EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
October 7, 2005 by and between CEPTOR CORPORTION, a Delaware corporation (the
"Company"), and FUSION CAPITAL FUND II, LLC, an Illinois limited liability
company (the "Buyer"). Capitalized terms used herein and not otherwise defined
herein are defined in Section 10 hereof.
WHEREAS:
Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Twenty Million Dollars ($20,000,000) of the Company's common
stock, par value $0.0001 per share (the "Common Stock"). The shares of Common
Stock to be purchased hereunder are referred to herein as the "Purchase Shares."
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE OF COMMON STOCK.
Subject to the terms and conditions set forth in Sections 6, 7 and 9
below, the Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, Purchase Shares as follows:
(a) COMMENCEMENT OF PURCHASES OF COMMON STOCK. The purchase and sale
of Purchase Shares hereunder shall commence (the "Commencement") within five (5)
Trading Days following the date of satisfaction of the conditions to the
Commencement set forth in Sections 6 and 7 below (the date of such Commencement,
the "Commencement Date").
(b) BUYER'S PURCHASE RIGHTS AND OBLIGATIONS. Subject to the
Company's right to suspend purchases under Section 1(d)(ii) hereof, the Buyer
shall buy Purchase Shares ("Daily Purchases") on each Trading Day during each
Monthly Period equal to the Daily Purchase Amount (as defined in Section
1(c)(i)) at the Purchase Price. From time to time, the Company shall also have
the right but not the obligation, by its delivery to the Buyer of a Block
Purchase Notice (as defined in Section 1(c)(iv)), to require the Buyer to buy
Purchase Shares (a "Block Purchase") equal to the Block Purchase Amount (as
defined in Section 1(c)(iv)) at the Block Purchase Price (as defined in Section
1(c)(iv)). The Buyer shall pay to the Company an amount equal to the Purchase
Amount with respect to such Purchase Shares as full payment for the purchase of
the Purchase Shares so received. The Company shall not issue any fraction of a
share of Common Stock upon any purchase. If the issuance would result in the
issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up or down to the nearest whole share. All
payments made under this Agreement shall be made in lawful money of the United
States of America by check or wire transfer of immediately available funds to
such account as the Company may from time to time designate by written notice in
accordance with the provisions of this Agreement. Whenever any amount expressed
to be due by the terms of this Agreement is due on any day that is not a Trading
Day, the same shall instead be due on the next succeeding day which is a Trading
Day.
(c) THE DAILY PURCHASE AMOUNT; COMPANY'S RIGHT TO DECREASE OR
INCREASE THE DAILY PURCHASE AMOUNT; THE BLOCK PURCHASE AMOUNT.
(i) THE DAILY PURCHASE AMOUNT. As used herein the term
"Original Daily Purchase Amount" shall mean Twenty Five Thousand
Dollars ($25,000) per Trading Day. As used herein, the term "Daily
Purchase Amount" shall mean initially Twenty Five Thousand Dollars
($25,000) per Trading Day, which amount may be increased or
decreased from time to time pursuant to this Section 1(c).
(ii) COMPANY'S RIGHT TO DECREASE THE DAILY PURCHASE
AMOUNT. The Company shall always have the right at any time to
decrease the amount of the Daily Purchase Amount by delivering
written notice (a "Daily Purchase Amount Decrease Notice") to the
Buyer which notice shall specify the new Daily Purchase Amount. The
decrease in the Daily Purchase Amount shall become effective one
Trading Day after receipt by the Buyer of the Daily Purchase Amount
Decrease Notice. Any purchases by the Buyer which have a Purchase
Date on or prior to the first (1st) Trading Day after receipt by the
Buyer of a Daily Purchase Amount Decrease Notice must be honored by
the Company as otherwise provided herein. The decrease in the Daily
Purchase Amount shall remain in effect until the Company delivers to
the Buyer a Daily Purchase Amount Increase Notice (as defined
below).
(iii) COMPANY'S RIGHT TO INCREASE THE DAILY PURCHASE
AMOUNT. The Company shall have the right (but not the obligation) to
increase the amount of the Daily Purchase Amount in accordance with
the terms and conditions set forth in this Section 1(c)(iii) by
delivering written notice to the Buyer stating the new amount of the
Daily Purchase Amount (a "Daily Purchase Amount Increase Notice"). A
Daily Purchase Amount Increase Notice shall be effective five (5)
Trading Days after receipt by the Buyer. The Company shall always
have the right at any time to increase the amount of the Daily
Purchase Amount up to the Original Daily Purchase Amount. With
respect to increases in the Daily Purchase Amount above the Original
Daily Purchase Amount, as the market price for the Common Stock
increases the Company shall have the right from time to time to
increase the Daily Purchase Amount as follows. For every $0.10
increase in Threshold Price above $1.50 (subject to equitable
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction), the Company
shall have the right to increase the Daily Purchase Amount by up to
an additional $2,500 in excess of the Original Daily Purchase
Amount. "Threshold Price" for purposes hereof means the lowest Sale
Price of the Common Stock during the five (5) consecutive Trading
Days immediately prior to the submission to the Buyer of a Daily
Purchase Amount Increase Notice (subject to equitable adjustment for
any reorganization, recapitalization, non-cash dividend, stock split
or other similar transaction). For example, if the Threshold Price
is $1.60, the Company shall have the right to increase the Daily
Purchase Amount to up to $27,500 in the aggregate. If the Threshold
Price is $2.00, the Company shall have the right to increase the
Daily Purchase Amount to up to $37,500 in the aggregate. Any
increase in the amount of the Daily Purchase Amount shall continue
in effect until the delivery to the Buyer of a Daily Purchase Amount
Decrease Notice. However, if at any time during any Trading Day the
Sale Price of the Common Stock is below the applicable Threshold
Price, such increase in the Daily Purchase Amount shall be void and
the Buyer's obligations to buy Purchase Shares hereunder in excess
of the applicable maximum Daily Purchase Amount shall be terminated.
Thereafter, the Company shall again have the right to increase the
amount of the Daily Purchase Amount as set forth herein by delivery
of a new Daily Purchase Amount Increase Notice only if the Sale
Price of the Common Stock is above the applicable Threshold Price on
each of five (5) consecutive Trading Days immediately prior to such
new Daily Purchase Amount Increase Notice.
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(iv) THE BLOCK PURCHASE AMOUNT. As used herein the term
"Block Purchase Amount" shall mean such Purchase Amount as specified
by the Company in a Block Purchase Notice. As used herein the term
"Block Purchase Notice" shall mean an irrevocable written notice
from the Company to the Buyer directing the Buyer to buy the
Purchase Amount in Purchase Shares as specified by the Company
therein at the Block Purchase Price. For a Block Purchase Notice to
be valid the following conditions must be met: (1) the Block
Purchase Amount shall not exceed Two Hundred Fifty Thousand Dollars
($250,000) per Block Purchase Notice, (2) the Company must deliver
the Purchase Shares on the same day as the Block Purchase Notice is
delivered and (3) the Sale Price of the Common Stock must have been
above $2.00 (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction) during the ten (10) Trading Days prior to the delivery
of the Block Purchase Notice. The Block Purchase Amount may be
increased to up to $500,000 if the Sale Price of the Common Stock is
above $4.00 (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction) during the ten (10) Trading Days prior to the delivery
of the Block Purchase Notice. The Block Purchase Amount may be
increased to up to $1,000,000 if the Sale Price of the Common Stock
is above $6.00 (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction) during the ten (10) Trading Days prior to
the delivery of the Block Purchase Notice. The Company may deliver
multiple Block Purchase Notices as it shall determine; provided
however, at least ten (10) Trading Days must have passed since the
most recent Block Purchase was completed. As used herein, the term
"Block Purchase Price" shall mean the lowest Purchase Price during
the previous fifteen (15) Trading Days prior to the date that the
Block Purchase Notice was received by the Buyer. The daily purchases
shall be automatically suspended for ten (10) trading days each time
any such block purchase notice is delivered.
(d) LIMITATIONS ON PURCHASES.
(i) LIMITATION ON BENEFICIAL OWNERSHIP. The Buyer shall
not have the right or the obligation to purchase shares of Common
Stock under this Agreement to the extent that after giving effect to
such purchase the Buyer together with its affiliates would
beneficially own in excess of 9.9% of the outstanding shares of the
Common Stock following such purchase. For purposes hereof, the
number of shares of Common Stock beneficially owned by the Buyer and
its affiliates or acquired by the Buyer and its affiliates, as the
case may be, shall include the number of shares of Common Stock
issuable in connection with a purchase under this Agreement with
respect to which the determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon
(1) a purchase of the remaining Available Amount which has not been
submitted for purchase, and (2) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any notes or warrants)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Buyer and its
affiliates. For purposes of this Section, in determining the number
of outstanding shares of Common Stock the Buyer may rely on the
number of outstanding shares of Common Stock as reflected in (1) the
Company's most recent Form 10-QSB or Form 10-KSB or any other SEC
filing, as the case may be, (2) a more recent public announcement by
the Company or (3) any other written communication by the Company or
its Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the reasonable written or oral request of
the Buyer, the Company shall promptly confirm orally and in writing
to the Buyer the number of shares of Common Stock then outstanding.
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In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to any purchases under this
Agreement by the Buyer since the date as of which such number of
outstanding shares of Common Stock was reported. Except as otherwise
set forth herein, for purposes of this Section 1(d)(i), beneficial
ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended.
(ii) COMPANY'S RIGHT TO SUSPEND PURCHASES. The Company
may, at any time, give written notice (a " Daily Purchase Suspension
Notice") to the Buyer suspending Daily Purchases of Purchase Shares
by the Buyer under this Agreement. The Daily Purchase Suspension
Notice shall be effective only for Daily Purchases that have a
Purchase Date later than one (1) Trading Day after receipt of the
Daily Purchase Suspension Notice by the Buyer. Any Daily Purchase by
the Buyer that has a Purchase Date on or prior to the first (1st)
Trading Day after receipt by the Buyer of a Daily Purchase
Suspension Notice from the Company must be honored by the Company as
otherwise provided herein. Such Daily Purchase suspension shall
continue in effect until a revocation in writing by the Company, at
its sole discretion.
(iii) PURCHASE PRICE FLOOR. The Company shall not affect
any sales under this Agreement and the Buyer shall not have the
right nor the obligation to purchase any Purchase Shares under this
Agreement on any Trading Day where the Purchase Price for any
purchases of Purchase Shares would be less than the Floor Price.
"Floor Price" means $0.50 per share, which shall be appropriately
adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction.
(e) RECORDS OF PURCHASES. The Buyer and the Company shall each
maintain records showing the remaining Available Amount at any give time and the
dates and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company.
(f) TAXES. The Company shall pay any and all transfer, stamp or
similar taxes that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Buyer made under this Agreement.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company that as of the date
hereof and as of the Commencement Date:
(a) INVESTMENT PURPOSE. The Buyer is entering into this Agreement
and acquiring the Commitment Shares and the Warrants, (each as defined in
Section 4(f) hereof) (this Agreement, the Warrants and the Commitment Shares are
collectively referred to herein as the "Securities"), for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof; provided however, by making the
representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term.
(b) ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
(c) RELIANCE ON EXEMPTIONS. The Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
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the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
(d) INFORMATION. The Buyer has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably
requested by the Buyer, including, without limitation, the SEC Documents (as
defined in Section 3(f) hereof). The Buyer understands that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
(e) NO GOVERNMENTAL REVIEW. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) TRANSFER OR RESALE. The Buyer understands that except as
provided in the Registration Rights Agreement (as defined in Section 4(a)
hereof): (i) the Securities have not been and are not being registered under the
1933 Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder or (B) an
exemption exists permitting such Securities to be sold, assigned or transferred
without such registration; (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(g) VALIDITY; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(h) RESIDENCY. The Buyer is a resident of the State of Illinois.
(i) NO PRIOR SHORT SELLING. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, representatives or affiliates engaged in or effected, in any
manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) of the Common Stock or (ii) hedging transaction, which establishes
a net short position with respect to the Common Stock.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that as of the date
hereof and as of the Commencement Date:
(a) ORGANIZATION AND QUALIFICATION. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns 50% or more of the voting stock or
capital stock or other similar equity interests) are corporations duly organized
and validly existing in good standing under the laws of the jurisdiction in
which they are incorporated, and have the requisite corporate power and
authority to own their properties and to carry on their business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing could not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on any of: (i) the business, properties,
assets, operations, results of operations or financial condition of the Company
and its Subsidiaries, if any, taken as a whole, or (ii) the authority or ability
of the Company to perform its obligations under the Transaction Documents (as
defined in Section 3(b) hereof). The Company has no Subsidiaries except as set
forth on Schedule 3(a).
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the Warrant
and each of the other agreements entered into by the parties on the Commencement
Date and attached hereto as exhibits to this Agreement (collectively, the
"Transaction Documents"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation, the issuance of
the Commitment Shares and the Warrants and the reservation for issuance and the
issuance of the Warrant Shares and Purchase Shares issuable under the Warrant or
this Agreement, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its shareholders, (iii) this Agreement has been, and each other
Transaction Document shall be on the Commencement Date, duly executed and
delivered by the Company and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company, shall
constitute, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Board of Directors of the Company has approved the resolutions (the "Signing
Resolutions") substantially in the form as set forth as EXHIBIT C-1 attached
hereto to authorize this Agreement and the transactions contemplated hereby. The
Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect other than by the resolutions set forth
in EXHIBIT C-2 attached hereto regarding the registration statement referred to
in Section 4 hereof. The Company has delivered to the Buyer a true and correct
copy of a unanimous written consent adopting the Signing Resolutions executed by
all of the members of the Board of Directors of the Company. No other approvals
or consents of the Company's Board of Directors and/or shareholders is necessary
under applicable laws and the Company's Certificate of Incorporation and/or
Bylaws to authorize the execution and delivery of this Agreement or any of the
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transactions contemplated hereby, including, but not limited to, the issuance of
the Commitment Shares, the Warrants, the Warrant Shares and the Purchase Shares.
(c) CAPITALIZATION. As of the date hereof (excluding the Commitment
Shares and Warrants as defined in Section 4(f)), the authorized capital stock of
the Company consists of (i) 100 million shares of Common Stock, of which as of
the date hereof, 10,552,944 shares are issued and outstanding, none are held as
treasury shares, 1,778,130 shares are reserved for issuance pursuant to the
Company's stock option plans of which only 1,131,435 shares remain available for
future grants and 8,345,427 shares are issuable and reserved for issuance
pursuant to securities (other than stock options issued pursuant to the
Company's stock option plans) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (ii) 20 million shares of Preferred Stock,
$0.0001 par value with a $25,000 per share liquidation preference, of which as
of the date hereof 254.15 shares are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws"), and summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents containing the
material rights of the holders thereof in respect thereto.
(d) ISSUANCE OF SECURITIES. The Commitment Shares and the Warrant
Shares (as defined in Section 4(f) hereof) have been duly authorized and, upon
issuance in accordance with the terms hereof and the Warrant (as defined in
Section 4(f) hereof), the Commitment Shares and the Warrant Shares shall be (i)
validly issued, fully paid and non-assessable and (ii) free from all taxes,
liens and charges with respect to the issue thereof. 5,000,000 shares of Common
Stock have been duly authorized and reserved for issuance upon purchase under
this Agreement. 754,717 shares of Common Stock (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction) have been duly authorized and reserved for issuance
as Additional Commitment Shares in accordance with Section 4(f) this Agreement.
Upon issuance and payment therefor in accordance with the terms and conditions
of this Agreement, the Purchase Shares shall be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock.
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(e) NO CONFLICTS. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market applicable to
the Company or any of its Subsidiaries) or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in the case of
conflicts, defaults and violations under clause (ii), which could not reasonably
be expected to result in a Material Adverse Effect. Except as disclosed in
Schedule 3(e), neither the Company nor its Subsidiaries is in violation of any
term of or in default under its Certificate of Incorporation, any Certificate of
Designation, Preferences and Rights of any outstanding series of preferred stock
of the Company or By-laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 3(e), neither the Company nor any
of its Subsidiaries is in violation of any term of or is in default under any
material contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to the
Company or its Subsidiaries, except for possible violations, conflicts,
defaults, terminations or amendments which could not reasonably be expected to
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is not being conducted, and shall not be conducted, in violation of any law,
ordinance, regulation of any governmental entity, except for possible
violations, the sanctions for which either individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
or applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof. Except as disclosed in Schedule 3(e), all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence shall be obtained or effected on or prior to
the Commencement Date. Except as listed in Schedule 3(e), since January 1, 2005,
the Company has not received nor delivered any notices or correspondence from or
to the Principal Market. The Principal Market has not commenced any delisting
proceedings against the Company.
(f) SEC DOCUMENTS; FINANCIAL STATEMENTS. Except as disclosed in
Schedule 3(f), since January 1, 2005, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates (except as they have been correctly amended), the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (except as they may have been properly amended), 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
light of the circumstances under which they were made, not misleading. As of
their respective dates (except as they have been properly amended), the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
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published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as listed in Schedule 3(f), the Company has received no
notices or correspondence from the SEC since January 1, 2005. The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.
(g) ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
3(g), since June 30, 2005, there has been no material adverse change in the
business, properties, operations, financial condition or results of operations
of the Company or its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.
(h) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
which could reasonably be expected to have a Material Adverse Effect. A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body which, as of the date of this Agreement, is pending or threatened in
writing against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, is set forth in Schedule
3(h).
(i) ACKNOWLEDGMENT REGARDING BUYER'S STATUS. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm's
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.
(j) NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of the
Securities.
(k) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service ▇▇▇▇ registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(k), none of the
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Company's material trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service ▇▇▇▇ registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(k), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service ▇▇▇▇
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.
(l) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(m) TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(m) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(n) INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
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 at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.
(o) REGULATORY PERMITS. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
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(p) TAX STATUS. Except as set forth on Schedule 3(p), the Company
and each of its Subsidiaries has made or filed all federal and state income and
all other material tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(q) TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule
3(q) and other than the grant or exercise of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (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 corporation, partnership, trust or other entity in
which any officer, director, or any such employee has an interest or is an
officer, director, trustee or partner.
(r) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board
of directors have taken or will take prior to the Commencement Date 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
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities.
(s) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
4. COVENANTS.
(a) FILING OF FORM 8-K AND REGISTRATION STATEMENT. The Company
agrees that it shall, within the time required under the 1934 Act file a Report
on Form 8-K disclosing this Agreement and the transaction contemplated hereby.
The Company shall also file within ten (10) Trading Days from the date hereof a
new registration statement covering only the sale of the Commitment Shares, the
Warrant Shares and at least 5,000,000 Purchase Shares in accordance with the
terms of the Registration Rights Agreement between the Company and the Buyer,
dated as of the date hereof ("Registration Rights Agreement"). After such
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registration statement is declared effective by the SEC, the Company agrees and
acknowledges that any sales by the Company to the Buyer pursuant to this
Agreement are sales of the Company's equity securities in a transaction that is
registered under the 1933 Act.
(b) BLUE SKY. The Company shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the
initial sale of the Commitment Shares and any Purchase Shares to the Buyer under
this Agreement and (ii) any subsequent sale of the Commitment Shares and any
Purchase Shares by the Buyer, in each case, under applicable securities or "Blue
Sky" laws of the states of the United States in such states as is reasonably
requested by the Buyer from time to time, and shall provide evidence of any such
action so taken to the Buyer.
(c) NO VARIABLE PRICED FINANCING. Other than pursuant to this
Agreement, the Company agrees that beginning on the date of this Agreement and
ending on the date of termination of this Agreement (as provided in Section
11(k) hereof), neither the Company nor any of its Subsidiaries shall, without
the prior written consent of the Buyer, contract for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or any Subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any Subsidiary
(including debt securities with an equity component) which, in any case (i) are
convertible into or exchangeable for an indeterminate number of shares of common
stock, (ii) are convertible into or exchangeable for Common Stock at a price
which varies with the market price of the Common Stock, (iii) directly or
indirectly provide for any "re-set" or adjustment of the purchase price,
conversion rate or exercise price after the issuance of the security, or (iv)
contain any "make-whole" provision based upon, directly or indirectly, the
market price of the Common Stock after the issuance of the security, in each
case, other than reasonable and customary anti-dilution adjustments for issuance
of shares of Common Stock at a price which is below the market price of the
Common Stock.
(d) LISTING. The Company shall promptly secure the listing of all of
the Purchase Shares, Warrant Shares and Commitment Shares upon each national
securities exchange and automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all such securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the Company nor any
of its Subsidiaries shall take any action that would be reasonably expected to
result in the delisting or suspension of the Common Stock on the Principal
Market. The Company shall promptly, and in no event later than the following
Trading Day, provide to the Buyer copies of any notices it receives from the
Principal Market regarding the continued eligibility of the Common Stock for
listing on such automated quotation system or securities exchange. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section.
(e) LIMITATION ON SHORT SALES AND HEDGING TRANSACTIONS. The Buyer
agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the ▇▇▇▇ ▇▇▇) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.
(f) ISSUANCE OF COMMITMENT SHARES AND WARRANTS; LIMITATION ON SALES
OF COMMITMENT SHARES AND WARRANT SHARES. Immediately upon the execution of this
Agreement, the Company shall issue to the Buyer: (1) 377,359 shares of Common
Stock (the "Initial Commitment Shares") and (2) common stock purchase warrants
(the "Warrants") to purchase an additional 377,359 shares of Common Stock (the
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"Warrant Shares") in the form as set forth in EXHIBIT F attached hereto. In
connection with each purchase of Purchase Shares hereunder after the Buyer has
purchased an aggregate of $10,000,000 of Common Stock, the Company agrees to
issue to the Buyer a number of shares of Common Stock (the "Additional
Commitment Shares" and together with the Initial Commitment Shares, the
"Commitment Shares") equal to the product of (x) 754,717 and (y) the Purchase
Amount Fraction. The "Purchase Amount Fraction" shall mean a fraction, the
numerator of which is the Purchase Amount purchased by the Buyer with respect to
such purchase of Purchase Shares and the denominator of which is Ten Million
Dollars ($10,000,000). The Additional Commitment Shares shall be equitably
adjusted for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction. The Initial Commitment Shares shall be
issued in certificated form and (subject to Section 5 hereof) shall bear the
following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
HOLDER'S COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT.
The Buyer agrees that the Buyer shall not transfer or sell the
Commitment Shares or the Warrant Shares until the earlier of 800 Trading Days
(40 Monthly Periods) from the date hereof or the date on which this Agreement
has been terminated, provided, however, that such restrictions shall not apply:
(i) in connection with any transfers to or among affiliates (as defined in the
1934 Act), (ii) in connection with any pledge in connection with a bona fide
loan or margin account, (iii) in the event that the Commencement does not occur
on or before December 31, 2005, due to the failure of the Company to satisfy the
conditions set forth in Section 7 or (iv) if an Event of Default has occurred,
or any event which, after notice and/or lapse of time, would become an Event of
Default, including any failure by the Company to timely issue Purchase Shares
under this Agreement. Notwithstanding the forgoing, the Buyer may transfer
Commitment Shares or the Warrant Shares to a third party in order to settle a
sale made by the Buyer where the Buyer reasonably expects the Company to deliver
Purchase Shares to the Buyer under this Agreement so long as the Buyer maintains
ownership of the same overall number of shares of Common Stock by "replacing"
the Commitment Shares or Warrant Shares so transferred with Purchase Shares when
the Purchase Shares are actually issued by the Company to the Buyer.
(g) DUE DILIGENCE. The Buyer shall have the right, from time to time
as the Buyer may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company and its
officers and employees shall provide information and reasonably cooperate with
the Buyer in connection with any reasonable request by the Buyer related to the
Buyer's due diligence of the Company, including, but not limited to, any such
request made by the Buyer in connection with (i) the filing of the registration
statement described in Section 4(a) hereof and (ii) the Commencement. Each party
hereto agrees not to disclose any Confidential Information of the other party to
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any third party and shall not use the Confidential Information for any purpose
other than in connection with, or in furtherance of, the transactions
contemplated hereby. Each party hereto acknowledges that the Confidential
Information shall remain the property of the disclosing party and agrees that it
shall take all reasonable measures to protect the secrecy of any Confidential
Information disclosed by the other party.
(h) PARTICIPATION RIGHTS. For a period of 40 months from the date of
this Agreement, the Company hereby grants to the Buyer a right to participate in
the purchase of any New Securities (as defined below) that the Company may, from
time to time, propose to issue and sell in connection with any financing
transaction, as follows. Not later than 5 Trading Days prior to the execution of
any definitive documentation relating to the sale of any New Securities to any
person or entity other than the Buyer or an Affiliate of the Buyer (a "New
Person"), the Company shall deliver written notice to Buyer of its intent to
enter into any such transaction, describing the New Person and the type of New
Securities in reasonable detail, and attaching to such notice copies of such
definitive documentation. The Buyer shall have 15 Trading Days after receipt of
such notice to purchase an amount equal to 25% of such New Securities or any
portion thereof, at the price and on the terms specified in such notice by
giving written notice to the Company specifying the amount of New Securities to
be purchased by the Buyer, provided, however that with respect to any single
transaction described on such notice, the Buyer may not purchase in excess of $5
million of such New Securities for such transaction, it being understood that
for each additional transaction specified on any subsequent notice, the Buyer
may purchase up to 25% of the New Securities up to a maximum of $5 million. In
the event the Company has not sold such New Securities to the New Person within
30 Trading Days after notice thereof to the Buyer, the Company shall not
thereafter issue or sell any New Securities to any New Person without first
again complying with this Section. "New Securities" shall mean any shares of
Common Stock, preferred stock or any other equity securities of the Company or
securities convertible or exchangeable for equity securities of the Company,
provided, however, that New Securities shall not include, (i) shares of Common
Stock issuable upon conversion or exercise of any securities outstanding as of
the date hereof, (ii) shares, options or warrants for Common Stock granted to
officers, directors and employees of the Company pursuant to stock option plans
approved by the Board of Directors of the Company, (iii) shares of Common Stock
or securities convertible or exchangeable for Common Stock issued pursuant to
the acquisition of another company by consolidation, merger, or purchase of all
or substantially all of the assets of such company or (iv) shares of Common
Stock or securities convertible or exchangeable into shares of Common Stock
issued in connection with a strategic transaction involving the Company and
issued to an entity or an affiliate of such entity that is engaged in the same
or substantially related business as the Company. The Buyer rights hereunder
shall not prohibit or limit the Company from selling any New Securities so long
as the Company makes the same offer to the Buyer as provided herein. Otherwise
the Company shall be prohibited from selling any New Securities to any New
Person until it fully complies herewith.
5. TRANSFER AGENT INSTRUCTIONS.
Immediately upon the execution of this Agreement, the Company shall
deliver to the Transfer Agent a letter in the form as set forth as EXHIBIT E
attached hereto with respect to the issuance of the Initial Commitment Shares.
On the Commencement Date, the Company shall cause any restrictive legend on the
Initial Commitment Shares, any Warrant Shares and the 25,000 shares of Common
Stock issued to the Buyer upon signing that certain Term Sheet between the Buyer
and the Company and dated as of September 14, 2005, (the "Signing Shares") to be
removed and all of the Purchase Shares, Warrant Shares and Additional Commitment
Shares, to be issued under this Agreement or the Warrant shall be issued without
any restrictive legend unless the Buyer expressly consents otherwise. The
Company shall issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Purchase Shares in the name of the Buyer for
the Purchase Shares (the "Irrevocable Transfer Agent Instructions"). The Company
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warrants to the Buyer that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, will be given by the Company
to the Transfer Agent with respect to the Purchase Shares, the Warrant Shares
and that the Commitment Shares, the Warrant Shares, the Signing Shares and the
Purchase Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement subject to the provisions of Section 4(f) in the
case of the Commitment Shares and Warrant Shares.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
SALES OF SHARES OF COMMON STOCK.
The obligation of the Company hereunder to commence sales of the
Purchase Shares is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that sales begin) and
once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred; provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion by providing the
Buyer with prior written notice thereof:
(a) The Buyer shall have executed each of the Transaction Documents
and delivered the same to the Company.
(b) Subject to the Company's compliance with Section 4(a), a
registration statement covering the sale of all of the Commitment Shares, the
Warrant Shares, the Signing Shares and at least 5,000,000 Purchase Shares shall
have been declared effective under the 1933 Act by the SEC and no stop order
with respect to the Registration Statement shall be pending or threatened by the
SEC.
(c) The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Commencement Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE
PURCHASES OF SHARES OF COMMON STOCK.
The obligation of the Buyer to commence purchases of Purchase Shares
under this Agreement is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that sales begin) and
once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred:
(a) The Company shall have executed each of the Transaction
Documents and delivered the same to the Buyer.
(b) The Company shall have issued to the Buyer the Initial
Commitment Shares and the Warrants and shall have removed the restrictive
transfer legend from the certificate representing the Initial Commitment Shares,
Warrant Shares (if any) and the Signing Shares.
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(c) The Common Stock shall be authorized for quotation on the
Principal Market, trading in the Common Stock shall not have been within the
last 365 days suspended by the SEC or the Principal Market and the Purchase
Shares, the Warrant Shares, the Signing Shares and the Commitment Shares shall
be approved for listing upon the Principal Market.
(d) The Buyer shall have received the opinions of the Company's
legal counsel dated as of the Commencement Date substantially in the form of
EXHIBIT A attached hereto.
(e) The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Commencement Date. The Buyer shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as EXHIBIT B.
(f) The Board of Directors of the Company shall have adopted
resolutions in the form attached hereto as EXHIBIT C which shall be in full
force and effect without any amendment or supplement thereto as of the
Commencement Date.
(g) As of the Commencement Date, the Company shall have reserved out
of its authorized and unissued Common Stock, (A) solely for the purpose of
effecting purchases of Purchase Shares hereunder, at least 5,000,000 shares of
Common Stock (B) as Warrant Shares in accordance with Warrants, 377,359 shares
of Common Stock and (C) as Additional Commitment Shares in accordance with
Section 4(f) hereof, 754,717 shares of Common Stock.
(h) The Irrevocable Transfer Agent Instructions, in form acceptable
to the Buyer shall have been delivered to and acknowledged in writing by the
Company and the Company's Transfer Agent.
(i) The Company shall have delivered to the Buyer a certificate
evidencing the incorporation and good standing of the Company in the State of
Delaware issued by the Secretary of State of the State of Delaware as of a date
within ten (10) Trading Days of the Commencement Date.
(j) The Company shall have delivered to the Buyer a certified copy
of the Certificate of Incorporation as certified by the Secretary of State of
the State of Delaware within ten (10) Trading Days of the Commencement Date.
(k) The Company shall have delivered to the Buyer a secretary's
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as EXHIBIT D.
(l) A registration statement covering the sale of all of the
Commitment Shares, The Warrant Shares, the Signing Shares and at least 5,000,000
Purchase Shares shall have been declared effective under the 1933 Act by the SEC
and no stop order with respect to the registration statement shall be pending or
threatened by the SEC. The Company shall have prepared and delivered to the
Buyer a final form of prospectus to be used by the Buyer in connection with any
sales of any Commitment Shares, Warrant Shares, Signing Shares or Purchase
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Shares. The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Commitment
Shares, the Warrants, the Warrant Shares, the Signing Shares and the Purchase
Shares pursuant to this Agreement in compliance with such laws.
(m) No Event of Default has occurred, or any event which, after
notice and/or lapse of time, would become an Event of Default has occurred.
(n) On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities.
(o) The Company shall have provided the Buyer with the information
requested by the Buyer in connection with its due diligence requests made prior
to, or in connection with, the Commencement, in accordance with the terms of
Section 4(g) hereof.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities hereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and all of
its affiliates, shareholders, officers, directors, employees and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, other than with respect to Indemnified
Liabilities which directly and primarily result from the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
-17-
9. EVENTS OF DEFAULT.
An "Event of Default" shall be deemed to have occurred at any time
as any of the following events occurs:
(a) while any registration statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of five (5)
consecutive Trading Days or for more than an aggregate of twenty (20) Trading
Days in any 365-day period;
(b) the suspension from trading or failure of the Common Stock to be
listed on the Principal Market for a period of three (3) consecutive Trading
Days;
(c) the delisting of the Company's Common Stock from the Principal
Market, provided, however, that the Common Stock is not immediately thereafter
trading on the New York Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, or the American Stock Exchange;
(d) the failure for any reason by the Transfer Agent to issue
Purchase Shares to the Buyer within five (5) Trading Days after the applicable
Purchase Date which the Buyer is entitled to receive;
(e) the Company breaches any representation, warranty, covenant or
other term or condition under any Transaction Document if such breach could have
a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of at
least five (5) Trading Days;
(f) if any Person commences a proceeding against the Company
pursuant to or within the meaning of any Bankruptcy Law ;
(g) if the Company pursuant to or within the meaning of any
Bankruptcy Law; (A) commences a voluntary case, (B) consents to the entry of an
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, (E)
becomes insolvent, or (F) is generally unable to pay its debts as the same
become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (A) is for relief against the Company in an
involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the Company
or any Subsidiary; or
(i) a material adverse change in the business, properties,
operations, financial condition or results of operations of the Company or its
Subsidiaries;
In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares of
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Common Stock under this Agreement. If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of
Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination of this
Agreement under Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.
10. CERTAIN DEFINED TERMS.
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "Available Amount" means initially Twenty Million Dollars
($20,000,000) in the aggregate which amount shall be reduced by the Purchase
Amount each time the Buyer purchases shares of Common Stock pursuant to Section
1 hereof.
(c) "Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
(d) "Closing Sale Price" means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by the Principal Market, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing trade
price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by the Principal Market.
(e) "Confidential Information" means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation,
documents, prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) business days after the initial disclosure. Confidential Information may
also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party at the time of disclosure by
the disclosing party as shown by the receiving party's files and records
immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party's Confidential Information, as shown
by documents and other competent evidence in the receiving party's possession;
or (vi) is required by law to be disclosed by the receiving party, provided that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.
-19-
(f) "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
(g) "Maturity Date" means the date that is 800 Trading Days (40
Monthly Periods) from the Commencement Date.
(h) "Monthly Period" means each successive 20 Trading Day period
commencing with the Commencement Date.
(i) "Person" means an individual or entity including any limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(j) "Principal Market" means the Nasdaq OTC Bulletin Board;
provided, however, that in the event the Company's Common Stock is ever listed
or traded on the Nasdaq National Market, the Nasdaq SmallCap Market, the New
York Stock Exchange or the American Stock Exchange, than the "Principal Market"
shall mean such other market or exchange on which the Company's Common Stock is
then listed or traded.
(k) "Purchase Amount" means the portion of the Available Amount to
be purchased by the Buyer pursuant to Section 1 hereof.
(l) "Purchase Date" means the actual date that the Buyer is to buy
Purchase Shares pursuant to Section 1 hereof.
(m) "Purchase Price" means, as of any Trading Day the lower of the
(A) the lowest Sale Price of the Common Stock on such Trading Day and (B) the
arithmetic average of the three (3) lowest Closing Sale Prices for the Common
Stock during the twelve (12) consecutive Trading Days ending on the Trading Day
immediately preceding such date of determination (to be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction).
(n) "Sale Price" means, for any security as of any date, any trade
price for such security on the Principal Market as reported by the Principal
Market, or, if the Principal Market is not the principal securities exchange or
trading market for such security, the trade price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by the Principal Market.
(o) "SEC" means the United States Securities and Exchange
Commission.
(q) "Transfer Agent" means the transfer agent of the Company as set
forth in Section 11(f) hereof or such other person who is then serving as the
transfer agent for the Company in respect of the Common Stock.
(r) "Trading Day" means any day on which the Principal Market is
open for trading including any day on which the Principal Market is open for
trading for a period of time less than the customary time.
-20-
11. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its shareholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
other Transaction Documents shall be governed by the internal laws of the State
of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. With the exception of the Mutual
Nondisclosure Agreement between the parties dated as of September 14, 2005, this
Agreement supersedes all other prior oral or written agreements between the
Buyer, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. Any provision of this Agreement may be
amended or modified by mutual agreement of the Company and the Buyer, and any
provision hereof may be waived only by the party against whom enforcement is
sought. The Company acknowledges and agrees that is has not relied on, in any
manner whatsoever, any representations or statements, written or oral, other
than as expressly set forth in this Agreement.
-21-
(f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Trading Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
CepTor Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome
▇▇▇▇▇▇▇▇▇▇ & Wolosky LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 212-451-2222
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Esq.
If to the Buyer:
Fusion Capital Fund II, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Transfer Agent:
American Stock Transfer
& Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service,
-22-
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights or obligations under this
Agreement.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) PUBLICITY. The Buyer shall have the right to approve before
issuance any press release, SEC filing or any other public disclosure made by or
on behalf of the Company whatsoever with respect to, in any manner, the Buyer,
its purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby. The Company agrees and acknowledges that its failure to
fully comply with this provision constitutes a material adverse effect on its
ability to perform its obligations under this Agreement.
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) TERMINATION. This Agreement may be terminated only as follows:
(i) By the Buyer any time an Event of Default exists
without any liability or payment to the Company. However, if
pursuant to or within the meaning of any Bankruptcy Law, the Company
commences a voluntary case or any Person commences a proceeding
against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a
general assignment for the benefit of its creditors, (any of which
would be an Event of Default as described in Sections 9(f), 9(g) and
9(h) hereof) this Agreement shall automatically terminate without
any liability or payment to the Company without further action or
notice by any Person. No such termination of this Agreement under
this Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases
and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this
Agreement.
(ii) In the event that the Commencement shall not have
occurred, the Company shall have the option to terminate this
Agreement for any reason or for no reason without liability of any
party to any other party.
(iii) In the event that the Commencement shall not have
occurred on or before December 31, 2005, due to the failure to
satisfy the conditions set forth in Sections 6 and 7 above with
respect to the Commencement (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement at the close of business
on such date or thereafter without liability of any party to any
other party.
-23-
(iv) If by the Maturity Date (including any extension
thereof by the Company pursuant to Section 10(g) hereof), for any
reason or for no reason the full Available Amount under this
Agreement has not been purchased as provided for in Section 1 of
this Agreement, by the Buyer without any liability or payment to the
Company.
(v) At any time after the Commencement Date, the Company
shall have the option to terminate this Agreement for any reason or
for no reason by delivering notice (a "Company Termination Notice")
to the Buyer electing to terminate this Agreement without any
liability or payment to the Buyer. The Company Termination Notice
shall not be effective until one (1) Trading Day after it has been
received by the Buyer.
(vi) This Agreement shall automatically terminate on the
date that the Company sells and the Buyer purchases the full
Available Amount as provided herein, without any action or notice on
the part of any party.
Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice
from the Company to the Buyer, or the Buyer to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2 and 3 hereof,
the indemnification provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Section 11, shall survive the Commencement and any
termination of this Agreement. No termination of this Agreement shall affect the
Company's or the Buyer's rights or obligations (i) under the Registration Rights
Agreement which shall survive any such termination or (ii) under this Agreement
with respect to pending purchases and the Company and the Buyer shall complete
their respective obligations with respect to any pending purchases under this
Agreement.
(l) NO FINANCIAL ADVISOR, PLACEMENT AGENT, BROKER OR FINDER. The
Company represents and warrants to the Buyer that it has not engaged any
financial advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Buyer represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated hereby. The Company
shall be responsible for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorneys' fees and out of pocket expenses) arising in connection
with any such claim.
(m) NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(n) REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
Buyer's remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate. The
-24-
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.
(o) ENFORCEMENT COSTS. If: (i) this Agreement is placed by the Buyer
in the hands of an attorney for enforcement or is enforced by the Buyer through
any legal proceeding; or (ii) an attorney is retained to represent the Buyer in
any bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Buyer in any other proceedings whatsoever
in connection with this Agreement, then the Company shall pay to the Buyer, as
incurred by the Buyer, all reasonable costs and expenses including attorneys'
fees incurred in connection therewith, in addition to all other amounts due
hereunder.
(p) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
* * * * *
-25-
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Common Stock Purchase Agreement to be duly executed as of the date first written
above.
THE COMPANY:
CEPTOR CORPORATION
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and CEO
BUYER:
FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS, LLC
BY: ROCKLEDGE CAPITAL CORPORATION
By:
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
-26-
SCHEDULES
---------
Schedule 3(a) Subsidiaries
Schedule 3(c) Capitalization
Schedule 3(e) Conflicts
Schedule 3(f) 1934 Act Filings
Schedule 3(g) Material Changes
Schedule 3(h) Litigation
Schedule 3(k) Intellectual Property
Schedule 3(m) Liens
Schedule 3(q) Certain Transactions
EXHIBITS
Exhibit A Form of Company Counsel Opinion
Exhibit B Form of Officer's Certificate
Exhibit C Form of Resolutions of Board of Directors of the Company
Exhibit D Form of Secretary's Certificate
Exhibit E Form of Letter to Transfer Agent
DISCLOSURE SCHEDULES
--------------------
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - No Conflicts
Schedule 3(f) - 1934 Act Filings
Schedule 3(g) - Absence of Certain Changes
Schedule 3(h) - Litigation
Schedule 3(k) - Intellectual Property Rights
Schedule 3(m) - Title
Schedule 3(q) - Transactions with Affiliates