EXHIBIT 4.1
THIS WARRANT (THIS
"WARRANT") HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT
OF 1933,
AS AMENDED
(THE "ACT"),
OR ANY STATE
SECURITIES
LAW.
NEITHER THIS
WARRANT NOR ANY WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF NOR
ANY INTEREST OR
PARTICIPATION
HEREIN OR
THEREIN
MAY BE SOLD,
ASSIGNED,
MORTGAGED,
PLEDGED,
HYPOTHECATED,
ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
ACT AND APPLICABLE STATE SECURITIES LAWS.
CEPTOR CORPORATION
COMMON STOCK PURCHASE WARRANT
377,359 SHARES
ORIGINAL ISSUE DATE: OCTOBER 7, 2005
This
Warrant is issued in
connection
with and
pursuant to that certain
Common Stock Purchase
Agreement (the "PURCHASE
AGREEMENT") dated as of October
7,
2005,
by and
between
CEPTOR
CORPORATION,
a
Delaware
corporation
(the
"COMPANY") and FUSION CAPITAL FUND II, LLC (the "BUYER").
FOR VALUE
RECEIVED,
the Buyer,
the
registered
holder
hereof,
or its
permitted
assigns
(the
"HOLDER"),
is entitled to purchase
from the Company,
during
the
period
specified
in
this
Warrant,
377,359
fully
paid
and
non-assessable
shares (subject to adjustment as hereinafter provided) of Common
Stock (the
"WARRANT
SHARES"),
of the Company at the purchase
price per share
provided in Section 1.2 of this
Warrant (the
"WARRANT
EXERCISE
Price"),
all
subject to the terms and
conditions
set forth in this
Warrant.
All terms not
otherwise defined herein shall have the meaning ascribed to them in
the Purchase
Agreement.
SECTION 1.
PERIOD FOR EXERCISE AND EXERCISE PRICE.
1.1
PERIOD FOR EXERCISE.
The right to purchase shares of Warrant Shares
represented by this Warrant shall be immediately
exercisable,
and shall expire
at 5:00 p.m.,
Chicago local time,
December 31, 2010 (the
"EXPIRATION
DATE").
From and after the Expiration Date this Warrant shall be null and
void and of no
further force or effect whatsoever.
1.2
WARRANT
EXERCISE
PRICE.
The Warrant
Exercise
Price per share of
Warrant
Shares shall be $0.01 per share
(subject to adjustment as
hereinafter
provided).
SECTION 2.
EXERCISE OF WARRANT.
2.1
MANNER OF EXERCISE.
The Holder may exercise this Warrant,
in whole
or in part,
immediately,
but not
after the
Expiration
Date,
during
normal
business hours on any Trading Day by surrendering this Warrant to
the Company at
the principal
office of the Company,
accompanied by a Warrant Exercise Form in
substantially
the form annexed hereto duly executed by the Buyer and by payment
of the
Warrant
Exercise
Price for the number of shares of Warrant
Shares for
which this
Warrant is then
exercisable,
either (i) in
immediately
available
funds, (ii) by delivery of an instrument
evidencing
indebtedness
owing by the
Company
to the
Holder in the
appropriate
amount,
(iii) by
authorizing
the
Company to retain shares of Common Stock which would
otherwise be issuable upon
exercise of this
Warrant (in
accordance
with Section 2.4 hereof) or (iv) in a
combination
of (i), (ii) or (iii) above,
provided,
however,
that in no event
shall the Holder be entitled to
exercise
this
Warrant for a number of Warrant
Shares in excess of that number of Warrant
Shares which,
upon giving effect to
such
exercise,
would
cause the
aggregate
number
of shares of Common
Stock
beneficially owned by the Holder to exceed 9.9% of the outstanding
shares of the
Common Stock following such exercise. For purposes of the foregoing
proviso, the
aggregate
number of shares of Common
Stock
beneficially
owned by the
Holder
shall
include the number of shares of Common Stock
issuable
upon
exercise of
this Warrant with respect to which
determination of such proviso is being made,
but shall
exclude the shares of Common
Stock which would be issuable
upon (i)
exercise of the remaining, unexercised Warrants beneficially owned
by the Holder
and (ii) exercise or conversion of the unexercised or unconverted
portion of any
other
securities of the Company
beneficially
owned by the Holder subject to a
limitation
on
conversion
or exercise
analogous to the
limitation
contained
herein.
Except as set forth in the
preceding
sentence,
for
purposes of this
paragraph,
beneficial
ownership shall be calculated in accordance with Section
13(d) of the Securities
Exchange Act of 1934, as amended.
The Holder may waive
the foregoing
limitation by written notice to the Company upon not less than 61
days
prior
written
notice
(with
such
waiver
taking
effect
only upon the
expiration of such 61 day notice period).
2.2
WHEN
EXERCISE
EFFECTIVE.
Each
exercise of this Warrant
shall be
deemed to have been effected on the day on which all requirements
of Section 2.1
shall have been met with
respect to such
exercise.
At such time the person in
whose name any
certificate
for shares of Warrant Shares shall be issuable upon
such
exercise
shall be deemed for all
corporate
purposes
to have become the
Holder
of
record
of
such
shares,
regardless
of
the
actual
delivery
of
certificates evidencing such shares.
2.3
DELIVERY OF STOCK
CERTIFICATES.
As soon as practicable
after each
exercise
of this
Warrant,
and in any event no later
than 2 days
after
such
exercise, the Company at its expense will issue Warrant Shares via
credit to the
Buyer's account with DTC for the number of Warrant Shares to which
such Buyer is
entitled upon such Buyer's
submission of the applicable
Warrant
Exercise Form
or,
if the
Transfer
Agent
is not
participating
in The DTC
Fast
Automated
Securities Transfer Program and DWAC system,
issue and surrender to the address
as specified in the Warrant Exercise Form, a certificate,
registered in the name
of the Buyer or its designee,
for the number of shares of Common Stock to which
the Buyer shall be entitled to upon such exercise.
2
2.4
CASHLESS
EXERCISE.
The Holder may, by providing
notice thereof to
the Company along with the Warrant
Exercise Form, elect to exercise the Warrant
for a number of Warrant
Shares
determined
in
accordance
with the
following
formula:
X = Y(A-B)
------
A
Where:
X = The
number
of
Warrant
Shares to be issued to the
Holder.
Y = The number of Warrant Shares
purchasable under this
Warrant (at the date of such exercise).
A = The fair market
value of one share of Common
Stock
(or other
security
for which the
Warrant
is then
exercisable
at the
date
of
such
exercise).
B = Exercise
Price
(as
adjusted
to the
date of such
exercise).
For purposes of this Section 2.4, the "fair market value" per share
shall be the
closing sale price of the Common Stock for the one Trading Day
immediately prior
to the notice of exercise of the Warrant.
SECTION 3.
ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The Warrant
Exercise Price and the kind of securities
issuable upon exercise of the Warrant
shall be adjusted from time to time as follows:
3.1
SUBDIVISION OR COMBINATION OF SHARES (STOCK SPLITS).
If the Company
at any time effects a subdivision or combination of the outstanding
Common Stock
(through a stock
split or
otherwise),
the number of shares of Warrant
Shares
shall be
increased,
in the case of a
subdivision,
or the number of shares of
Warrant
Shares shall be decreased,
in the case of a
combination,
in the same
proportions
as the
Common
Stock
is
subdivided
or
combined,
in each
case
effective
automatically upon, and simultaneously with, the effectiveness of
the
subdivision or combination which gives rise to the adjustment.
3.2
STOCK
DIVIDENDS.
If the
Company at any time pays a
dividend,
or
makes any other
distribution,
to holders of Common Stock
payable in shares of
Common Stock, or fixes a record date for the
determination of holders of Common
Stock entitled to receive a dividend or other distribution
payable in shares of
Common Stock, then the number of shares of Warrant Shares in effect
immediately
prior to such
action
shall be
proportionately
increased
so that the
Holder
hereof may receive upon exercise of the Warrant the
aggregate
number of shares
of Common
Stock
which he or it would have
owned
immediately
following
such
action if the Warrant had been exercised
immediately prior to such action.
The
adjustment shall become
effective
immediately as of the date the Company shall
take a record of the holders of its Common
Stock for the
purpose of
receiving
such
dividend
or
distribution
(or if no
such
record
is
taken,
as of the
effectiveness of such dividend or distribution).
3.3 RECLASSIFICATION,
CONSOLIDATION OR MERGER. If at any time, as a result
of:
(a)
a
capital
reorganization
or
reclassification
(other
than
a
subdivision,
combination or dividend provided for elsewhere in this Section 3),
or
(b)
a merger or
consolidation
of the Company with another
corporation
(whether
or not the Company is the
surviving
corporation),
the Common
Stock
issuable
upon
exercise of the Warrants
shall be changed into or exchanged for
the same or a different number of shares of any class or classes of
stock of the
3
Company or any other
corporation,
or other
securities
convertible
into such
shares,
then,
as a part of such
reorganization,
reclassification,
merger or
consolidation,
appropriate
adjustments
shall
be
made
in the
terms
of the
Warrants (or of any
securities
into which the
Warrants
are
exercised or for
which the Warrants are exchanged), so that:
(y)
the
Holders of
Warrants
or of such
substitute
securities
shall
thereafter be entitled to receive,
upon exercise of the Warrants or
of such
substitute
securities,
the kind and
amount
of shares of
stock, other securities, money and property which such Holders
would
have
received
at
the
time
of
such
capital
reorganization,
reclassification,
merger,
or
consolidation,
if such
Holders had
exercised
their
Warrants
immediately
prior
to
such
capital
reorganization, reclassification, merger, or consolidation, and
(z)
the
Warrants or such
substitute
securities
shall
thereafter
be
adjusted on terms as nearly
equivalent as may be practicable to the
adjustments theretofore provided in this Section 3.3.
3.4
OTHER
ACTION
AFFECTING
COMMON
STOCK.
If at any time the Company
takes any action
affecting its Common Stock,
other than an action described in
any of Sections 3.1 - 3.3 which, in the opinion of the Board of
Directors of the
Company (the "BOARD"),
would have an adverse effect upon the exercise rights of
the Warrants, the Warrant Exercise Price or the kind of securities
issuable upon
exercise of the Warrants,
or both, shall be adjusted in such manner and at such
time
as
the
Board
may
in
good
faith
determine
to be
equitable
in
the
circumstances; provided, however, that the purpose of this Section
is to prevent
the Company
from taking any action
which has the effect of diluting the number
of shares of Warrant Shares issuable upon exercise of this Warrant.
3.5
NOTICE OF ADJUSTMENT EVENTS.
Whenever the
