Exhibit 4.1
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BANNER CAPITAL MARKETS
May 20, 2005
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
CepTor Corporation
000 Xxxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000-0000
Re: Private Placement of Securities
Dear Xx. Xxxxxxx,
This letter confirms the agreement between Brown Advisory Securities, LLC
("Brown" or "we" or "us") acting as placement agents, and CepTor Corporation
(the "Company", "CepTor" or "you") as follows:
1. ENGAGEMENT. The Company engages Xxxxx to act as your exclusive
representative for the proposed offering (the "Offering" or the
"Placement") by private placement of equity or equity-linked
securities (the "Securities") under terms further described herein,
and we accept this engagement upon the terms and conditions set
forth in this agreement.
Xxxxxxx X'Xxxx and Xxxxxx Xxxxxx, acting together as Banner Capital
Markets LLC, will be providing the Brown services as registered
representatives of Brown.
During the term of our engagement, we will, as appropriate to the
Placement:
o consult with you in planning and implementing the Placement;
o assist you in preparing any offering materials (the "Offering
Materials") we mutually agree are beneficial or necessary to
the consummation of the Placement;
o assist you in preparing for due diligence conducted by
potential investors;
o identify potential investors and use our reasonable commercial
efforts to assist in arranging sales of the Securities to
investors;
o consult with you in structuring the investment; and
o assist you in negotiating definitive documentation.
BANNER CAPITAL MARKETS LLC
securities services offered through
Brown Advisory Securities, LLC
000 Xxxxx Xxxx Xxxxxx - Xxxxx 000 0000 Xxxxxxx Xxxxxxxxx - Xxxxx 000
Xxxxxxxxx, XX 00000-0000 Xxxxxxxxxxx, XX 00000
P: 000-000-0000 P: 000-000-0000
F: 000-000-0000 F: 000-000-0000
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BANNER CAPITAL MARKETS
As currently contemplated, the Placement will consist of
approximately $7.5 million of net proceeds to you, after payment of
expenses and commissions of the offering. You acknowledge and agree
that our engagement pursuant to this letter is not an agreement by
us or any of our affiliates to underwrite or purchase any Securities
or otherwise provide any financing, nor an agreement by you to issue
and sell any Securities. You may in your sole discretion postpone,
modify, abandon or terminate the Placement prior to closing and in
such event your sole obligation to us will be for Expenses as set
forth in Section 3 and Fees as provided in Section 2, hereof, or
decline any individual subscription for the Securities, in whole or
in part, for any reason and that, in the event that a subscription
is rejected, any purchase price delivered will be promptly returned,
without interest thereon or deduction therefrom. We may decline to
participate in the Placement if we reasonably determine that the
offering has become impractical or undesirable, in which case you
will have no further obligation to us.
We agree that we will not make offers to sell or solicit offers to
buy your securities in any state without first confirming with you
the availability of exemptions from registration under, or other
appropriate compliance with, such state's securities laws. We will
also use our best efforts to ascertain that and reasonably believe
that investors obtained satisfy the investor suitability standards
set forth in any offering memorandum utilized for the offering.
2. FEES. For our services, you agree to pay us:
o a non-refundable retainer fee of $15,000 per month for four
(4) months, to begin upon execution of this agreement;
o an award of 25,000 unregistered shares of common stock, upon
execution of the agreement, such shares to be registered
concurrent with shares issued pursuant to the Offering (which
right to registration will be determined through negotiation
between you and your investors), or in the event of a
termination, the next registration undertaken by the Company;
and
o a selling commission of seven percent (7%) on all Securities
sold, payable at each closing. The retainer fee will be
credited against the selling commission payable to Xxxxx
pursuant to this paragraph.
At each closing of a sale of the Securities, you will issue to us a
warrant (the "Warrants") to purchase a number of shares of the
Securities ("Warrant Stock") equal to three percent (3.0%) of the
number of shares of Securities sold by you at such closing. All
Warrants will be exercisable at a price equal to the price at which
the Securities are sold to investors. The Warrants will be in form
reasonably acceptable to us and you and will include mutually
acceptable provisions customary in private equity transactions and
no less favorable than those agreeable to investors in the
Securities. The Warrants will expire on the fifth anniversary of
their issuance.
The fees and commission payable to "us" and "Brown" set forth above
shall include all fees and commissions payable in connection with
the services contemplated in this letter, including for sales made
or services rendered by any affiliate or associate of ours or Brown.
CepTor Corporation
May 20, 2005
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BANNER CAPITAL MARKETS
In the event that this engagement is terminated, you will pay us the
same commission (cash and Warrants) on any financing by you
involving the issuance of Securities consummated within twelve
months after any termination of this engagement; PROVIDED, HOWEVER,
such commission (i) only extends to Securities sold to investors we
have introduced to the Company (not previously known to the Company
as investors in the Company) prior to such termination and who are
specifically identified in writing as provided to you on a Schedule
as further defined below, and (ii) is not payable in the event that
you paid us a selling commission of at least $250,000 for Securities
sold during the term of this engagement. In the case of termination
of this engagement, we will deliver to you, reasonably promptly
following the date of termination, a schedule listing the potential
investors we have introduced to the Company and proposed to be
covered (the "Schedule").
3. EXPENSES. Upon receipt of an invoice, you agree to reimburse us for
our reasonable expenses incurred in preparing to market and
marketing the Securities, not to exceed $30,000 without your prior
approval, and other non-legal expenses (including, but not limited
to travel) in an amount not to exceed $5,000 without your prior
approval, in each case whether or not a closing occurs. In the event
that a closing does not occur, you shall not be obligated for any
expense reimbursement in excess of $35,000.
4. INDEMNIFICATION AND CONTRIBUTION. Annex A is hereby incorporated
into this agreement by reference and made a part of this agreement.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. You
represent and warrant to, and agree with us, that:
(a) the Securities will be offered and sold by you in compliance
with the requirements for exemptions from registration or
qualification of, and otherwise in accordance with, all
federal and state securities laws and regulations;
(b) you will have responsibility for the accuracy and completeness
of any Offering Materials. You agree to notify us promptly of
any material adverse changes, or development that may lead to
any material adverse change, in your business, properties,
operations, financial condition or prospects and concerning
any statement contained in any Offering Material, or in any
other information provided to us, which is not accurate or
which is incomplete or misleading in any material respect;
(c) you will make available to us such documents and other
information which we reasonably deem appropriate and will
provide us with access to your officers, directors, employees,
accountants, counsel and other representatives; it being
understood that we will rely solely upon such information
supplied by you and your representatives without assuming any
responsibility for independent investigation or verification
thereof; and
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May 20, 2005
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BANNER CAPITAL MARKETS
(d) at each closing, you will permit us to rely on the
representations and warranties of the Company, and cause your
counsel to permit us to rely upon any opinion, furnished to
any purchaser of Securities. Such opinion of counsel shall be
modified as appropriate to also address this agreement.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO THE COMPANY. We
represent and warrant to, and agree with you, that:
(a) We are and at the time of any offer or sale in connection with
the offering will utilize only persons associated with a duly
registered broker/dealer pursuant to the Securities Exchange
Act of 1934 and who are and at such time will be a member or
licensed representative in good standing of the National
Association of Securities Dealers, Inc. ("NASD").
(b) We will furnish to you prior to closing appropriate records
indicating the entity and address of each person to whom an
offer has been made, and the information that we have relied
upon to reach a conclusion that the investor suitability
standards have been satisfied with respect to each investors.
7. OTHER MATTERS RELATING TO OUR ENGAGEMENT. You acknowledge that you
have retained us to provide the services set forth in this
agreement. In rendering such services, we will act as an independent
contractor, and we owe our duties arising out of this engagement
solely to the Company. You acknowledge that nothing in this
agreement is intended to create duties to you or your creditors or
securityholders beyond those expressly provided for in this
agreement, and we and you specifically disclaim the creation of any
fiduciary relationship between, or the imposition of any fiduciary
duties on, either party.
In addition, we and our affiliates may from time to time perform
various investment banking, commercial banking and financial
advisory services for other clients and customers who may have
conflicting interests with respect to you or the Placement. You also
acknowledge that we and our affiliates have no obligation to use in
connection with this engagement or to furnish you confidential
information obtained from other companies.
Furthermore, you acknowledge we may have fiduciary or other
relationships whereby we or our affiliates may exercise voting power
over securities of various persons, which securities may from time
to time include securities of the Company or of potential investors
or others with interests in respect of the Placement. You
acknowledge that we or such affiliates may exercise such powers and
otherwise perform our functions in connection with such fiduciary or
other relationships without regard to our relationship with you
hereunder.
You acknowledge that we are not an advisor as to legal, tax,
accounting or regulatory matters in any jurisdiction. You should
consult with your own advisors concerning such matters and are
responsible for making your own independent investigation and
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May 20, 2005
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BANNER CAPITAL MARKETS
appraisal of the transactions contemplated by this agreement, and we
have no responsibility or liability to you with respect such
matters.
8. TERMINATION. You or we may terminate our engagement under this
agreement, with or without cause, upon ten (10) days' written notice
to the other party; PROVIDED, HOWEVER, no such notice may be given
by you prior to July 20, 2005; PROVIDED FURTHER, that this agreement
will automatically terminate on September 20, 2005. The fees,
expense reimbursement, financial advisory services, indemnity,
contribution and exculpation, your representations, warranties and
agreements, and miscellaneous provisions of this agreement
(including Annex A) will survive any termination of our engagement
under this agreement.
9. MISCELLANEOUS. This agreement will be governed by and construed in
accordance with the laws of Maryland, without regard to its conflict
of law principles. You and we hereby waive all right to trial by
jury in any action, proceeding, or counterclaim (whether based upon
contract, tort or otherwise) in connection with any dispute arising
out of this agreement or any matters contemplated by this agreement.
This agreement embodies the entire agreement and understanding
between you and us and supersedes all prior agreements and
understandings relating to the subject matter of this agreement.
This agreement may be executed in any number of counterparts. The
invalidity or unenforceability of any provision of this agreement
will not affect the validity or enforceability of any other
provisions of this agreement, which will remain in full force and
effect. This agreement is solely for the benefit of you and us, and
no other person (other than the Indemnified Persons set forth in
Annex A hereto) will acquire or have any rights by virtue of this
agreement.
10. NOTICES. All notices or communications hereunder will be in writing
and mailed, faxed or delivered by hand as follows:
If to Brown:
Brown Advisory Securities, LLC
c/o Banner Capital Markets
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. X'Xxxx
Xxxxxxxxx: 000-000-0000
If to the Company:
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
CepTor Corporation
000 Xxxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000-0000
Facsimile: 000-000-0000
CepTor Corporation
May 20, 2005
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BANNER CAPITAL MARKETS
Please confirm that the foregoing correctly and completely sets forth our
understanding by signing and returning to us the enclosed duplicate of this
engagement agreement.
Sincerely,
BROWN ADVISORY SECURITIES, LLC
By: /s/ Xxxxxxx X. X'Xxxx
-------------------------------
Name: Xxxxxxx X. X'Xxxx
Xxx: ______________________________
Xxxxxx and accepted as of the 16th day of May, 2005.
CEPTOR CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: Chief Executive Officer
CepTor Corporation
May 20, 2005
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BANNER CAPITAL MARKETS
ANNEX A TO ENGAGEMENT LETTER
You agree to (i) indemnify and hold harmless us, our affiliates (within the
meaning of the Securities Act of 1933), and each of our respective partners,
directors, officers, agents (including, but not limited to, Xxxxxx Xxxxxx;
Xxxxxxx X'Xxxx; and Banner Capital Markets LLC), consultants, employees and
controlling persons (within the meaning of the Securities Act of 1933) (each of
Brown and such other person or entity is hereinafter referred to as an
"Indemnified Person"), from and against any losses, claims, damages, liabilities
and expenses, joint or several, and all actions, inquiries, proceedings and
investigations in respect thereof, to which any Indemnified Person may become
subject arising out of or in connection with our engagement or any matter
referred to in the agreement to which this Annex A is attached and of which this
Annex A forms a part (the "Agreement"), regardless of whether any of such
Indemnified Persons is a party thereto, and (ii) as provided below periodically
reimburse an Indemnified Person for such person's legal and other expenses as
may be incurred in connection with investigating, preparing, defending, paying,
settling or compromising any such action, inquiry, proceeding or investigation,
whether or not such action, inquiry, proceeding or investigation is initiated or
brought by you, your creditors or stockholders, or any other person. You are not
responsible under clause (i) of the foregoing sentence for any losses, claims,
damages, liabilities or expenses to the extent that such loss, claim, damage,
liability or expense has been finally judicially determined to have resulted
primarily from actions taken or omitted to be taken by such Indemnified Person
due to such person's gross negligence or willful misconduct. To the extent that
any prior payment you made to an Indemnified Person is determined to have been
improper by reason of such Indemnified Person's gross negligence or willful
misconduct, such Indemnified Person will promptly pay you such amount.
If the indemnity or reimbursement referred to above is, for any reason
whatsoever, unenforceable, unavailable or otherwise insufficient to hold each
Indemnified Person harmless, you agree to pay to or on behalf of each
Indemnified Person contributions for losses, claims, damages, liabilities or
expenses so that each Indemnified Person ultimately bears only a portion of such
losses, claims, damages, liabilities or expenses as is appropriate (i) to
reflect the relative benefits received by each such Indemnified Person,
respectively, on the one hand and you and your stockholders on the other hand in
connection with the Placement, or (ii) if the allocation on that basis is not
permitted by applicable law, to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of each such Indemnified
Person, respectively, and you as well as any other relevant equitable
considerations; PROVIDED, HOWEVER, that in no event will the aggregate
contribution of all Indemnified Persons to all losses, claims, expenses,
damages, liabilities or expenses in connection with any Placement exceed the
amount of the fee actually received by us pursuant to this Agreement. The
respective relative benefits received by us and you in connection with any
Placement will be deemed to be in the same proportion as the aggregate fee paid
or proposed to be paid to Brown in connection with the Placement bears to the
aggregate consideration paid or proposed to be paid by investors committed to
investment in the Placement, whether or not consummated.
Promptly after its receipt of notice of the commencement of any action or
proceeding, any Indemnified Person will, if a claim in respect thereof is to be
made against you pursuant to this letter, notify you in writing of the
commencement thereof; but omission so to notify you will not relieve you from
any liability which you may have to any Indemnified Person, except your
obligation to indemnify for losses, claims, damages, liabilities or expenses to
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May 20, 2005
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the extent that you suffer actual prejudice as a result of such failure, but
will not relieve you from your obligation to provide reimbursement of expenses
and any liability which you may have to an Indemnified Person otherwise than
hereunder. If you so elect, you may assume the defense of such action or
proceeding in a timely manner, including the employment of counsel (reasonably
satisfactory to us) and payment of expenses, PROVIDED you permit an Indemnified
Person and counsel retained by an Indemnified Person at its expense to
participate in such defense. Notwithstanding the foregoing, in the event (i) you
fail promptly to assume the defense and employ counsel reasonably satisfactory
to us, or (ii) the Indemnified Person has been advised by counsel that there
exist actual or potential conflicting interests between you or your counsel and
such Indemnified Person, an Indemnified Person may employ separate counsel (in
addition to any local counsel) to represent or defend such Indemnified Person in
such action or proceeding, and you agree to pay the reasonable fees and
disbursements of such separate counsel as incurred; PROVIDED HOWEVER, that you
will not, in connection with any one such action or proceeding, or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel).
You will not, without our prior written consent, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
under this Agreement, unless such settlement, compromise or consent includes an
express, complete and unconditional release of us and each other Indemnified
Person from all liability and obligations arising therefrom. Without your prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned, no Indemnified Person shall settle or compromise any claim for
which indemnification or contribution may be sought hereunder.
You also agree that no Indemnified Person will have any liability to you or your
affiliates, directors, officers, employees, agents, creditors or stockholders,
directly or indirectly, related to or arising out of the Agreement or the
services performed thereunder, except losses, claims, damages, liabilities and
expenses you incur which have been finally judicially determined to have
resulted primarily and directly from actions taken or omitted to be taken by
such Indemnified Person due to such person's gross negligence or willful
misconduct. In no event, regardless of the legal theory advanced, will any
Indemnified Person be liable for any consequential, indirect, incidental or
special damages of any nature. Your indemnification, reimbursement, exculpation
and contribution obligations in this Annex A will be in addition to any rights
that any Indemnified Person may have at common law or otherwise.
Capitalized terms used, but not defined in this Annex A, have the meanings
assigned to such terms in the Agreement.
CepTor Corporation
May 20, 2005
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