exv10w46



 





Exhibit 10.46









	 	 	 
	 

	 	Oppenheimer & Co. Inc.
	 

	 	125 Broad Street
	 

	 	16th Floor
	 

	 	New York, NY 10014
	 
	 	 
	 

	 	Member of All Principal Exchanges






August 3, 2006




Confidential




Ms. Gail S. Page

Chief Executive Officer

Ciphergen Biosystems, Inc.

6611 Dumbarton Circle

Fremont, CA 94555




Dear Gail:




          This letter is our agreement (the “Agreement”) whereby Ciphergen Biosystems, Inc. (the
“Company”), has requested Oppenheimer & Co. Inc. (“Oppenheimer”) to assist the Company on an
exclusive basis as a financial advisor for the Recapitalization (as defined below) until December
31, 2006 (the “Outside Date”), provided that in the event that the execution of definitive
agreements between the Company and the debt holders providing for the Recapitalization, as defined
below (the “Signing”) occurs prior to the Outside Date and the Closing (as defined below) occurs
prior to March 31, 2007, the Company shall pay Oppenheimer the Closing Fee (as defined below).
Oppenheimer will advise the Company on potential recapitalization alternatives and assist the
Company in negotiations with the holders of approximately $30,000,000 of Convertible Promissory
Notes (the “Notes”) to significantly extend the due date of all Notes, provide for the conversion
of all Notes into equity or otherwise restructure the Notes on such terms as are acceptable to the
Company (the “Recapitalization”). Oppenheimer has agreed to render such services on the terms and
conditions set forth herein.





	1.	 	Oppenheimer’s financial advisory services for the Recapitalization shall include: analyzing
the current financial condition of the Company, discussing recapitalization alternatives,
recommending the appropriate plan for the Company, negotiating with the debt holders and other
matters relating to the Agreement as may be reasonably requested by the Company. In addition,
Oppenheimer will assist, to the degree necessary, the Company in completing the planned
divestiture of its tools business (the “Divestiture”).
	 
	2.	 	In consideration for the services rendered by Oppenheimer to the Company pursuant to this
Agreement, the Company shall agree to compensate Oppenheimer as follows:






	 	•	 	A cash fee of $400,000. Of this cash compensation, $50,000 will be non-refundable and
due on the date of signing of this Agreement and $350,000 (the “Closing Fee”) will be
payable at the closing of the Recapitalization (the “Closing”).
	 
	 	•	 	In addition to the cash fees, Oppenheimer shall receive warrants exercisable for an
aggregate 200,000 shares of the Company’s common stock, which shall have a five (5) year
term and be exercisable at a twenty percent (20%) premium to the average closing price of
the Company’s common stock on the Nasdaq National Market or Nasdaq Capital Market for the
ten (10) day period immediately prior to the date set forth above (the “Warrants”). The
Warrants shall not be callable by the Company (but shall be subject to earlier termination
in the event of an acquisition




 









 






	 	 	 	of the Company in which the Company’s stockholders receive cash consideration for their shares of Company stock) and shall provide for cashless net exercise. A warrant exercisable
for 100,000 shares shall be issued to Oppenheimer as of the date set forth above and a
warrant exercisable for the remaining 100,000 shares shall be issued to Oppenheimer promptly
following the Closing.






	3.	 	In addition to the fees payable hereunder, the Company shall promptly reimburse Oppenheimer
for its reasonable travel and out-of-pocket expenses, excluding legal fees and disbursements,
up to a maximum of $25,000.
	 
	4.	 	In the event the Company is required to seek shareholder approval and requires a fairness
opinion for the Divestiture, Oppenheimer and the Company shall enter into a separate agreement
at that time, which shall provide for a fee of $250,000 (the “Fairness Opinion Fee”).
However, upon the Closing, $125,000 of the Fairness Opinion Fee shall be applied as a credit
against the Closing Fee, reducing the Closing Fee by $125,000.
	 
	5.	 	In the event that a satisfactory Recapitalization cannot be achieved, Oppenheimer will act as
the Company’s exclusive placement agent to raise approximately $12.5 million of equity and/or
equity linked securities (the “Securities”), on a “best efforts” basis (the “Offering”).
Oppenheimer intends to market the Offering on the terms as set forth in the Term Sheet
attached hereto as Exhibit B. However, the ultimate terms will depend upon various factors
including, but not limited to, the overall market conditions at that time, the interest of
potential investors and the Company’s capitalization. The Securities shall be offered without
registration under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “Act”) pursuant to the exemption from registration created by
Regulation D thereof. Oppenheimer will be paid at closing of the Offering a cash commission
of 6.5% of the aggregate amount of the proceeds received at closing for the Securities sold.
However, any amount previously paid by the Company to Oppenheimer for the Recapitalization
under paragraph 2 hereunder shall be credited to the placement agent fee in this paragraph 5.
In addition, Oppenheimer shall receive non-callable warrants (but shall be subject to earlier
termination in the event of an acquisition of the Company in which the Company’s stockholders
receive cash consideration for their shares of Company stock) with a five (5) year term to
purchase that number of shares of the Company’s Common Stock equal to 5.0% of the number of shares of common stock sold in the Offering, exercisable at 120% of the Market Price at
closing of the Offering (the “Placement Warrants”). The Placement Warrants shall provide for
cashless net exercise. Whether or not the Offering is successfully completed, it shall be the
Company’s obligation to bear all of its expenses in connection with the proposed Offering. In
addition, the Company shall reimburse Oppenheimer for its reasonable actual out of pocket
expenses, including reasonable legal fees and disbursements, up to a maximum of $50,000.
	 
	6.	 	If there is no Closing or completed Offering as set forth herein and the Company enters into
discussions to merge or sell the Company (other then the Divestiture) on or prior to the
Outside Date with any third party, then the Company shall explore in good faith retaining
Oppenheimer as its mergers and acquisition advisor for such transaction (pursuant to a
separate agreement) on terms and conditions mutually acceptable to the Company and
Oppenheimer. Notwithstanding the foregoing, the Company is under no obligation to retain
Oppenheimer as its mergers and acquisitions advisor and may elect not to do so in its sole
discretion.
	 
	7.	 	Oppenheimer will not conduct any independent verification of information or material
furnished by the Company. Oppenheimer is entitled to rely on the accuracy and completeness of
such information and material, and Oppenheimer’s recommendations may be qualified to reflect
the foregoing. In addition, Oppenheimer will be relying on the audited and unaudited
historical financial statements and projections as provided by the Company.




 









 












	8.	 	The Company acknowledges that all recommendations and advice (written or oral) given by
Oppenheimer to the Company in connection with Oppenheimer’s engagement are intended solely for
the benefit and use of the Company and its professional advisors in considering the
Recapitalization and the Company agrees that, except as required by law and except with regard
to the fairness opinion, no such recommendation or advice shall be used for any other purpose
or reproduced, disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor may the Company except with regard to the fairness opinion make any public
references to Oppenheimer, or use Oppenheimer’s name in any annual reports or any other
reports or releases of the Company without Oppenheimer’s prior consent.
	 
	9.	 	Since Oppenheimer will be acting on behalf of the Company in connection with its engagement
hereunder, the Company and Oppenheimer have entered into a separate indemnification agreement
attached hereto as Exhibit A and dated the date hereof, providing for the indemnification of
Oppenheimer by the Company. Oppenheimer has entered into this Agreement in reliance on the
indemnities set forth in such indemnification agreement. The indemnification shall survive
the termination or expiration of this Agreement.
	 
	10.	 	This Agreement shall be governed by the laws of the State of New York and may not be amended
or modified except in writing signed by both parties.
	 
	11.	 	This Agreement and all rights, liabilities and obligations hereunder shall be binding upon
and inure to the benefit of each party’s successors; provided that Oppenheimer may not assign
this Agreement without the prior written consent of the Company.
	 
	12.	 	The Company represents and agrees that it is authorized to enter into this Agreement and this
Agreement constitutes a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms.
	 
	13.	 	This Agreement contains the entire agreement between the Company and Oppenheimer with respect
to the subject matter contained herein and supersedes any and all prior agreements between the
Company and Oppenheimer, whether written or oral.




 









 











          If the foregoing correctly sets forth the understanding between Oppenheimer and the Company,
please indicate your acceptance of this agreement by signing below, at which time this letter shall
become a binding contract.




	 	 	 	 	 
	 	Sincerely,




Oppenheimer & Co. Inc.

 	 
	 	/s/ Kee Colen
 	 
	 	Kee Colen 	 
	 	Managing Director 	 
	 



Accepted and Agreed:




	 	 	 	 	 
	Ciphergen Biosystems, Inc.

 	 	 
	BY:  	/s/ James P. Merryweather for
 	 	 
	 	Ms. Gail S. Page 	 	 
	 	Chief Executive Officer



James P. Merryweather

EVP Sales & Marketing 	 	 



 









 






	 	 	 	 	 



EXHIBIT A




August 3, 2006




Oppenheimer & Co. Inc.

125 Broad Street

New York, New York 10004





			
	Attention:	 	Kee Colen
 Managing Director





Dear Mr. Colen:




          In connection with our engagement of Oppenheimer & Co. Inc. (“Oppenheimer”) as our financial
advisor, we hereby agree to indemnify and hold harmless Oppenheimer and its affiliates, and the
respective controlling persons, directors, officers, shareholders, agents and employees of any of
the foregoing (collectively the “Indemnified Persons”), from and against any and all claims,
actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses
incurred by any of them (including the reasonable fees and expenses of counsel), (collectively a
“Claim”), which are (A) related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by the Company, or (ii)
any actions taken or omitted to be taken by any Indemnified Person in connection with our
engagement of Oppenheimer, or (B) otherwise relate to or arise out of Oppenheimer’s activities on
our behalf under Oppenheimer’s engagement, and we shall reimburse any Indemnified Person for all
expenses (including the reasonable fees and expenses of counsel) incurred by such Indemnified
Person in connection with investigating, preparing or defending any such claim, action, suit or
proceeding, whether or not in connection with pending or threatened litigation in which any
Indemnified Person is a party. We will not, however, be responsible for any Claim, which is
finally judicially determined to have resulted from the gross negligence or willful misconduct of
any person seeking indemnification hereunder. We further agree that no Indemnified Person shall
have any liability to us for or in connection with our engagement of Oppenheimer except for any
Claim incurred by us as a result of any Indemnified Person’s gross negligence or willful
misconduct.




          We further agree that we will not, without the prior written consent of Oppenheimer, settle,
compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of
which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual
or potential party to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any and all liability
arising out of such Claim.




          Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or
institution of any Claim with respect to which indemnification is being sought hereunder, such
Indemnified Person shall notify us in writing of such complaint or of such assertion or institution
but failure to so notify us shall not relieve us from any obligation we may have hereunder, unless
and only to the extent such failure results in the forfeiture by us of substantial rights and
defenses. If we so elect or are requested by such Indemnified Person, we will assume the defense
of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified
Person and the payment of the fees and expenses of such counsel. In the event, however, that legal
counsel to such Indemnified Person reasonably determines and provides written correspondence to us,
that having common counsel would present such counsel with a conflict of interest or if the
defendant in, or target of, any such Claim, includes an Indemnified Person and us, and legal
counsel to such Indemnified Person reasonably concludes that there may be legal defenses available
to it or other Indemnified Persons different from or in addition to those available to us, then
such Indemnified Person may employ its own separate counsel to



 









 






represent or defend it in any such Claim and we shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if we fail timely or diligently to
defend, contest, or otherwise protect against any Claim, the relevant Indemnified Party shall have
the right, but not the obligation, to defend, contest, compromise, settle, assert crossclaims, or
counterclaims or otherwise protect against the same, and shall be fully indemnified by us therefor,
including without limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In any Claim in which we
assume the defense, the Indemnified Person shall have the right to participate in such Claim and to
retain its own counsel therefor at its own expense.




          We agree that if any indemnity sought by an Indemnified Person hereunder is unavailable for
any reason then (whether or not Oppenheimer is the Indemnified Person), we and Oppenheimer shall
contribute to the Claim for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to us, on the one hand, and Oppenheimer on the other,
in connection with Oppenheimer’s engagement referred to above, subject to the limitation that in no
event shall the amount of Oppenheimer’s contribution to such Claim exceed the amount of fees
actually received by Oppenheimer from us pursuant to Oppenheimer’s engagement. We hereby agree
that the relative benefits to us, on the one hand, and Oppenheimer on the other, with respect to
Oppenheimer’s engagement shall be deemed to be in the same proportion as (a) the total value paid
or proposed to be paid or received by us or our stockholders as the case may be, pursuant to the
transaction (whether or not consummated) for which you are engaged to render services bears to (b)
the fee paid or proposed to be paid to Oppenheimer in connection with such engagement.




          Our indemnity, reimbursement and contribution obligations under this Agreement shall be in
addition to, and shall in no way limit or otherwise adversely affect any rights that any
Indemnified Party may have at law or at equity.




          The validity and interpretation of this agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to agreements made and to
be fully performed therein (excluding the conflicts of laws rules). Each of Oppenheimer and the
Company hereby irrevocably submits to the jurisdiction of any court of the State of New York,
County of New York or the United States District Court for the Southern District of New York for
the purpose of any suit, action or other proceeding arising out of this agreement or the
transactions contemplated hereby, which is brought by or against Oppenheimer or the Company and in
connection therewith, each of Oppenheimer and the Company (i) hereby irrevocably agrees that all
claims in respect of any such suit, action or proceeding may be heard and determined in any such
court, (ii) to the extent that it has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein, it hereby waives, to the fullest
extent permitted by law, such immunity and (iii) agrees not to commence any action, suit or
proceeding relating to this agreement other than in any such court. Each of Oppenheimer and the
Company hereby waives and agrees not to assert in any such action, suit or proceeding, to the
fullest extent permitted by applicable law, any claim that (a) it is not personally subject to the
jurisdiction of any such court, (b) it is immune from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to its property of (c) any suit, action or proceeding is brought in an inconvenient forum.




 









 








          The provisions of this Agreement shall remain in full force and effect following the
completion or termination of Oppenheimer’s engagement.




	 	 	 	 	 
	 	Very truly yours,



Ciphergen Biosystems, Inc.

 	 
	 	By:  	 	 
	 	 	Gail S. Page 	 
	 	 	Chief Executive Officer 	 
	 



Confirmed and agreed to:




	 	 	 	 	 
	Oppenheimer & Co. Inc.

 	 	 
	By:  	
 	 	 
	 	Kee Colen 	 	 
	 	Managing Director 	 	 
	Date: