February 27, 2007 Vision Opportunity Master Fund Ltd 5th Floor New York, NY 10019 Attn: David Skriloff Gentlemen: Pursuant to a Purchase Agreement, dated as of February 27, 2007, among us, Caprius, Inc. (the “Company”) and several purchasers,...
Exhibit
10.3
CAPRIUS,
INC.
Xxx
Xxxxxxxxxx Xxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
February
27, 2007
Vision
Opportunity Master Fund Ltd
00
Xxxx
00xx
Xxxxxx
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxxx
Gentlemen:
Pursuant
to a Purchase Agreement, dated as of February 27, 2007, among us, Caprius,
Inc.
(the “Company”) and several purchasers, including you, Vision Opportunity Master
Fund Ltd. (“Vision”), Vision purchased 1,200 shares of the Company’s Series E
Convertible Stock (the “Series E Shares”) and warrants (the “Warrants”) for the
purchase of 375,000 shares (the “Warrant Shares”) of the Company’s Common Stock,
$.01 par value (the “Common Stock”). The Series E Shares are convertible into
750,000 shares (the “Conversion Shares”) of Common Stock, subject to adjustment.
In consideration of Vision purchasing the Series E Shares and the Warrants,
the
Company and Vision hereby agree as follows with respect to conversion of
the
Series E Shares into Conversion Shares and exercise of the Warrants for Warrant
Shares.
1. Beneficial
Ownership Limitation.
1.1 Subject
to the terms and conditions herein, the Company agrees that it shall not
effect
any conversion of Vision’s Series E Shares or exercise of Vision’s Warrants, and
Vision shall not have the right to convert any portion of its Series E Shares
or
to exercise any portion of its Warrants to the extent that, after giving
effect
to the conversion or the exercise set forth on the applicable Conversion
or
Exercise Notice, Vision (together with its Affiliates (as defined in the
Securities Exchange Act of 1934, as amended (the “1934 Act”))), and any other
person or entity acting as a group together with Vision or any of its
Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined in Section 1.4 below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned
by
Vision and its Affiliates shall include the number of shares of Common Stock
issuable upon conversion of the Series E Shares or upon exercise of the Warrants
with respect to which such determination is being made, but shall exclude
the
number of shares of Common Stock which are issuable upon (A) conversion of
the
remaining, unconverted Series E Shares beneficially owned by
Vision
or
any of its Affiliates, (B) exercise of the remaining unexercised Warrants
beneficially owned by Vision or any of its Affiliates or (C) conversion or
exercise of the unconverted or unexercised portion of any other securities
of
the Company subject to a limitation on conversion or exercise analogous to
the
limitation contained herein beneficially owned by Vision or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of
this Section 1, beneficial ownership shall be calculated in accordance with
Section 13(d) of the 1934 Act, and the rules and regulations promulgated
thereunder.
1.2 To
the
extent that the limitation contained in this Section 1 applies, the
determination of whether the Series E Shares are convertible and the Warrants
are exercisable (in relation to other securities owned by Vision together
with
any Affiliates) and of how many shares of Series E Shares are convertible
and
how many Warrants are exercisable shall be in the sole discretion of Vision.
The
submission of a Conversion or Exercise Notice shall be deemed to be Vision’s
determination of whether the Series E Shares may be converted or the Warrants
may be exercised (in relation to other securities owned by Vision together
with
any Affiliates) and how many shares of Series E Shares are convertible or
how
many Warrants are exercisable, in each case subject to such aggregate percentage
limitations. To ensure compliance with this restriction, Vision will be deemed
to represent to the Company each time it delivers a Conversion or Exercise
Notice that such Notice has not violated the restrictions set forth in this
Section 1. The Company shall have no obligation to verify or confirm the
accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall
be
determined in accordance with Section 13(d) of the 1934 Act and
the
rules and regulations promulgated thereunder.
1.3 For
purposes of this Section 1, in determining the number of outstanding shares
of
Common Stock, Vision may rely on the number of outstanding shares of Common
Stock as stated in the most recent of the following: (A) the Company’s most
recent Form 10-QSB or Form 10-KSB, as the case may be, (B) a more recent
public
announcement by the Company or (C) a more recent notice by the Company or
the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of Vision, the Company shall
within two business days confirm orally and in writing to Vision the number
of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to
the conversion or exercise of securities of the Company, including the Series
E
Shares and Warrants, by Vision or its Affiliates since the date as of which
such
number of outstanding shares of Common Stock was reported.
1.4 The
“Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance
of
shares of Common Stock issuable upon conversion of Series E Shares and/or
the
exercise of the Warrants held by the Holder. The Beneficial Ownership Limitation
provisions of this Section 1 may be waived by Vision, at the election of
such
Holder, upon not less than 61 days’ prior notice to the Company. The provisions
of this subsection shall be construed and implemented in a manner otherwise
than
in strict conformity with the terms of this Section 1 to correct this subsection
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such
limitation.
2. Miscellaneous.
2.1 This
letter agreement sets forth the entire agreement between the Company and
Vision
as to the subject matter herein, and cannot be amended, modified or terminated
except by a writing executed by the parties hereto. In the event of any conflict
between the provisions of this letter agreement and those in the Purchase
Agreement or the Transaction Documents (as
2
defined
in the Purchase Agreement) as to the subject matter in Section 1 herein,
the
provisions herein shall govern.
2.2 This
letter agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
2.3 Any
notice to be given hereunder shall be in writing and shall be given in person
or
by first class mail or recognized courier by either party to the other party
at
its address as set forth at the head of this letter agreement or such other
address as it may hereafter duly give to the other party.
2.4 This
letter agreement shall be govern by and construed in accordance with the
laws of
the State of Delaware, without giving effect to principles of conflicts of
law.
If
the
provisions of this letter agreement accurately set forth our agreement with
the
matters herein, please sign and return the duplicative original; you may
retain
the original for your files.
Very
truly yours,
/s/
Xxxxxxxx Xxxxx
Xxxxxxxx
Xxxxx, Chief Financial Officer
AGREED
TO:
VISION
OPPORTUNITY MASTER FUND LTD.
By:
/s/ Xxxx Xxxxxxxx
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