Exhibit 10.2
November 29, 2006
S. Lewis Meyer
President & CEO
Lipid Sciences, Inc.
7068 Koll Center Parkway
Suite 401
Pleasanton, CA
94566
Dear Dr. Meyer:
1.
This letter agreement (the
“Agreement”) confirms our understanding that Lipid
Sciences, Inc. (“Company”) has engaged Oppenheimer
& Co. Inc. (“Oppenheimer”) to act as placement
agent to the Company for a period of 30 days, commencing as of the
date of your acceptance of this letter, for the sale by the Company
of a minimum of $4,000,000 and a maximum of $6,000,000 of shares of
common stock (the “Securities” or the
“Shares”) of the Company, and warrants
(“Warrants”), if any, to purchase shares of common
stock of the Company (the “Proposed
Financing”).
The Proposed Financing will be made
pursuant to the exemptions afforded by Section 4(2) of the
Securities Act of 1933, as amended (the “Act”) and
Regulation D promulgated thereunder and applicable state securities
laws. Our undertaking herein shall be subject to, among other
things, the terms and conditions set forth in this Agreement, our
due diligence investigation of the Company, the continuance of the
Company without material adverse change, the absence of unfavorable
market conditions in general, approval of our commitment committee
and our continued satisfaction with the results of our ongoing
review of the Company’s business and affairs. It is
understood that execution of this Agreement does not assure the
successful completion of the Proposed Financing.
2.
Our services to the Company will
include: (i) assistance in the preparation of the Company’s
Offering Materials described below, if any; (ii) assistance in
structuring the Proposed Financing and its terms; (iii) identifying
and contacting up to and not to exceed eight selected qualified
purchasers (the “Purchasers”) of the Proposed Financing
and furnishing them, on behalf of the Company, with copies of the
Offering Materials; and (iv) negotiating under your guidance the
financial aspects of the Proposed Financing.
3.
As compensation for the services to
be provided by Oppenheimer hereunder, the Company agrees to pay to
Oppenheimer a cash fee equal to 7.0% of the gross proceeds of the
Proposed Financing payable to Oppenheimer at the closing of the
Proposed Financing (the “Closing”) and warrants to
purchase 4% of the shares of the Offering with an exercise price of
120% of the 10-day volume weighted average per share closing price
immediately prior to the closing of the Proposed Financing (which
can in no event be less than $1.35 per share) and other terms
similar to warrants investors receive or have received in past
financings. If the Proposed Financing is consummated by means of
more than one Closing, Oppenheimer shall be entitled to the fees
provided herein with respect to each such Closing.
In addition and regardless of
whether the Proposed Financing is consummated, upon request by
Oppenheimer from time to time, the Company shall reimburse
Oppenheimer for all out-of-pocket expenses incurred by Oppenheimer
in connection with its engagement hereunder, including reasonable
fees and expenses of its counsel, which will be limited to $ 25,000
without prior written consent by the Company.
4.
The Company acknowledges and agrees
that Oppenheimer has been retained solely to provide the advice or
services set forth in this Agreement. Oppenheimer shall act as an
independent contractor, and any duties of Oppenheimer arising out
of its engagement hereunder shall be owed solely to the Company. As
Oppenheimer will be acting on your behalf in such capacity, it is
our firm practice to be indemnified in connection with engagements
of this type and the Company agrees to the indemnification
agreement attached hereto as Exhibit A and the other obligations as
set forth in paragraph 13 of this Agreement.
5.
The sale of the Securities pursuant
to the Proposed Financing shall be made pursuant to the terms of a
purchase agreement or subscription agreement (each a
“Purchase Agreement”) in form satisfactory to
Oppenheimer. The Company represents and warrants that (i) the
representations and warranties contained in each Purchase Agreement
will be true and correct in all respects on the date such Purchase
Agreement is entered into and as of the closing date of the sale of
the Securities to which such Purchase Agreement relates, and (ii)
Oppenheimer shall be entitled to rely on such representations and
warranties as if they were made directly to Oppenheimer.
Oppenheimer shall also be entitled to rely upon any opinions of
counsel delivered to any purchaser of the Securities, including,
without limitation, any opinions relating to the Registration
Statement. Oppenheimer and the Company shall establish an
escrow account (the “Escrow Account”) with a suitable
financial institution agreeable to the Company and Oppenheimer (the
“Escrow Agent”), and shall enter into an Escrow
Agreement (the “Escrow Agreement”) with the Escrow
Agent. Upon the closing of the Proposed Financing (or each
such closing if there shall be more than one), the Escrow Agent
shall deliver to the Company, by wire transfer of immediately
available funds, the funds deposited in the Escrow Account in
payment for the Securities, less (x) the amounts payable to the
Escrow Agent pursuant to the terms of the Escrow Agreement, and (y)
the amounts payable to Oppenheimer pursuant to Section 3
hereof. The receipt by Oppenheimer of the amounts to which it
is entitled pursuant to Section 3 shall be a condition to any
closing of the Proposed Financing. The Company will also cause to
be furnished to Oppenheimer at the Closing, copies of such other
agreements, opinions, certificates and other documents delivered at
the Closing as Oppenheimer may reasonably request including,
without limitation, subject to customary assumptions and
qualifications, an opinion of Company counsel to the effect that
the placement of the Securities was exempt from registration under
the Act.
6.
The Company has not taken, and the
Company and Oppenheimer will not take, any action, directly or
indirectly, so as to cause the Proposed Financing to fail to be
entitled to exemption under Section 4(2) of the Act or any other
applicable securities laws.
7.
Any advice, written or oral,
provided by Oppenheimer pursuant to this Agreement will be treated
by the Company as confidential, will be solely for the information
and assistance of the Company in connection with the Proposed
Financing and may not be quoted, nor will any such advice or
(except as may be required by applicable laws and regulations) the
name of Oppenheimer be referred to, in any report, document,
release or other communication, whether written
(including,
2
without limitation, the Offering
Materials) or oral, prepared, issued or transmitted by the Company
or any affiliate, director, officer, employee, agent or
representative of any thereof, without, in each instance,
Oppenheimer ‘s prior written consent.
8.
Intentionally omitted.
9.
This Agreement may be terminated by
either the Company or Oppenheimer at any time upon receipt of
written notice to that effect by the other party. Upon the
expiration or termination of this Agreement, Oppenheimer will be
entitled to prompt reimbursement of all its out-of-pocket expenses
and fees as described above. In addition, if at any time
prior to 12 months after the termination or expiration of this
Agreement, the Company consummates a private financing transaction,
including the Proposed Financing, with any party contacted
regarding the Proposed Financing during the term of our engagement,
Oppenheimer will be entitled to payment in full of the compensation
described in the third paragraph of this Agreement. Promptly
following any termination or expiration of this Agreement,
Oppenheimer will provide the Company with written notice of the
parties contacted by Oppenheimer regarding the Proposed Financing
during the term of our engagement. The indemnity and other
provisions contained in paragraph 11 and Exhibit A will also remain
operative and in full force and effect regardless of any expiration
or termination of this Agreement.
10.
This Agreement shall not give rise
to any express or implied commitment by Oppenheimer to purchase or
place any securities of the Company.
11.
The Company acknowledges that
Oppenheimer is acting as placement agent and advisor for the
Company in the transactions contemplated by this engagement. In
addition to the terms of this Agreement and the provisions set
forth in Exhibit A, the
