Exhibit 10.1
ladenburg.jpg [ladenburg.jpg]

Strictly Confidential

October 10, 2018

Duane Nash, M.D., J.D., M.B.A.
President
Vital Therapies, Inc.
15010 Avenue of Science
Suite 200
San Diego, CA 92128
INVESTMENT BANKING AGREEMENT
Dear Duane:

We are pleased to confirm our mutual understanding regarding the retention of
Ladenburg Thalmann & Co. Inc. (“Ladenburg”) by Vital Therapies, Inc., its
subsidiaries, affiliates, beneficiaries, successors and assigns (collectively,
the “Company”), subject to the terms and conditions of this agreement (the
“Agreement”).
1.
Purpose of Engagement. Ladenburg will assist the Company as its exclusive
financial advisor in connection with a possible business combination of the
Company with an unaffiliated third party (a “Transaction”). A Transaction may be
effected by means of any merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to which
the Company is acquired by, acquires, or is combined with, another party. For
the avoidance of doubt, a Transaction may include several separate transactional
elements (merger, asset sale or spin-off, and/or issuance of securities), but
all of such elements shall result in the payment of only one Transaction Fee (as
defined below) pursuant to this Agreement. In addition, a financing transaction
for the purpose of raising cash, without any other element of a Transaction,
shall not result in payment of a Transaction Fee under this Agreement.

2.
Term. The term of this Agreement shall be for a period commencing on the date
hereof and expiring on the earlier of (i) the closing of the Transaction, (ii)
nine (9) months from the date hereof, and (iii) the delivery of written notice
of termination from one party to the other (the “Term”). Notwithstanding any
termination or expiration of this Agreement, the provisions of Paragraphs 4, 5
and 6 and Exhibit A, which is attached hereto and incorporated herein, shall
survive such termination or expiration.

3.
Services. Ladenburg will act as the Company’s financial advisor with respect to:

a)
Assisting the Company in its preparation of a Confidential Selling Memorandum
(the “Memorandum”) for distribution to potential Acquirers (as defined herein);

b)
Identifying and introducing the Company to prospective financial investors,
strategic corporate investors, acquirers of equity or assets, merger partners
and/or other potential acquirers (collectively, “Acquirers”) and marketing the
Transaction to such potential Acquirers;

LADENBURG THALMANN & CO. INC.
277 Park Avenue, 26th floor
New York, NY 10172
Phone 212.409.2000 • Fax 212.409.2169

MEMBER NYSE, NYSE American, FINRA, SIPC

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c)
Evaluating Transaction proposals and providing the Company’s management with
guidance on valuation and Transaction structure and terms;

d)
Assisting the Company’s management in negotiating the terms of a Transaction (as
appropriate);

e)
Coordinating due diligence, documentation and Transaction closing; and

f)
Rendering an opinion (whether or not favorable) to the Company’s board of
directors, as to whether, on the date of such opinion, the consideration to be
paid in the Transaction is fair, from a financial point of view, to the
shareholders of the Company (the “Opinion”).

Ladenburg shall not be required to undertake duties not reasonably within the
scope of the financial advisory or investment banking services contemplated by
this Agreement.
4.
Nature of Engagement. In order to facilitate Ladenburg’s efforts to effect a
Transaction, during the Term, the Company shall not authorize any other party to
act on the Company’s behalf with respect to any Transaction.

5.
Fees. In consideration for the services described above, Ladenburg shall be
entitled to receive, and the Company agrees to pay Ladenburg, the following
compensation:

a)
Initial Fee. An upfront retainer fee of $75,000 payable by check or wire
transfer on the date hereof. The initial fee is creditable against the
Transaction Fee.

b)
Transaction Fee. If the Company consummates a Transaction, the Company shall pay
to Ladenburg a transaction fee (the “Transaction Fee”), payable by wire transfer
at the closing of the Transaction, equal to $1,000,000.

c)
Fairness Opinion. The fee for rendering the Opinion shall be $250,000 (the
“Opinion Fee”), which shall be paid when Ladenburg renders the Opinion.

d)
Fee Obligation. Ladenburg shall be entitled to the fees set forth in this
Paragraph 5 with respect to any Transaction consummated during the Term, or
within one year after the date of termination or expiration of this Agreement.

e)
Other. In the event that any portion of the Transaction(s) includes instruments
or arrangements not contemplated by this Agreement, then the Company agrees to
negotiate with Ladenburg in good faith the amount of Transaction Fees that will
be due Ladenburg under such circumstances. No fee payable to any other financial
advisor by the Company or any other company in connection with the subject
matter of this engagement shall reduce or otherwise affect any fee payable
hereunder to Ladenburg. All fees due to Ladenburg hereunder shall have no
offsets, are non-refundable and non-cancelable.

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6.
Reimbursement of Expenses. In addition to the fees described in Paragraph 5
above, the Company agrees to reimburse Ladenburg promptly, upon request from
time to time, for all reasonable, documented, out-of-pocket expenses incurred by
Ladenburg (including travel, databases, fees and disbursements of counsel, and
of other consultants and advisors retained by Ladenburg, etc.), provided that
Ladenburg shall not be entitled to reimbursement of expenses in excess of
$50,000 in the aggregate without the prior written consent of the Company, which
shall not be unreasonably withheld, conditioned or delayed.

We look forward to formalizing our business relationship. If the foregoing and
the attached Exhibit A correctly set forth our agreement, please execute the
enclosed copy of this letter in the space provided and return it to us.

Very truly yours,

LADENBURG THALMANN & CO. INC.

By: /s/ David Strupp
Name: David Strupp
Title: Managing Director

Confirmed and agreed to this 11th day of October, 2018

VITAL THERAPIES, INC.

By: /s/ Duane Nash
Name: Duane Nash, M.D., J.D., M.B.A.
Title: President

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EXHIBIT A

(A)
Representations of the Company. The Company hereby represents and warrants that
any and all information supplied hereunder to Ladenburg in connection with any
and all services to be performed hereunder by Ladenburg for and on behalf of the
Company shall be, to the best of the Company’s knowledge, true, complete and
correct in all material respects as of the date of such dissemination and shall
not, in the aggregate, fail to state a material fact necessary to make any of
such information not misleading. The Company hereby acknowledges that the
ability of Ladenburg to adequately provide services as described herein is
dependent upon the prompt dissemination of accurate, correct and complete
information to Ladenburg. The Company further represents and warrants hereunder
that this Agreement has been duly and validly authorized by all requisite
corporate action; that the Company has the full right, power and capacity to
execute, deliver and perform its obligations hereunder; and that this Agreement,
upon execution and delivery of the same by the Company, will represent the valid
and binding obligation of the Company enforceable in accordance with its terms.
The representations and warranties set forth herein shall survive the
termination or expiration of this Agreement.

(B)
Indemnification. The Company hereby agrees to indemnify and hold Ladenburg, its
officers, directors, principals, employees, shareholders, affiliates, and
members, and their successors and assigns, harmless from and against any and all
loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs
and legal expenses or expense whatsoever (including, but not limited to,
reasonable legal fees and other expenses and reasonable disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever, or in appearing or preparing for appearance
as witness in any proceeding, including any pretrial proceeding such as a
deposition) (collectively, "Losses") arising out of, based upon, or in any way
related or attributed to (i) any breach of a representation, warranty or
covenant by the Company contained in this Agreement or (ii) any activities or
services performed hereunder by Ladenburg, except to the extent that it is
finally judicially determined in a court of competent jurisdiction that such
Losses were the primary and direct result of the intentional misconduct or gross
negligence of Ladenburg in performing the services hereunder.

If Ladenburg receives written notice of the commencement of any legal action,
suit or proceeding with respect to which the Company is or may be obligated to
provide indemnification pursuant to this Section (B), Ladenburg shall, within
twenty (20) days of the receipt of such written notice, give the Company written
notice thereof (a "Claim Notice"). Failure to give such Claim Notice within such
twenty (20) day period shall not constitute a waiver by Ladenburg of its right
to indemnity hereunder with respect to such action, suit or proceeding;
provided, however, that the indemnification may be limited to the extent the
Company has been materially prejudiced by any such failure or delay of timely
notification. Upon receipt by the Company of a Claim Notice from Ladenburg with
respect to any claim for indemnification which is based upon a claim made by a
third party ("Third Party Claim"), the Company may assume the defense of the
Third Party Claim with counsel of its own choosing, as described below.
Ladenburg shall cooperate in the defense of the Third Party Claim and shall
furnish such records, information and testimony and attend all such conferences,
discovery proceedings, hearings, trial and appeals as may be reasonably required
in connection therewith. Ladenburg shall have the right to employ one counsel of
its own, which shall be at the Company's expense if (i) the Company and
Ladenburg shall have mutually agreed in writing to the retention of such
counsel, (ii) the Company shall have failed in a timely manner to assume the
defense and employ counsel or experts reasonably satisfactory to Ladenburg in
such litigation or proceeding or (iii) the named parties to any such litigation
or proceeding (including any impleaded parties) include the Company and
Ladenburg and representation of the Company and Ladenburg by the same counsel or
experts would, in the reasonable opinion of Ladenburg, be inappropriate due to
actual or potential differing interests between the Company and Ladenburg. The
Company shall not

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satisfy or settle any Third Party Claim for which indemnification has been
sought and is available hereunder, without the prior written consent of
Ladenburg, which consent shall not be delayed and which shall not be required if
Ladenburg is granted a release in connection therewith. The indemnification
provisions hereunder shall survive the termination or expiration of this
Agreement.
The Company further agrees, upon demand by Ladenburg, to promptly reimburse
Ladenburg for, or pay, any Loss as to which Ladenburg has been indemnified
herein with such reimbursement to be made currently as any Loss is incurred by
Ladenburg. Notwithstanding the provisions of the aforementioned indemnification,
any such reimbursement or payment by the Company of fees, expenses, or
disbursements incurred by Ladenburg shall be repaid by Ladenburg to the extent
that a final judgment is finally judicially determined (after all appeals or the
expiration of time to appeal) in a court of competent jurisdiction against
Ladenburg based solely upon its gross negligence or intentional misconduct in
the performance of its duties hereunder, and provided further, that the Company
shall not be required to make reimbursement or payment for any settlement
effected without the Company’s prior written consent (which consent shall not be
unreasonably withheld or delayed).
If for any reason the foregoing indemnification is unavailable or is
insufficient to hold Ladenburg harmless, the Company agrees to contribute the
amount paid or payable by Ladenburg in such proportion as to reflect not only
the relative benefits received by the Company, as the case may be, on the one
hand, and Ladenburg, on the other hand, but also the relative fault of the
Company and Ladenburg as well as any relevant equitable considerations. In no
event shall Ladenburg contribute in excess of the fees actually received by it
pursuant to the terms of this Agreement.
For purposes of this Agreement, each officer, director, shareholder, member, and
employee or affiliate of Ladenburg and each person, if any, who controls
Ladenburg (or any affiliate) within the meaning of either Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act
of 1934, as amended, shall have the same rights as Ladenburg with respect to
matters of indemnification by the Company hereunder.
(C)
Confidentiality. Ladenburg agrees that all non-public information pertaining to
the prior, current or contemplated business of the Company is valuable and
confidential assets of the Company. Such information shall include, without
limitation, information relating to customer lists, bidding procedures,
intellectual property, patents, trademarks, trade secrets, financing techniques
and sources and such financial statements of the Company as are not available to
the public. Ladenburg, its officers, directors, employees, agents and members
shall hold all such information in trust and confidence for the Company and
shall not use or disclose any such information for other than the Company’s
business. Such confidentiality does not apply (i) where such information is
publicly available or later becomes publicly available other than through a
breach of this Agreement, (ii) where such information is subsequently lawfully
obtained by Ladenburg from a third party or parties, (iii) if such information
is known to Ladenburg prior to the execution of this Agreement or (iv) as may be
required by law, rule or regulation.

(D)
Independent Contractor. It is expressly understood and agreed that Ladenburg
shall, at all times, act as an independent contractor with respect to the
Company and not as an employee or agent of the Company, and nothing contained in
this Agreement shall be construed to create a joint venture, partnership,
association or other affiliation, or like relationship, between the parties. It
is specifically agreed that the relationship is and shall remain that of
independent parties to a contractual relationship and that Ladenburg shall have
no right to bind the Company in any manner. In no event shall either party be
liable for the debts or obligations of the other except as otherwise
specifically provided in this Agreement.

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(E)
Amendment. No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is evidenced by a written instrument,
executed by the party against which such modification, waiver, amendment,
discharge, or change is sought.

(F)
Notices. All notices, demands or other communications given hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person
or transmitted by facsimile transmission or on the third calendar day after
being mailed by United States registered or certified mail, return receipt
requested, postage prepaid, to the addresses herein above first mentioned or to
such other address as any party hereto shall designate to the other for such
purpose.

(G)
Entire Agreement. This Agreement contains all of the understandings and
agreements of the parties with respect to the subject matter discussed herein.
All prior agreements, whether written or oral, are merged herein and shall be of
no force or effect.

(H)
Severability. The invalidity, illegality or unenforceability of any provision or
provisions of this Agreement will not affect any other provision of this
Agreement, which will remain in full force and effect, nor will the invalidity,
illegality or unenforceability of a portion of any provision of this Agreement
affect the balance of such provision. In the event that any one or more of the
provisions contained in this Agreement or any portion thereof shall for any
reason be held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be reformed, construed and enforced as if such invalid, illegal
or unenforceable provision had never been contained herein.

(I)
Construction; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. The Company agrees that the
sole and exclusive venue for any matters arising hereunder shall be the court of
competent jurisdiction in Miami-Dade County, Florida and agrees to waive any
objections to such venue. EACH OF LADENBURG AND THE COMPANY HEREBY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY PROCEEDING, SUIT OR CLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT.

(J)
Binding Nature. The terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties, and their respective successors and
assigns.

(K)
Counterparts. This Agreement may be executed in any number of counterparts,
including facsimile signatures, which shall be deemed as original signatures.
All executed counterparts shall constitute one Agreement, notwithstanding that
all signatories are not signatories to the original or the same counterpart.

(L)
Attorneys’ Fees and Court Costs. If any party to this Agreement brings an
action, directly or indirectly based upon this Agreement or the matters
contemplated hereby against the other party, the prevailing party shall be
entitled to recover, in addition to any other appropriate amounts, its
reasonable costs and expenses in connection with such proceeding, including, but
not limited to, reasonable attorneys’ fees and expenses and court costs.

(M)
Computer Virus. During the course of this engagement, Ladenburg may exchange
electronic versions of documents and emails with you using commercially
available software. Unfortunately, the technology community is occasionally
victimized by the creation and dissemination of so-called viruses, or similar
destructive electronic programs. Ladenburg takes the issues raised by these
viruses seriously and has invested in document and email scanning software that
identifies and rejects files containing known viruses. Ladenburg also updates
its system with the software vendor’s most current releases at regular
intervals.

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By utilizing this virus scanning software, Ladenburg’s system may occasionally
reject a communication you send. Ladenburg in turn may send you something that
is rejected by your system. This infrequent occurrence is to be expected as part
of the ordinary course of business.
Because the virus protection industry is generally one or two steps behind new
viruses, Ladenburg cannot guarantee that its communications and documents will
always be virus free. Occasionally, a virus will escape and go undetected as it
is passed from system to system. Although Ladenburg believes its virus
protection measures are excellent, it can make no warranty that its documents
will be virus free at all times.
Please inform Ladenburg immediately in the event a virus enters your company’s
system via any electronic means originating from Ladenburg. Through cooperative
efforts, disruption to communications can be minimized.
(N)
Information Disclosure. Subject to Section (C) hereof, Ladenburg may disclose
any information when it is believed necessary for the conduct of its business,
or where disclosure is required by law. For example, information may be
disclosed for audit or research purposes, or to law enforcement and regulatory
agencies to do such things as prevent fraud. Subject to Section (C) hereof,
information may also be disclosed to affiliates as well as to others that are
outside Ladenburg. Ladenburg may make other disclosures of information as
permitted by law.

(O)
Legal Services. While certain principals of Ladenburg are attorneys, Ladenburg
is not, in any manner, providing legal services or legal advice to the Company.
Furthermore, the Company agrees and acknowledges that Ladenburg is not an
advisor as to tax, accounting or regulatory matters in any jurisdiction.

(P)
Securities Trading and Other Activities. Ladenburg is a full service securities
firm engaged, directly or indirectly, in various activities, including
securities trading, investment management, financing and brokerage activities.
The Company agrees and acknowledges that in the ordinary course of these
activities, Ladenburg and its affiliates may actively trade the debt or equity
securities (or related derivative securities) of the Company and other companies
which may be the subject of the engagement contemplated by this Agreement for
its own account and for the accounts of its customers and may at any time hold
long and short positions in such securities. The Company further agrees and
acknowledges that Ladenburg and its affiliates also may from time to time
perform various investment banking and financial advisory services for other
clients and customers who may have conflicting interests with respect to the
Company or the Transaction and nothing herein shall in any way limit
Ladenburg’s, or its affiliates’, ability to provide such services.

(Q)
No Fiduciary Duties. The Company represents that it is a sophisticated business
enterprise that has retained Ladenburg for the limited purposes set forth in
this Agreement, and the parties acknowledge and agree that their respective
rights and obligations are contractual in nature. Each party disclaims any
intention to impose fiduciary obligations on the other by virtue of the
engagement contemplated by this Agreement.

(R)
USA Patriot Act. If necessary, the Company agrees to provide Ladenburg with
information and supporting documentation to enable Ladenburg to comply with the
requirements under Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 ("USA Patriot Act") (Public Law 107-56).

(S)
Marketing. Ladenburg shall have the ability to publicize (i.e., use of the
Company logo in its marketing materials) its role in providing the Company with
the services noted herein.