Exhibit 4.3
SECOND AMENDMENT TO CEPTOR AGREEMENT
Second Amendment dated this 9th day of December, 2004 to that certain
Agreement ("Agreement") by and among Xxxxxxx Xxxxxxx ("WP"), Ceptor Corporation
("Ceptor") and Xechem International, Inc. ("Xechem").
RECITALS:
WHEREAS, the parties entered into the Agreement on March 31, 2004 (the
"Original Agreement") to provide a mechanism for among other things,
facilitating the independent financing of Ceptor, and a means of liquidity for
Xechem.
WHEREAS, the parties entered into a First Amendment to Ceptor Agreement
on April __, 2004 (the "First Amendment" and together with the Original
Agreement, the "Agreements") in order to further the purposes of the Original
Agreement by adding to and modifying certain terms and provisions of the
Original Agreement.
WHEREAS, the parties are desirous of amending the Original Agreement and
First Amendment to further delineate their respective rights and obligations as
set forth below, which will supersede any inconsistencies or ambiguities in the
Agreements.
Capitalized terms used herein and not otherwise defined shall have the
same meaning as set forth in the Original Agreement or as such may be modified
by the First Amendment and in the PPM (as hereinafter defined).
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the parties agree as follows:
1. RECITALS. The recitals set forth above are incorporated herein by
reference as if fully rewritten.
2. PPM. Xechem acknowledes it has received a copy of the Confidential
Private Placement Memorandum of Ceptor dated October 22, 2004 (the
"PPM") and that the Board of Directors of Xechem have approved the PPM
and the "Offering" and other transactions described therein and has or
will adopt any resolutions as stockholder of Ceptor to authorize the
taking of all actions by Ceptor necessary or appropriate to effectuate
the transactions described therein and consummate the "Merger" of Ceptor
with and into a subsidiary of Company (as such terms are defined in the
PPM) and subsequent merger of Ceptor into Company for the purpose of
effectuating a change of domicile of Company from Florida to Delaware.
Xechem agrees that it shall take all further actions reasonably
requested by Ceptor in order to effectuate the intent and purposes of
the Agreements and the transactions described in the PPM.
3. EXCHANGE RATIO AND SHARES. Xechem agrees and consents to an exchange
ratio of Company Common Stock to be exchanged for each share of
presently outstanding of Ceptor common stock of 2.1656741:1. Xechem
acknowledges that it presently is the record holder of 1,800,000 of the
issued and outstanding shares of common stock of Ceptor, par value
$0.00001 per share, which prior to redemption as contemplated in Section
4 hereof, will be converted into 3,898,213 shares of Company Common
Stock.
4. PUT OPTION. Notwithstanding anything to the contrary contained in
Section 5.0(b) of the Original Agreement as amended by Section 2 of the
First Amendment, the number of shares of Ceptor to be "Put" by Xechem
pursuant to the "Put" obligation shall be that amount of shares equal to
the quotient of: (a) ten (10%) percent of the gross cash raised (before
any commissions or other expenses) in each tranche of equity financing
by Ceptor (or the Company or any other publicly traded parent of Ceptor)
into which shares of the common stock of Ceptor presently outstanding
may be exchanged in connection with the Merger of Ceptor with and into
any subsidiary of Company or such other entity; divided by (b) the price
per share of common stock of Company or other entity (the "Issue Price")
at which such equity tranche is raised (and if in the form of preferred
stock, then the price per share will be computed based upon the number
of shares of common stock into which such preferred stock would be
converted were the preferred stock to immediately convert to common
stock, and, provided, further, that the value or conversion of any
warrants or other consideration shall be disregarded in such
calculation).
Under the terms of the PPM, Ceptor is raising by the sale of shares of
Common Stock of Company a minimum of $2.5 million and maximum of $6.0
million from the offering of Units, each Unit consisting of one share of
Series A Preferred Stock and a warrant for 5,000 shares of common stock
of the Company, exercisable at $1.25 per share. Units are offered by the
Placement Agent for sale at $25,000 per Unit. Shares of Series A
Preferred Stock will be convertible into 10,000 shares of Company Common
Stock (or $2.50 per share of Common Stock).
For the absence of doubt, under the PPM, assuming gross Offering
proceeds of $2.5 million from the sale of 100 Units, Xechem would
exercise its Put for $250,000 in cancellation of 100,000 shares
($2,500,000 x .10 = $250,000/$2.50 = 100,000); and assuming gross
Offering proceeds of $6.0 million from the sale of 240 Units, Xechem
would exercise its Put for $600,000 in cancellation of 240,000 shares
($6,000,000 x .10 = $600,000/$2.50 = 240,000).
Upon closing of any sales of Units under the Offering Xechem shall be
required to and without further action by Xechem shall be deemed to
exercise its Put as set forth herein, provided, however, that in no
event shall one or more exercises of the Put result in any amount in
excess of $2.0 million being redeemed by Company.
Each further tranche of shares of equity to be sold by Ceptor or any
Ceptor parent or affiliate subsequent to the PPM will result in exercise
of the Put by Xechem, and shall be priced at the issue price per share
for the tranche of equity corresponding to the Put to the greatest
extent that is consistent with the principles set forth in the foregoing
paragraphs, provided, however, that Xechem's Put obligation (and
Ceptor's redemption obligation, or that of its parent or affiliate) will
cease once Xechem has Put $2.0 million, in the aggregate, to Ceptor or
any Ceptor parent or affiliate.
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For the absence of doubt, if Xechem has Put $600,000 (240,000 shares) to
Company and subsequently, Company raises $1,000,000 of equity based upon
a price of $2.50 per share in tranche 1 (i.e., 400,000 shares) and
$10,000,000 of equity based upon a price of $4.00 per share in tranche 2
(i.e., 2,500,000 shares), then Xechem would Put 40,000 shares for $2.50
per share in tranche 1 ($100,000) and 250,000 shares in tranche 2
($1,000,000), resulting in aggregate Put proceeds of $1,100,000.
If, however, tranche 2 were $20,000,000 at $4.00 per share, then Xechem
would Put 500,000 shares in tranche 2 ($2,000,000), reduce by $700,000
previously Put (175,000 shares), or $1,300,000, or an additional 325,000
shares, net ($600,000 (PPM) + $100,000 (tranche 1) = $700,000.
$2,000,000 - $700,000 = $1,300,000 net Put remaining. $1,300,000/$4.00 =
325,000 shares to extinguish Put.
Xechem shall continue to be entitled to the royalty of two (2%) percent
of gross revenues received by Ceptor, its subsidiaries, affiliates and
assigns with respect to the sale of any products incorporating any of
the Ceptor IP or the licensing of any of the Ceptor IP (or the sale of
the licensing rights to any of the Ceptor IP or the sale of any of the
Ceptor IP).
The remainder of the substantive provisions of Section 5.0(b) of the
Original Agreement shall remain in place, subject to the modification of
the terms of any indebtedness of Ceptor or exchange of such indebtedness
for Replacement Notes of Company, to reflect the terms set forth in the
PPM, including any cancellations or additional consideration in
connection with the Exchange Offer of Bridge Loans and/or 10% Notes for
Replacement Notes as shall be determined in the sole discretion of
Ceptor management, from time to time.
5. LOCK-UP. Of the shares of Common Stock to be issued to and held by
Xechem pursuant to the PPM (and as set forth in Section 3, above), the
entire amount held is subject to a lock-up agreement amongst the parties
to this Agreement as follows: Xechem agrees that it may not sell any of
its shares for a period of six (6) months following the effective date
of the registration of the securities purchased in the Offering (or the
effective date of the registration of the Common Stock underlying the
securities purchased in the Offering) as described in the PPM; and may
thereafter sell an amount equal to up to fifty (50%) percent issued to
Xechem by exchange for outstanding CepTor shares under the terms of the
Merger, after giving effect to any Put Option Redemptions (1,899,106 at
the Minimum Offering and 1,829,107 at the Maximum Offering shares of
Company Common Stock) thereafter; until one (1) year following the
effective date of the registration of securities purchased in the
Offering (or the effective date of registration of the underlying Common
Stock) described in the PPM.
Notwithstanding the foregoing, if the effective date of the registration
of the securities purchased in the Offering (or Common Stock underlying
the securities purchased in the Offering) has not occurred by the six
(6) month anniversary following the termination of the Offering, then
the six (6) month lock-up applicable to fifty (50%) percent of the
shares of Common Stock held by Xechem as set forth above shall commence
upon such six (6) month anniversary without an effective registration
statement, such that Xechem may sell fifty (50%) percent of its shares
following one (1) year following such date, and an additional fifty
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(50%) percent eighteen (18) months following, subject in all cases to
Rule 144 restrictions.
In addition, if the Company engages an underwriter or placement agent
during the twelve (12) month period following the final Closing to occur
under the PPM, in order to raise a minimum of $5.0 million through the
sale of the Company other equity securities (or securities that may be
convertible into Company equity securities), in a public offering or
private placement, upon notice of commencing such public offering or
private placement, Xechem agrees to the terms of any further lock-up
agreements required by the underwriter or placement agent thereof, and
agrees that it shall refrain from making any sales, transfers or other
dispositions in the course of such offering, but, in any event, for not
more than ninety (90) days from the date of effectiveness of such
further lock-up agreement, or ninety (90) days following the termination
of such offering, whichever is less. Xechem agrees that its piggyback
registration rights shall be inapplicable to registration of the share
of Common Stock of Company issued pursuant to the PPM, provided that
such piggyback registration shall be effected at the same time as
registration of Founder's Shares issued pursuant to the Founders' Stock
Plan to be adopted by the Corporation is effected, as described in the
PPM.
Notwithstanding anything herein to the contrary, Xechem shall be
permitted to transfer shares of the Common Stock in a privately
negotiated transaction to any person or entity who agrees to be bound by
the terms and provisions of this Agreement as evidenced by its execution
thereof, and upon the consent of the Company, which consent shall not be
unreasonably withheld.
6. PLACEMENT AGENT AGREEMENT. A true and correct copy of the Placement
Agent Agreement by and between Xxxxxxxxxx Securities Corporation and
Ceptor is annexed as Exhibit A hereto. Xechem authorizes and approves
the Placement Agent Agreement, including the payment of all fees and
expenses, as provided therein, and all agreements of indemnification or
contribution therein.
7. RATIFICATION. All actions of Ceptor, its officers, directors, attorneys,
accountants, advisors, lenders, consultants, and other parties which
have been disclosed to Xechem, or any of its directors, are hereby
ratified, confirmed and approved by Xechem as stockholder of Ceptor in
all respects, and Ceptor is and shall be authorized to proceed in all
respects as described in the PPM.
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment
as of the date first set forth above, which Second Amendment shall be binding if
delivered in counterpart or one integrated document by original, photocopy or
facsimile.
CEPTOR CORPORATION
By: /s/Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
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XECHEM INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Director
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