent that any losses, claims, damages, expenses
or liabilities (or actions in respect thereof) are found in a final
judgment (not subject to appeal) by a court of law to have resulted
primarily and directly from R&R's willful misconduct or gross negligence
in performing the services described herein.
2. Promptly after receipt by R&R of notice of any claim or the commencement
of any action or proceeding with respect to which R&R is entitled to
indemnity hereunder, R&R will notify the Company in writing of such claim
or of the commencement of such action or proceeding, and the Company will
assume the defense of such action or proceeding and will employ counsel
reasonably satisfactory to R&R and will pay the reasonable fees and
expenses of such counsel. Notwithstanding the preceding sentence, R&R will
be entitled to employ counsel separate from counsel for the Company and
from any other party in such action if counsel for R&R reasonably
determines that it would be inappropriate under the applicable rules of
professional responsibility for the same counsel to represent both the
Company and R&R. In such event, the reasonable fees and disbursements of
no more than one such separate counsel will be paid by the Company. The
Company will have the exclusive right to settle the claim or proceeding
provided that the Company will not settle any such claim, action or
proceeding without the prior written consent of R&R, which will not be
unreasonably withheld.
3. The Company agrees to notify R&R promptly of the assertion against it or
any other person of any claim or the commencement of any action or
proceeding relating to a transaction contemplated by the Agreement.
4. If for any reason the foregoing indemnity is unavailable to R&R or
insufficient to hold R&R harmless, then the Company shall contribute to
the amount paid or payable by R&R as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect not
only the relative benefits received by the Company on the one hand and R&R
on the other, but also the relative fault of the Company on the one hand
and R&R on the other that resulted in such losses, claims, damages or
liabilities, as well as any relevant equitable considerations. The amounts
paid or payable by a party in respect of losses, claims, damages and
liabilities referred to above shall be deemed to include any reasonable
legal or other fees and expenses incurred in defending any litigation,
proceeding or other action or claim. Notwithstanding the provisions
hereof, R&R's share of the liability hereunder shall not be in excess of
the amount of fees actually received, or to be received, by R&R under the
Agreement (excluding any amounts received as reimbursement of expenses
incurred by R&R).
5. These Indemnification Provisions shall remain in full force and effect
whether or not the transaction contemplated by the Agreement is completed
and shall survive the termination of the Agreement, and shall be in
addition to any liability that the Company might otherwise have to any
indemnified party under the Agreement or otherwise.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: CEO
Accepted and Agreed to as of
the date first written above:
VASOGEN, INC.
By: /s/ ▇. ▇▇ ▇▇▇▇
-------------------------
Name: ▇. ▇. ▇▇▇▇
Title: Vice-President, Corporate & Legal Affairs
ADDENDUM B
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
November __, 2006
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special United States counsel to Vasogen Inc., a corporation
incorporated under the CANADA BUSINESS CORPORATIONS ACT (the "Company"), in
connection with the Securities Purchase Agreement, dated November __, 2006,
among the purchasers identified on the signature pages thereto (each a
"Purchaser," and collectively, the "Purchasers"), for whom you are acting as
representative, and the Company, relating to the issuance and sale to the
Purchasers by the Company of the Company's common shares, no par value (the
"Common Shares"), and warrants which are exercisable to purchase Common Shares
(the "Warrants," and together with the Common Shares, the "Securities"). This
letter is being furnished at the request of the Company in connection with
Section 8(D) of the Engagement Letter, dated November __, 2006 (the "Engagement
Letter"), between you and the Company. Capitalized terms used and not otherwise
defined in this letter have the respective meanings given those terms in the
Engagement Letter.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form F-10 (File No. 333-130578) under
the Securities Act of 1933, as amended (the "Act"). The Registration Statement
was filed on December 21, 2005, and was amended on January 5, 2006. The
Registration Statement was declared effective by the Commission on January 5,
2006 (the "Effective Date"). The Base Prospectus, dated January 5, 2006, as
supplemented by the Prospectus Supplement dated November __, 2006, together
with the documents incorporated by reference therein, are referred to,
collectively, as the "U.S. Final Prospectus." The U.S. Final Prospectus has
been filed pursuant to General Instruction II.L of Form F-10 and has been made
in the manner and within the time period required by said General Instruction
II.L.
We have been advised orally by the staff of the Commission that no stop order
suspending the effectiveness of the Registration Statement has been issued, and
to our knowledge no proceedings for that purpose have been initiated or are
pending or are threatened by the Commission.
The primary purpose of our professional engagement was not to establish factual
matters or financial, accounting or statistical information. In addition, many
determinations involved in the preparation of the Registration Statement, the
U.S. Final Prospectus and the documents incorporated by reference therein are
of a wholly or partially non-legal character or relate to legal matters outside
the scope of this letter. Furthermore, the limitations inherent in the
independent verification of factual matters and in the role of outside counsel
are such that we have not undertaken to independently verify, and cannot and do
not assume responsibility for the accuracy, completeness or fairness of, the
statements contained in the Registration Statement, the U.S. Final Prospectus
or the documents incorporated by reference therein.
In the course of acting as special United States counsel to the Company in
connection with the offering of the Securities, we have participated in the
preparation of the Registration Statement and the U.S. Final Prospectus and in
conferences and telephone conversations with officers and other representatives
of the Company and the independent registered public accountants for the
Company during which conferences and conversations the contents of the
Registration Statement, the U.S. Final Prospectus and related matters were
discussed. Based upon such participation (and relying as to materiality with
respect to factual matters to the extent we deemed reasonable on officers,
employees and other representatives of the Company and its subsidiaries), we
hereby advise you that our work in connection with this matter did not disclose
any information that gave us reason to believe that (A) at its Effective Date,
the Registration Statement (other than the financial statements, financial
statement schedules and other financial data included or incorporated by
reference therein or omitted therefrom or from those documents incorporated by
reference, as to which we express no such belief) contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein not misleading, or (B) at the time the U.S. Final Prospectus
was issued or at the Closing Date, the U.S. Final Prospectus (other than the
financial statements, financial statement schedules and other financial data
included or incorporated by reference therein or omitted therefrom or from
those documents incorporated by reference, as to which we express no such
belief) contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. We do not know of any
contract or other document which is required to be filed as an exhibit to the
Registration Statement.
This letter is furnished by us solely for your benefit in connection with the
transactions referred to in the Engagement Letter and may not be used,
circulated to, or relied upon by any other person without our prior written
consent.
Very truly yours,
▇▇▇▇, ▇▇▇▇▇, RIFKIND, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Vasogen Inc.
Schedule 3 (F)
in millions
Common shares O/S 107.9
Options O/S 8.2
Warrants O/S 5.1 ^
Face vale of Debt O/S USD 8.2
^ 0.6 million of warrants O/S to quest expire on November 6, 2006 and have
been removed
Engagement Letter
Schedule 3 (I)
A. Letters from NASD dated October 6, 2005, November 17, 2005 and April 17,
2006 relating to the August 30, 2006 announcement of the SIMPADICO results
and the responses of Vasogen dated October 27, 2005, December 5, 2006 and
December 8, 2006.
B. Letter from Ontario Securities Commission dated July 11, 2006 in respect
of the disclosure of the ACCLAIM results and response of the Company dated
July 26, 2006.
