Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
May 26, 2006
Xxxxxxxxxx Securities Corporation
0 Xxxx Xxx Xxxx Xxxx. - 0xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
RE: CEPTOR CORPORATION
Ladies and Gentlemen:
This Placement Agency Agreement (this "Agreement") sets forth terms
upon which Xxxxxxxxxx Securities Corporation, a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc. (together with
its dealers, the "Placement Agent"), shall be engaged by Ceptor Corporation
("CepTor") to act as Placement Agent in connection with the private placement
(the "Offering") on a "best efforts" basis of up to $6 million principal amount
of one-year 6% convertible notes (the "Notes"). The Notes shall be convertible
into CepTor's Common Stock at $0.15 per share, subject to adjustment. Purchasers
of Notes who did not previously purchase shares of CepTor's Series A Convertible
Preferred Stock will also receive, without additional consideration, five-year
warrants (the "Warrants") to purchase shares of our Common Stock in an amount
equal to 100% of the amount of shares of our Common Stock into which our Notes
are initially convertible, exercisable at $0.30 per share, subject to adjustment
for certain issuances or events that will result in dilution. Notes purchasers
who previously purchased shares of Series A Preferred stock shall be entitled to
receive the number of shares of Common Stock set forth in the confidential
offering letter, dated May 26, 2006 (the "Memorandum") and an adjustment to the
exercise price of warrants they hold as set forth in the Memorandum.
The purchase price of the Notes is 100% of the principal amount
purchased (the "Offering Price"). The minimum subscription is $25,000, provided,
however, that subscriptions in lesser amounts may be accepted in CepTor's and
Placement Agent's discretion. The Placement Agent shall not tender to CepTor
subscriptions for any persons or entities who do not qualify as "accredited
investors," as such term is defined in Rule 501 of Regulation D as promulgated
under Section 4(2) ("Regulation D") of the Securities Act of 1933, as amended
(the "Act"). The Notes will be offered until June 30, 2006 (the "Initial
Offering Period") commencing on the issue date of the Memorandum (as defined
below), which period may be extended by CepTor and the Placement Agent (this
additional period and the Initial Offering Period shall be referred to as the
"Offering Period"). The date on which the Offering shall terminate shall be
referred to as the "Termination Date."
With respect to the Offering, CepTor shall provide the Placement
Agent, on the terms set forth herein, the right to offer and sell all of the
securities being offered. Each of the Placement Agent and CepTor may, in its
sole reasonable discretion, accept or reject in whole or in part any prospective
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investment in the Notes and securities to accompany the Notes or allot to any
prospective subscriber less than principal amount of Notes that such subscriber
desires to purchase.
The Offering will be made by CepTor solely pursuant to the
Memorandum (which shall include all amendments, supplements, exhibits and
schedules attached thereto), which at all times will be in form and substance
reasonably acceptable to the Placement Agent, CepTor and their respective
counsel and contain such legends and other information as such parties and their
respective counsel may, from time to time, deem necessary and desirable to be
set forth therein.
1. APPOINTMENT OF PLACEMENT AGENT. On the basis of the representations
and warranties provided herein, and subject to the terms and conditions set
forth herein, the Placement Agent is appointed as exclusive Placement Agent of
CepTor during the Offering Period to assist CepTor in finding qualified
subscribers for the Offering. On the basis of such representations and
warranties and subject to such terms and conditions, the Placement Agent hereby
accepts such appointment and agrees to perform its services hereunder in a
professional and businesslike manner and to use its commercially reasonable best
efforts to assist CepTor in finding subscribers for Notes and securities to
accompany the Notes who qualify as "accredited investors," as such term is
defined in Rule 501 of Regulation D and to complete the Offering. The Placement
Agent has no obligation to purchase any of the Notes or securities to accompany
the Notes. Unless sooner terminated in accordance with this Agreement, the
engagement of the Placement Agent hereunder shall continue until the later of
the Termination Date or the last Closing (as defined below). Prior to the
Termination Date, CepTor shall not engage any other party to act as placement
agent of the type of securities being offered by CepTor pursuant to the
Memorandum.
2. REPRESENTATIONS AND WARRANTIES.
The following representations and warranties of CepTor are true and
correct as of the date of this Agreement:
(a) CepTor is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Except as disclosed in the Memorandum, CepTor has no subsidiaries
and does not have an equity interest in any other firm, partnership, association
or other entity. CepTor and each of its subsidiaries is duly qualified to
transact business as a foreign corporation or limited liability company and is
in good standing under the laws of each jurisdiction where the location of its
properties or the conduct of its business makes such qualification necessary.
(b) CepTor has all requisite power and authority to conduct its
business as presently conducted and as proposed to be conducted, to enter into
and perform its obligations under this Agreement and at the time of each closing
of the sale of Notes, CepTor will have all requisite power and authority to
issue, sell and deliver the Notes and the securities to accompany the Notes and
the Placement Agent Warrants (as hereinafter defined). Upon due execution and
delivery, this Agreement, the Subscription Agreement accompanying the Memorandum
(the "Subscription Agreement"), the Notes, the Warrants and the warrants to be
issued to the Placement Agent at each closing of the Offering ("Placement Agent
Warrants") will constitute the valid and binding obligations of CepTor,
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enforceable against CepTor in accordance with their respective terms, subject to
any applicable bankruptcy, insolvency or other laws affecting the rights of
creditors generally, securities laws applicable to indemnification and
contribution obligations of the kind set forth herein and to general equitable
principles and the availability of specific performance.
(c) None of the execution and delivery of, or performance by CepTor
under this Agreement or the Subscription Agreement, the Notes, the Warrants and
the Placement Agent Warrants, will conflict with or violate, or will result in
the creation or imposition of, any lien, charge or other encumbrance upon any of
the assets of CepTor or any of its subsidiaries under any agreement or other
instrument to which CepTor or any of its subsidiaries is a party or by which
either CepTor or any of its subsidiaries or their respective assets may be
bound, or any term of the charter or by-laws of CepTor, or any license, permit,
judgment, decree, order, statute, rule or regulation applicable to CepTor or its
subsidiaries or any of their respective assets.
(d) Except as disclosed in CepTor's filings with the United States
Securities and Exchange Commission (the "SEC"), none of the Notes, the Warrants,
the Placement Agent Warrants, the shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants or the Placement Agent
Warrants, and the shares of Common Stock issuable to purchasers of Notes who
were or are holders of Series A Preferred Stock of CepTor are subject to
preemptive or similar rights of any stockholder or security holder of CepTor or
an adjustment under the anti-dilution or exercise rights of any holders of any
outstanding shares of capital stock, options, warrants or other rights to
acquire any securities of CepTor.
(e) Ceptor agrees that no consent, authorization or filing of or
with any United States court or government authority is required in connection
with the consummation of the transactions contemplated herein, except for
required filings with the SEC and applicable "Blue Sky" or state securities
commissions relating specifically to the Offering.
(f) The Memorandum and CepTor's filings with the SEC do not, and
will not, include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(g) The offering materials offering the Notes have been prepared in
conformity with all applicable law, and is in compliance with Regulation D, the
Act and the requirements of all other rules and regulations (the "Regulations")
of the SEC relating to offerings of the type contemplated by this Agreement, and
the applicable securities laws and the rules and regulations of those
jurisdictions wherein the Units are to be offered and sold other than foreign
jurisdictions. The Notes and securities accompanying the notes will be offered
and sold pursuant to the registration exemption provided by Rule 506 of
Regulation D and Section 4(2) of the Act as a transaction not involving a public
offering and the requirements of any other applicable state securities laws and
the respective rules and regulations thereunder in those jurisdictions in the
United States in which the Placement Agent notifies CepTor that the Notes and
securities to accompany the Notes are being offered for sale. CepTor has not
taken, nor will it take, any action which conflicts with the conditions and
requirements of, or which would make unavailable with respect to the Offering,
the exemption(s) from registration available pursuant to Rule 506 of Regulation
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D or Section 4(2) of the Act. None of CepTor, its predecessors or, to CepTor's
knowledge, its affiliates, has been subject to any order, judgment or decree of
any court of competent jurisdiction temporarily, preliminarily or permanently
enjoining such person for failing to comply with Section 503 of Regulation D.
(h) CepTor owns its property and assets free and clear of all
mortgages, liens, loans, pledges, security interests, claims, equitable
interests, charges, and encumbrances, except such encumbrances and liens which
arise in the ordinary course of business and do not materially impair CepTor's
ownership or use of such property or assets. With respect to the property and
assets it leases, if any, CepTor is in compliance in all material respects with
such leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims, or encumbrances.
(i) All outstanding shares of capital stock of CepTor are duly
authorized, validly issued and outstanding, fully paid and nonassessable. Except
for warrants referred to in the Memorandum and as set forth in CepTor's filings
with the SEC: (i) there are no outstanding options, warrants or other rights
permitting or requiring CepTor or others to purchase or acquire any shares of
capital stock or other equity securities of CepTor or to pay any dividend or
make any other distribution in respect thereof; (ii) there are no securities
issued or outstanding which are convertible into or exchangeable for shares of
capital stock or other equity securities of CepTor and there are no contracts,
commitments or understandings to which CepTor is a party, whether or not in
writing, to issue or grant any such option, warrant, right or convertible or
exchangeable security; (iii) no shares of stock or other securities of CepTor
are reserved for issuance for any purpose; (iv) there are no voting trusts or
other contracts, commitments, understandings, arrangements or restrictions of
any kind to which CepTor is a party with respect to the ownership, voting or
transfer of Units of stock or other securities of CepTor, including without
limitation, any preemptive rights, rights of first refusal, proxies or similar
rights and (v) no person holds a right to require CepTor to register any
securities of CepTor under the Act or to participate in any such registration.
All issuances by CepTor of its securities have been registered or were exempt
from registration under the Act and any applicable state securities laws.
(j) The financial statements, together with the related notes, of
CepTor included in CepTor's SEC filings and the Memorandum present fairly in all
material respects the financial position of CepTor as of the respective dates
specified and the results of its operations and cash flow for the respective
periods covered thereby. Except as set forth in such financial statements,
CepTor has not incurred any material liabilities of any kind, whether accrued,
absolute, contingent or otherwise or entered into any material transactions
subsequent to December 31, 2005 except as set forth in CepTor's SEC filings.
(k) The conduct of business by CepTor as presently and proposed to
be conducted is not subject to continuing oversight, supervision, regulation or
examination by any governmental official or body of the United States or any
other jurisdiction wherein CepTor conducts or proposes to conduct such business,
except as is described in the Memorandum and CepTor's SEC filings or where such
regulation is otherwise applicable to commercial enterprises generally. CepTor
has obtained all requisite licenses, permits and other governmental
authorizations to conduct its business as presently conducted, except to the
extent the failure to so obtain would not materially and adversely affect or
could reasonably be expected to materially and adversely affect the business,
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financial condition, operations, prospects or property of CepTor or any of its
subsidiaries, taken as a whole (a "Material Adverse Effect"). CepTor has not
received any notice of any violation of, or noncompliance with, any federal,
state, local or foreign laws, ordinances, regulations and orders (including,
without limitation, those relating to environmental protection, occupational
safety and health, federal securities laws, equal employment opportunity,
consumer protection, credit reporting, "truth-in-lending", and warranties and
trade practices) applicable to its business, the violation of, or noncompliance
with, which would have a Material Adverse Effect, and CepTor knows of no facts
or set of circumstances which would give rise to such a notice.
(l) Except as set forth in its SEC filings, no default by CepTor or,
to the knowledge of CepTor, any other party exists in the due performance under
any material agreements to which CepTor is a party or to which any of its assets
are subject, other than defaults that would not have a Material Adverse Effect.
Except as set forth in the Memorandum and CepTor's SEC filings, no default by
CepTor or, to the knowledge of CepTor, any other party exists in the due
performance under any material agreements to which CepTor is a party or to which
any of its assets are subject, other than defaults that would not have a
Material Adverse Effect.
(m) Except as set forth in the Memorandum and CepTor's SEC filings,
there are no actions, suits, claims, hearings or proceedings pending before any
court or governmental authority or, to the knowledge of CepTor, threatened,
against CepTor, or involving its assets or any of its officers or directors (in
their capacity as such) which, if determined adversely to CepTor or such officer
or director, would have a Material Adverse Effect or adversely affect the
transactions contemplated by this Agreement or the enforceability thereof.
(n) CepTor is not: (i) in violation of its charter or By-laws; (ii)
in default of any indenture, mortgage, deed of trust, note or other agreement or
instrument to which it is a party or by which it is or may be bound or to which
any of its assets may be subject, the default of which would have a Material
Adverse Effect; (iii) in violation of any statute, rule or regulation, the
violation of which would have a Material Adverse Effect; or (iv) in violation of
any judgment, decree or order applicable to it, which violation or violations
individually, or in the aggregate, would have a Material Adverse Effect.
(o) Except as set forth in the Memorandum and CepTor's SEC filings,
since December 31, 2005, there has been no: (i) material adverse change in the
financial condition of CepTor or (ii) damage, loss or destruction, whether or
not covered by insurance, with respect to any material asset or property of
CepTor.
(p) CepTor has appropriate casualty and liability insurance
coverage, in scope and amounts reasonable and customary for similar businesses.
(q) CepTor has made or filed all federal, state and foreign income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject for which taxes are due and which are due (unless and
only to the extent that it has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes or has obtained an
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extension of the deadline for such filing) 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 provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. To CepTor's
knowledge, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of CepTor know of no
basis for any such claim. CepTor has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign,
federal, statue or local tax. To CepTor's knowledge, none of CepTor's tax
returns is presently being audited by any taxing authority. To CepTor's
knowledge, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of CepTor know of no
basis for any such claim. CepTor has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign,
federal, statue or local tax. To CepTor's knowledge, none of CepTor's tax
returns is presently being audited by any taxing authority.
(r) CepTor has filed all reports required to be filed by it under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
pursuant to Section 13(a) or 15(d) thereof (the foregoing materials being
collectively referred to herein as the "SEC Filings"). As of their respective
dates, the SEC Filings complied in all material respects with the requirements
of the Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Filings, when filed, 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. All
material agreements to which CepTor is a party have been filed as exhibits to
the SEC Filings. The financial statements of CepTor included in the SEC Filings
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing.
(s) Since the adoption of the Xxxxxxxx-Xxxxx Act of 2002 (the "New
Act"), CepTor has complied in all material respects with the laws, rules and
regulations under the New Act to the extent applicable to CepTor.
(t) Neither the sale of the Notes and securities accompanying the
Notes hereunder nor its use of the proceeds thereof will violate the Trading
with the Enemy Act, as amended, or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto.
Without limiting the foregoing, CepTor (a) is not a person whose property or
interests in property are blocked pursuant to Section 1 of Executive Order 13224
of September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) or (b) engages in any dealings or transactions, or be otherwise
associated, with any such person. CepTor is in compliance with the USA Patriot
Act of 2001 (signed into law October 26, 2001).
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3. CERTAIN OBLIGATIONS OF CEPTOR AND PLACEMENT AGENT COMPENSATION.
(a) CepTor shall cause to be delivered to the Placement Agent copies
of the Memorandum and has consented, and hereby consents, to the use of such
copies for the purposes permitted by the Act and applicable securities laws and
in accordance with the terms and conditions of this Agreement, and hereby
authorizes the Placement Agent and its agents and employees to use the
Memorandum in connection with the sale of the Notes until the Termination Date,
and no person or entity is or will be authorized to give any information or make
any representations other than those contained in the Memorandum or to use any
offering materials other than those contained in the Memorandum in connection
with the sale of the Notes.
(b) CepTor shall make available to the Placement Agent and its
representatives such information as may be reasonably requested in making a
reasonable investigation of CepTor and its affairs and shall provide access to
such employees during normal business hours as shall be reasonably requested by
the Placement Agent.
(c) As compensation for its services under this Agreement, at each
Closing, the Placement Agent will receive a cash fee (the "Placement Agent Fee")
equal to 10% of the aggregate gross proceeds that CepTor receives from the sale
of Notes to purchasers obtained through the assistance of the Placement Agent at
such closing. In addition, at the Initial Closing, Placement Agent shall be
reimbursed for fees and expenses of counsel for the Placement Agent in
connection with the Offering in the aggregate amount of $15,000.
(d) In addition to the Placement Agent Fee and expense allowances
and reimbursement set forth in clause (c) above, CepTor shall at each Closing
sell to Placement Agent, or its designee(s), for consideration of $10.00, a
five-year warrant to purchase such number of shares of Common Stock at an
exercise price of $0.15 per share equal to 10% of the number of shares of Common
Stock into which the Notes sold through the efforts of the Placement Agent in
this Offering are convertible as part of such closing (the "Placement Agent
Warrants"). The Placement Agent Warrants shall have the same registration rights
as those afforded to investors in the Offering and shall contain the same
provisions for cashless exercise afforded to purchasers of Notes.
(e) As additional compensation to Placement Agent, CepTor shall
reduce to $0.30 per share the exercise price of all warrants issued to the
Placement Agent as placement agent compensation in connection with the private
placement of units consisting of Series A Preferred stock and warrants.
4. SUBSCRIPTION AND CLOSING PROCEDURES.
(a) The Notes and securities accompanying the Notes sold in the
Offering will be sold pursuant to Subscription Agreements between CepTor and the
investors in the Offering in the form annexed to the Memorandum.
(b) All funds for subscriptions received from the sale of Notes in
the Offering will be deposited into the escrow account (the "Escrow Account")
established for such purpose with Guaranty Bank & Trust to be administered by
Corporate Stock Transfer, Inc., as escrow agent (the "Escrow Agent"). All such
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funds for subscriptions will be held in the Escrow Account pursuant to the terms
of the Escrow Agreement by and among the Placement Agent, CepTor and the Escrow
Agent. CepTor will pay all fees related to the establishment and maintenance of
the Escrow Account.
(c) If all of the conditions set forth elsewhere in this Agreement
are fulfilled, the Initial Closing shall be held in accordance with the terms of
the Subscription Agreements with respect to the Notes and securities
accompanying the Notes sold at the offices of Olshan, Grundman, Frome &
Xxxxxxxxxx, counsel to CepTor. Thereafter, additional closings may be held until
termination of the Offering. Delivery of payment for the accepted subscriptions
for the Notes and securities accompanying the Notes from funds held in the
Escrow Account will be made at the Closing against delivery of the Notes and
securities to accompany the Notes by CepTor.
(d) If subscriptions for Notes have not been received and accepted
by CepTor on or before the expiration of the Initial Offering Period or any
extension thereof for any reason, the Offering will be terminated, no Notes will
be sold, and the Escrow Agent will, at the request of the Placement Agent, cause
all monies received from subscribers for the Notes to be promptly returned to
such subscribers without interest, penalty, expense or deduction. CepTor will
accept or reject the Subscription Document in a timely fashion and at each
Closing will countersign the Subscription Document and provide duplicate copies
of such Agreements to the Placement Agent for distribution to the Subscribers.
CepTor will give written notice to the Placement Agent of its acceptance or
rejection of each subscription. CepTor or the Placement Agent on CepTor's
behalf, will promptly return to Subscribers incomplete, improperly completed,
improperly executed and rejected subscriptions and give written notice thereof
to the Placement Agent upon such return.
5. FURTHER COVENANTS. CepTor hereby covenants and agrees that:
(a) Except upon prior written notice to the Placement Agent, CepTor
shall not, at any time prior to the Closing, knowingly take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be complete and correct in all material respects on and as of
the Closing date with the same force and effect as if such representations and
warranties had been made on and as of each such date.
(b) If, at any time prior to the Closing, any event shall occur that
causes or is reasonably likely to result in a Material Adverse Effect or as a
result of which it becomes necessary to amend or supplement the Memorandum so
that the representations and warranties herein remain true and correct in all
material respects, or in case it shall be necessary to amend or supplement the
Memorandum to comply with Regulation D or any other applicable securities laws
or regulations, CepTor will promptly notify the Placement Agent and shall, at
its sole cost, prepare and furnish to the Placement Agent copies of appropriate
amendments and/or supplements in such quantities as the Placement Agent may
reasonably request. CepTor will not at any time before the Closing prepare or
use any amendment or supplement to the Memorandum of which the Placement Agent
will not previously have been advised and furnished with a copy, or which is not
in compliance in all material respects with the Act and other applicable
securities laws. As soon as CepTor is advised thereof, CepTor will advise the
Placement Agent and its counsel, and confirm the advice in writing, of any order
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preventing or suspending the use of the Memorandum, or the suspension of any
exemption for such qualification or registration thereof for offering in any
jurisdiction, or of the institution or threatened institution of any proceedings
for any of such purposes, and CepTor will use its best efforts to prevent the
issuance of any such order and, if issued, to obtain as soon as reasonably
possible the lifting thereof.
(c) CepTor shall comply with the Act, the Exchange Act and the rules
and regulations thereunder, all applicable state securities laws and the rules
and regulations thereunder so as to permit the continuance of the sales of the
Notes and securities accompanying the Notes, and will file with the SEC, and
shall promptly thereafter forward to the Placement Agent, any and all reports on
Form D as are required.
(d) CepTor shall use its best efforts to qualify the Notes and
securities accompanying the Notes for sale under the securities laws of such
jurisdictions in the United States as may be mutually agreed to by CepTor and
the Placement Agent, and CepTor will make such applications and furnish
information as may be required for such purposes, provided that CepTor will not
be required to qualify as a foreign corporation in any jurisdiction or execute a
general consent to service of process. CepTor will, from time to time, prepare
and file such statements and reports as are or may be required to continue such
qualifications in effect for so long a period as the Placement Agent may
reasonably request with respect to the Offering.
(e) CepTor shall place a legend on the certificates representing the
securities sold in the Offering and the Placement Agent Warrants that the
securities evidenced thereby have not been registered under the Act or
applicable state securities laws, setting forth or referring to the applicable
restrictions on transferability and sale of such securities under the Act and
applicable state laws.
(f) CepTor shall apply the net proceeds from the sale of the Notes
to fund its working capital requirements and for such other purposes as
substantially described under the heading "Monthly Disbursement of Proceeds" in
the Memorandum and in the Subscription Agreement.
(g) During the Offering Period, CepTor shall afford each prospective
purchaser of Notes the opportunity to ask questions of and receive answers from
an officer of CepTor concerning the terms and conditions of the Offering and the
opportunity to obtain such other additional information necessary to verify the
accuracy of the Memorandum.
(h) CepTor shall pay all reasonable expenses incurred in connection
with the preparation and printing and mailing of all necessary offering
documents and instruments related to the Offering and the issuance of the Notes
and securities to accompany the Notes and the Placement Agent Warrants and will
also pay its own respective expenses for accounting fees, legal fees, and other
costs involved with the Offering. CepTor will provide at its own expense such
quantities of the Memorandum and other documents and instruments relating to the
Offering as the Placement Agent may reasonably request. In addition, CepTor will
pay all reasonable filing fees, costs and legal fees for Blue Sky services and
related filings and expenses of its counsel with respect to Blue Sky
qualifications. The Blue Sky filings shall be prepared by CepTor's counsel and
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all Blue Sky filing fees shall be paid by CepTor prior to or together with any
filing. CepTor's counsel shall promptly send copies of all Blue Sky filings that
it makes to the Placement Agent following the Closing. Further, as promptly as
practicable after the Closing, CepTor shall prepare, at its own expense,
velobound "closing binders" relating to the Offering and will distribute such
binders to the individuals designated by counsel to the Placement Agent.
6. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS. The obligations of the
Placement Agent hereunder to effect each Closing are subject to the fulfillment,
at or before each Closing, of the following additional conditions:
(a) Each of the representations and warranties of CepTor shall be
true and correct in all material respects when made on and as of the Closing
date as though made on and as of the Closing, except as to representations and
warranties made as of a specific date.
(b) CepTor shall have performed and complied in all material
respects with all agreements, covenants and conditions required to be performed
and complied with by it at or before the Closing.
(c) No order suspending the use of the Memorandum or enjoining the
Offering or sale of the Notes shall have been issued, and no proceedings for
that purpose or a similar purpose shall have been initiated or pending, or, to
the best of CepTor's knowledge, be contemplated or threatened.
(d) The Placement Agent shall have received a certificate of the
Chairman and Chief Executive Officer of CepTor, dated as of the Closing Date,
certifying, as to the fulfillment of the conditions set forth in subparagraphs
(a), (b) and (c) above.
(e) CepTor shall have delivered to the Placement Agent: (i) a
recently dated good standing certificate from the secretary of state of its
jurisdiction of incorporation or organization and each jurisdiction in which it
is qualified to do business as a foreign corporation and (ii) resolutions of its
Board of Directors or other governing body approving this Agreement and the
transactions and agreements contemplated by this Agreement, and the Memorandum,
certified by its Chairman and Chief Executive Officer.
(f) At each Closing, CepTor shall pay to the Placement Agent the
Placement Agent Fee and the expense reimbursement and shall issue the Placement
Agent Warrants.
(g) CepTor shall deliver to the Placement Agent a signed opinion of
its legal counsel dated as of each Closing Date, containing the opinions set
forth in Exhibit A, subject to conditions, limitations and qualifications
provided for therein.
(h) All proceedings taken at or prior to each Closing in connection
with the authorization, issuance and sale of the Notes and securities
accompanying the Notes and the Placement Agent Warrants will be reasonably
satisfactory in form and substance to the Placement Agent and its counsel, and
such counsel shall have been furnished with all such documents, certificates and
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opinions as it may reasonably request upon reasonable prior notice in connection
with the transactions contemplated hereby.
7. INTENTIONALLY OMITTED
8. REPRESENTATION AND WARRANTIES OF THE PLACEMENT AGENT; COVENANTS OF
THE PLACEMENT AGENT.
(a) The Placement Agent hereby represents and warrants to CepTor
that (i) it is a registered broker-dealer pursuant to the Exchange Act and a
member in good standing of the National Association of Securities Dealers, Inc.,
and (ii) this Agreement has been duly authorized, executed and delivered by the
Placement Agent and is a valid and binding agreement on its part.
(b) The Placement Agent shall not engage in any form of general
solicitation or general advertising that is prohibited by Regulation D in
connection with the Offering, or take any action that might reasonably be
expected to jeopardize the availability for the Offering of the exemption from
registration provided by Rule 506 under Regulation D. The Placement Agent shall
comply in all material respects with all laws in effect in all US jurisdictions
in which securities of CepTor are offered by it and the rules, regulations and
orders of any securities administrator existing or adopted thereunder, including
without limitation, the Act, the Exchange Act and the rules and regulations
thereunder.
(c) The Placement Agent shall maintain appropriate records of the
documents signed by each subscriber for a period of at least four years after
the Termination Date.
9. INDEMNIFICATION.
(a) CepTor shall: (i) indemnify and hold harmless the Placement
Agent, its selected dealers, agents and their respective officers, directors,
employees and each person, if any, who controls the Placement Agent within the
meaning of the Act and such agents (each an "Indemnitee") against, and pay or
reimburse each Indemnitee for, any and all losses, claims, damages, liabilities
or expenses whatsoever (or actions or proceedings or investigations in respect
thereof), joint or several (which will, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees, including appeals), to which
any Indemnitee may become subject, under the Act or otherwise, in connection
with the offer and sale of the Notes and securities accompanying the Notes, and
(ii) reimburse each Indemnitee for any legal or other expenses reasonably
incurred in connection with investigating or defending against any such loss,
claim, action, proceeding or investigation; provided, however, that CepTor will
not be liable in any such case to the extent that any such claim, damage or
liability results from (A) an untrue statement or alleged untrue statement of a
material fact made in the Memorandum, or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in reliance upon and in conformity with
written information furnished to CepTor by the Placement Agent or any such
controlling persons specifically for use in the Memorandum, (B) any violations
by the Placement Agent or such controlling persons of the Act or state
securities laws which does not result from a violation thereof by CepTor or any
of its affiliates, or (C) the gross negligence, willful misconduct, or bad faith
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of the Placement Agent or the party claiming a right to indemnification. In
addition to the foregoing agreement to indemnify and reimburse the Indemnitees,
CepTor will indemnify and hold harmless each Indemnitee against any and all
losses, claims, damages, liabilities or expenses whatsoever (or actions or
proceedings or investigations in respect thereof), joint or several (which shall
for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees, including appeals) to which any Indemnitee may become subject insofar as
such costs, expenses, losses, claims, damages or liabilities arise out of or are
based upon the claim of any person or entity that he or it is entitled to
broker's or finder's fees from any Indemnitee in connection with the Offering.
(b) The Placement Agent will indemnify and hold harmless each of
CepTor, its officers, directors, agents, employees and each person, if any, who
controls CepTor within the meaning of the Act against, and pay or reimburse any
such person for, any and all losses, claims, damages, liabilities or expenses
whatsoever (or actions, proceedings or investigations in respect thereof) joint
or several (which shall for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees, including appeals) to which CepTor or any such person may
become subject under the Act or otherwise, whether such losses, claims, damages,
liabilities or expenses shall result from any claim of CepTor, any of its
respective officers, directors, agents, employees, any person who controls
CepTor within the meaning of the Act or any third party, insofar as such losses,
claims, damages or liabilities are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Memorandum but only with
reference to information contained in the Memorandum relating to the Placement
Agent furnished in writing to CepTor by the Placement Agent or any controlling
person.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, claim, proceeding or
investigation (the "Action"), such indemnified party, if a claim in respect
thereof is to be made against the indemnified party under this Section 9, will
notify the indemnifying party of the commencement thereof, but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 9 unless the indemnifying
party has been substantially prejudiced by such omission. The indemnifying party
will have the right, at its option, to assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party, which consent shall not be unreasonably withheld. The
indemnified party will have the right to employ separate counsel in any such
Action and to participate in the defense thereof, but the fees and expenses of
such counsel will not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the Action with counsel reasonably
satisfactory to the indemnified party, provided, however, that if the
indemnified party shall be requested by the indemnifying party to participate in
the defense thereof or shall have concluded in good faith and specifically
notified the indemnifying party either that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such Action involves or could have a material adverse
effect upon it with respect to matters beyond the scope of the indemnity
agreements contained in this Agreement, then the counsel representing the
indemnified party, to the extent made necessary by such defenses, shall have the
right to direct such defenses of such Action on its behalf and in such case the
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reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an indemnified party will be made without the consent of
the indemnified party, which consent shall not be unreasonably withheld or
delayed in light of all factors of importance to such party, unless such
settlement includes an unconditional release of such indemnified party from all
liability arising or that may arise out of such Action. No indemnified party
shall settle any Action for which indemnification may be sought by him or it
hereunder without the prior written consent of the indemnifying party.
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10. CONTRIBUTION.
To provide for just and equitable contribution, if: (i) an
indemnified party makes a claim for indemnification pursuant to Section 10
hereof and it is finally determined, by a judgment, order or decree not subject
to further appeal that such claims for indemnification may not be enforced, even
though this Agreement expressly provides for indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
Exchange Act, or otherwise, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of CepTor on the one hand and the Placement Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by CepTor on the one hand and the Placement Agent on the other shall be
deemed to be in the same proportion as the total net proceeds from the Offering
(before deducting expenses) received by CepTor bear to the total compensation
(with respect to stock compensation, the value of such stock shall be determined
by reference to the value of the stock at the time the contribution payment is
determined) received by the Placement Agent. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission or alleged omission will
be determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by CepTor or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. CepTor and the Placement Agent agree
that it would be unjust and inequitable if the respective contribution
obligations of CepTor on the one hand and the Placement Agent on the other hand
were determined by pro rata allocation of the aggregate losses, liabilities,
claims, damages and expenses or by any other method or allocation that does not
reflect the equitable considerations referred to in this Section 10. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 10(f) of
the Act) will be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Section 10, each person,
if any, who controls the Placement Agent within the meaning of the Act will have
the same rights to contribution as the Placement Agent, and each person, if any,
who controls CepTor within the meaning of the Act will have the same rights to
contribution as CepTor, subject in each case to the provisions of this Section
10. Anything in this Section 10 to the contrary notwithstanding, no party will
be liable for contribution with respect to the settlement of any claim or action
effected without its written consent. This Section 10 is intended to supersede,
to the extent permitted by law, any right to contribution under the Act, the
Exchange Act or otherwise available.
11. TERMINATION.
(a) The engagement of the Placement Agent may be terminated by the
Placement Agent at any time prior to the expiration of the Offering Period (such
date of termination of the engagement of the Placement Agent or the date of
termination of the engagement of the Placement Agent under Section 11(b) below,
as the case may be, the "Expiration Date") in the event that: (i) any of the
representations or warranties of CepTor contained herein or in the Memorandum
shall prove to have been false or misleading in any material respect when made
14
or deemed made; (ii) CepTor shall have failed to perform any of its material
obligations hereunder; or (iii) the Placement Agent shall determine in good
faith that it is reasonably likely that any of the conditions to Closing set
forth herein will not or cannot be satisfied. In the event of any such
termination occasioned by or arising out of or in connection with any breach or
failure hereunder on the part of CepTor described in clauses (i), (ii), or (iii)
above or a termination of the Offering by CepTor for any reason other than a
material breach of this Agreement by Placement Agent, the Placement Agent shall
be entitled to receive from CepTor, in addition to other rights and remedies it
may have hereunder, at law or otherwise, an amount equal to the sum of: (A) all
unpaid Placement Agent Fees earned through the Expiration Date based upon the
amount of funds then in escrow, (B) reimbursement of all reasonable
out-of-pocket expenses of Placement Agent, and (C) reimbursement of $15,000 for
legal fees of Placement Agent.
(b) Upon any such termination, the Escrow Agent will, at the request
of the Placement Agent, cause all monies received in respect of subscriptions
for Units then in escrow to be promptly returned to such subscribers without
interest, penalty, expense or deduction.
12. SURVIVAL. The provisions of Sections 9, 10, 11, 12, 13, 14, 15, 16,
and 17 shall survive any termination hereunder.
13. NOTICES. All communications hereunder will be in writing and, except
as otherwise expressly provided herein or after notice by one party to the other
of a change of address, if sent to the Placement Agent, will be mailed,
delivered or telefaxed and confirmed to Xxxxxxxxxx Securities Corporation, 0
Xxxx Xxx Xxxx Xxxx., Xx. Xxxxxxxxxx Xxxxxxx 00000 telefax number (000) 000-0000
with a copy to Peckar & Xxxxxxxx, PC, 00 Xxxxx Xxxxxx, Xxxxx Xxxx, Xxx
Xxxxxx 00000, Attn: Xxxxxxx X. Xxxx, Esq., telefax number (000) 000-0000, and if
sent to CepTor, will be mailed, delivered or telefaxed and confirmed to 000
Xxxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxxx, XX 00000 Attn: Xxxxxxx Xxxxxxx,
Chairman and Chief Executive Officer, telefax number (000) 000-0000 with a copy
to Olshan, Grundman, Frome & Xxxxxxxxxx, Attn: Xxxxxx Xxxxxx, Esq., telefax
number (000) 000-0000.
14. GOVERNING LAW, JURISDICTION. This Agreement shall be deemed to have
been made and delivered in Fort Lauderdale, Florida and shall be governed as to
validity, interpretation, construction, effect and in all other respects by the
internal laws of the State of Florida without regard to principles of conflicts
of law thereof.
15. MISCELLANEOUS. No provision of this Agreement may be changed or
terminated except by a writing signed by the party or parties to be charged
therewith. Unless expressly so provided, no party to this Agreement will be
liable for the performance of any other party's obligations hereunder. Either
party hereto may waive compliance by the other with any of the terms, provisions
and conditions set forth herein; provided, however, that any such waiver shall
be in writing specifically setting forth those provisions waived thereby. No
such waiver shall be deemed to constitute or imply waiver of any other term,
provision or condition of this Agreement.
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16. ENTIRE AGREEMENT. This Agreement together with any other agreement
referred to herein supersedes all prior agreements between the parties with
respect to the Offering and the subject matter hereof.
17. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which may be executed by less than all of the parties and shall be
deemed to be an original instrument which shall be enforceable against the
parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
* * * * *
If the foregoing is in accordance with your understanding of the
agreement, kindly sign and return this Agreement, whereupon it will become a
binding agreement between CepTor and the Placement Agent in accordance with its
terms.
CEPTOR CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
Accepted and agreed to this
26th day of May, 2006
XXXXXXXXXX SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
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EXHIBIT A
FORM OF OPINION OF CEPTOR'S COUNSEL
The opinion will be the same opinion requested by Alpha Capital
Aktiengesellschaft and Longview Fund, L.P.
17
