Term Sheet for $4–6 Million Convertible Note Investment in CepTor Corporation by Margie Chassman and/or Designees

 Exhibit 10.1 Term Sheet for an Investment Of $4 to 6 million In CepTor Corporation Investment Margie Chassman and/or her designees (the "Investor") will invest at least $4 million and up to $6 million (the "Investment") in CepTor Corporation (the "Company"). The first $400,000 will be funded by April 20; $600,000 by May 10 and; $500,000 by June 10th. Thereafter, an additional $500,000 shall be funded by the 10th of each succeeding calendar month until the Investment has been fully funded to the Company. Funds provided by the Investor shall be held in escrow pending funding to the Company in accordance with the foregoing schedule. The Investment will be evidenced by convertible notes (the "Notes") bearing interest at 6% per annum and maturing 1 year after each funding. The principal and interest on the Notes will be convertible into common stock of the Company (the "Common Stock") at a conversion rate of $.15 per share, and, if the Notes are not converted or repaid in full by payment of 200% of the principal thereof by September 30, 2006, the conversion price will change to be equal to the lower of $.15 per share (the "Fixed Conversion Price") or 90% of the lowest closing sale price (or average of closing bid and asked prices if no closing sale price is available) for the 20 trading days immediately preceding the date on which the notice of conversion is sent to the Company (the "Floating Conversion Price"). The Notes shall have customary anti-dilution protection, including a full ratchet on the Fixed Conversion Price upon sales of Common Stock or Common Stock equivalents by the Company for less than the Fixed Conversion Price. The full ratchet shall not apply to excepted issuances, including issuances pursuant to any rights or convertible securities existing on the date of the first issuance of the Notes and issuances pursuant to employee plans. The Notes shall have customary default provisions, including an event of default if the Company shall fail to timely issue shares of Common Stock upon conversion of the Notes or shall fail to timely file or have declared effective a registration statement covering the Common Stock underlying the Notes. Upon the occurrence of an event of default, the Notes shall bear interest at 12% per annum. The Company will obtain shareholder approval of an increase in the authorized shares of Common Stock to a number that will permit registering any Common Stock that may be issued upon conversion of the Notes and upon conversion or exercise of the securities being issued or modified as set forth under  "Restructuring," below, which approval shall be obtained no later than July 20, 2006 to permit timely filing of and inclusion of all such underlying shares in the registration statement required to be filed as set forth under "Registration Rights," below. Additional Warrants The Company shall grant to the Investor for no additional consideration, except in the case of investors in prior rounds to the extent of their participation in the Investment with respect to which they are receiving adjustments to existing securities of the Company or warrants in lieu thereof as set forth under "Restructuring," non-callable five-year warrants (the "Warrants") to purchase Common Stock at $.30 per share covering 100% of the shares of Common Stock into which the Notes purchased by them are initially convertible. The Warrants shall have customary anti-dilution protection, including a full ratchet upon sales of Common Stock or Common Stock equivalents by the Company for less than $.30 per share. The full ratchet shall not apply to excepted issuances, including issuances pursuant to any rights or convertible securities existing on the date of the first issuance of the Warrants (including the Notes and any convertible securities or rights issued or modified in connection with the issuance of the Notes) and issuances pursuant to employee plans. Repurchase Right/Obligation The Company may repurchase the Notes for 200% of the principal amount thereof on or before September 30, 2006, provided, the Company shall give at least 30 days' notice of its election to repurchase the Notes, during which time the Notes may be converted in accordance with their terms. In the event the Company announces the sale or merger of the Company or its assets on or before September 30, 2006 and thereafter completes such sale or merger within 6 months after such announcement, the Company shall repurchase any Notes not converted before the consummation of such sale or merger for 200% of the principal amount thereof upon the consummation of the sale or merger. Registration Rights The Company agrees to file a registration statement under the Securities Act covering the shares of Common Stock underlying the Notes within 90 days following the first issuance of the Notes ( April 20, 2006) and to cause such registration statement to become effective within 5 months following such issuance. The registration statement shall also cover all shares of Common Stock issued to or underlying outstanding convertible securities or rights to  acquire Common Stock issued to the Investor. Liquidated damages of 2% of the principal amount of the Notes shall be due for each month or portion thereof in which the Company fails to meet this schedule, with such liquidated damages capped at 18% of the principal amount of the Notes. Lock-ups The parties funding the Investment will agree to be locked up on all securities of the Company owned by them until August 31, 2006. Restructuring The Company shall adjust the conversion price on its outstanding convertible notes to $.15 per share. In the event the Notes have not been repurchased on or before September 30, 2006, the conversion price on such convertible notes shall thereafter be the lower of the Fixed Conversion Price or the Floating Conversion Price, with the same anti-dilution protection as in the Notes. Other Investors participating in the Investment who invested in prior rounds of convertible securities shall receive the same adjustment to the conversion price on such securities having a stated value equal to 100% of their participation in the Investment (or, to the extent they have converted such securities but not sold the Common Stock received upon conversion, they shall receive an equivalent amount of additional shares of Common Stock), together with an adjustment in the warrant price on the warrants attached to such securities being adjusted to $.30 per share, subject to the Company's right to call such warrants on 20 days' notice for a nominal price in the event that, after the registration statement covering such shares of Common Stock is effective, the Common Stock closes over $.45 per share for 10 consecutive trading days, or, in the event they have sold or otherwise disposed of such convertible securities, they shall receive warrants to purchase Common Stock that will provide equivalent value. Fees The Company shall pay Margie Chassman a yield maintenance fee of 10% of the Investment, together with 5-year warrants to purchase Notes and Warrants equal to 10% of the Notes and Warrants comprising the Investment for an exercise price equal to the price paid by the Investors, and for such fee Ms. Chassman will pledge a convertible note of the Company in the principal amount of $250,000 to secure her non-recourse obligation to increase the return to the Investor to the extent required to avoid loss on the Investment, measured on the earlier of April 20, 2007 or the date on which the entire Investment is sold or otherwise disposed of, including by conversion. The Company shall  pay legal fees of Greenberg & Kahr of $35,000, payable upon the first funding of the Notes, which fee shall be in addition to the fee of Grushko & Mittman, P.C., as counsel for the Investors, of $15,000, which will also be an obligation of the Company. This Term Sheet (the "Agreement") shall constitute a binding agreement among the parties with respect to the subject matter hereof with the parties to use good faith efforts to prepare definitive documentation as quickly as practicable subject to the foregoing. This Agreement supersedes all other drafts of the Agreement, whether or not such prior drafts were executed. - -------------------------------------------------------------------------------- AGREED TO: AGREED TO: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CEPTOR CORPORATION - -------------------------------------------------------------------------------- /s/ Margie Chassman - -------------------------------------------------------------------------------- MARGIE CHASSMAN - -------------------------------------------------------------------------------- By: /s/ William Pursley - -------------------------------------------------------------------------------- William Pursley, CEO - -------------------------------------------------------------------------------- Date: 5/3/06 Date: - --------------------------------------------------------------------------------