sec document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 9, 2005
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CEPTOR CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-105793 11-2897392
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
200 International Circle, Suite 5100, Hunt Valley, Maryland 21030
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 527-9998
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
FINANCING
On December 9, 2005 (the "Closing Date), CepTor Corporation (the "Company")
entered into a securities purchase agreement (the "Securities Purchase
Agreement") with Cornell Capital Partners, LP (the "Buyer") pursuant to which
the Buyer has agreed to purchase from the Company, in a private placement,
secured convertible debentures in the aggregate principal amount of $2,000,000
(the "Debentures"), which Debentures bear interest at the rate of 8% per year.
Pursuant to the Securities Purchase Agreement, the Company issued a Debenture in
the principal amount of $1,000,000 on the Closing Date and will issue a
Debenture in the principal amount of $1,000,000 prior to the Registration
Statement, as described below, being filed with the SEC covering the resale of
the shares of the Company's common stock, par value $0.0001 (the "Common Stock")
issuable upon conversion of the Debentures. Each Debenture has a three-year
maturity from the date of issuance and is subject to earlier conversion or
redemption pursuant to its terms.
The Buyer has the right to convert a portion or all of the outstanding
principal and interest under the Debentures into shares of Common Stock at a
conversion price per share equal to the lesser of: (i) 105% of the closing bid
price of the Common Stock on the day prior to the Closing Date (the "Fixed
Price") or (ii) 95% of the lowest closing bid price of the Common Stock for the
twenty trading days immediately preceding the conversion date (the "Floating
Price" and together with the Fixed Price, the "Conversion Price"), subject to
adjustment as provided in the Debentures; provided, that any such conversion
based on the Floating Price will generally be limited to $150,000 of principal
outstanding under the Debentures in any thirty day period; and further provided,
that the Buyer may not convert the Debentures into shares of Common Stock if
such conversion would result in the Buyer beneficially owning in excess of 4.9%
of the then issued and outstanding shares of Common Stock. The Conversion Price
and number of shares of Common Stock issuable upon conversion of the Debentures
is subject to certain exceptions and adjustment for stock splits and
combinations and other dilutive events.
Subject to the terms and condition of the Debentures, the Company has the
right at any time to redeem a portion or all amounts outstanding under the
Debentures. If the closing bid price of the Common Stock, is less than the Fixed
Price at the time of the redemption, the Company is obligated to pay, in
addition to the principal amount being redeemed, a redemption premium of 8% of
the principal amount (and accrued interest) being redeemed (the "Redemption
Amount"). If the closing bid price is greater than the Fixed Price, the Company
may redeem up to 50% at the Redemption Amount and 50% at the greater of the (x)
Redemption Amount and (y) market value of the Common Stock. In addition, the
Buyer will receive a three-year warrant to purchase 25,000 shares of Common
Stock for every $100,000 redeemed by the Company, on a pro rata basis, at an
exercise price per share of 105% of the closing bid price of the Common Stock on
the Closing Date (the "Redemption Warrant").
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In an Event of Default (as such term is defined in the Debentures) occurs,
any principal and accrued interest outstanding will become immediately due and
payable, in cash or Common Stock, at the Buyer's election.
Pursuant to the Securities Purchase Agreement, on December 9, 2005, the
Company issued to the Buyer (i) a three-year warrant to purchase up to 1,000,000
shares of Common Stock at an exercise price per share of 110% of the closing bid
price of the Common Stock on the day prior to the Closing Date (the "Warrant"
and together with the Redemption Warrant, the "Warrants"), (ii) $250,000 shares
of Common Stock as determined by the closing bid price of the Common Stock on
the day prior to the Closing Date (the "Buyer Shares") and made a cash payment
to an affiliate of the Buyer of $80,000.
In connection with the Securities Purchase Agreement, the Company and the
Buyer also entered into an investor registration rights agreement pursuant to
which the Company is obligated to file a registration statement with the SEC
within 30 days after the Closing Date covering the resale of the shares of
Common Stock issuable upon the conversion of the Debentures and the exercise of
the Warrants (the "Registration Statement"). If the Registration Statement is
not timely filed with, or deemed effective by, the SEC within 90 days after the
Closing Date, the Company is obligated to pay the Buyer, as liquidated damages,
an amount equal to 1% of the value of the Debentures outstanding in cash or in
shares of Common Stock, at the Buyer's option, for each 30-day period following
the date by which such Registration Statement should have been filed or deemed
effective, as the case may be.
The Company has granted a security interest in its assets to the Buyer to
secure its obligations under the Debentures pursuant to a security agreement
dated December 9, 2005.
The issuances of securities described above were not registered under the
Securities Act of 1933, as amended (the "Securities Act") and were made in
reliance on an exemption from registration pursuant to Section 4(2) and
Regulation D (Rule 506) under the Securities Act.
HARBOR NOTES
On December 9, 2005, the Company issued a convertible promissory note (the
"Note") in the principal amount of $250,000 to Harbor Trust (the "Holder") which
bears interest at the rate of 6% percent per year. All unpaid principal and
interest under the Note will be due and payable on December 9, 2006. The Note is
convertible, in whole or in part, at any time, into Common Stock at a conversion
price of $1.00 per share, subject to certain limitations on conversion as set
forth in the Note, including where the resulting number of shares converted on a
cumulative basis, would exceed 19.99% of the total number of shares of Common
Stock outstanding and, subject to a conversion price adjustment in the event the
Company offers or sells an option to acquire Common Stock at a price per share
less than the conversion price.
On December 9, 2005, the Company issued an amended convertible promissory
note (the "Amended Note") to the Holder which amends that certain convertible
promissory note dated December 9, 2004 in the principal amount of $452,991.10 to
lower the conversion price from $0.75 to $0.375 per share. The Amended Note
bears interest at the rate of 10% per year through December 9, 2005 and 12% per
year from December 9, 2005. All unpaid principal and interest under the Amended
Note will be due and payable on July 3, 2006. The Amended Note is convertible,
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in whole or in part, at any time, into Common Stock at the conversion price of
$0.375 per share subject to certain limitations on conversion as set forth in
the Note, including where the resulting number of shares converted, on a
cumulative basis, would exceed 19.99% of the total number of shares of Common
Stock outstanding.
The foregoing summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the actual text of the Exhibits
attached and incorporated by reference to this Current Report on Form 8-K.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The information reported in Item 1.01 is incorporated into this Item 2.03
by reference.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
The information reported in Item 1.01 is incorporated into this Item 3.02
by reference.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description
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4.1 Secured Convertible Debenture dated December 9, 2005
4.2 Warrant dated December 9, 2005
4.3 Form of Redemption Warrant
4.4 $250,000 Convertible Promissory Note dated December 9, 2005
4.5 $452,991.10 Amended Convertible Promissory Note dated
December 9, 2004
10.1 Securities Purchase Agreement dated December 9, 2005
10.2 Side Letter dated December 9, 2005
10.3 Investor Registration Rights Agreement dated December 9, 2005
10.4 Security Agreement dated December 9, 2005
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CEPTOR CORPORATION
Date: December 15, 2005
By: /s/ William H. Pursley
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William H. Pursley, Chairman and Chief
Executive Officer
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