REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (the “Agreement”) is made and entered into as of
this 6th day of December, 2007 by and among Caprius, Inc., a Delaware
corporation (the “Company”), and the “Investors” named in that certain Purchase
Agreement by and among the Company and the Investors (the “Purchase
Agreement”).
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means, with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Business
Day” means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of business.
“Common
Stock” shall mean the Company’s common stock, par value $0.01 per share, and
any securities into which such shares may hereinafter be
reclassified.
“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the
Shares.
“Investors”
shall mean the Investors identified in the Purchase Agreement and any Affiliate
or permitted transferee of any Investor who is a subsequent holder of any
Warrants or Registrable Securities.
“Preferred
Stock” means the Company’s Series F Convertible Preferred Stock, par value
$0.01 per share.
“Prospectus”
shall mean (i) the prospectus included in any Registration Statement, as amended
or supplemented by any prospectus supplement, with respect to the terms of
the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by
reference in such prospectus, and (ii) any “free writing prospectus” as defined
in Rule 405 under the 1933 Act.
“Register,”
“registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such Registration Statement or document.
“Registrable
Securities” shall mean (i) the Conversion Shares, (ii) the Warrant Shares
and (iii) any other securities issued or issuable with respect to or in exchange
for Registrable Securities; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or
Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by
the
Investors pursuant to Rule 144(k).
“Registration
Statement” shall mean any registration statement of the Company filed under
the 1933 Act that covers the resale of any of the Registrable Securities
pursuant to
the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
“Required
Investors” means the Investors holding at least 66% of the Registrable
Securities at the time of the action taken by the Required
Investors.
“SEC”
means the U.S. Securities and Exchange Commission.
“Shares”
means the shares of Preferred Stock issued pursuant to the Purchase
Agreement.
“SSF”
means the Investors affiliated with AWM Investment Company, Inc.
“1933
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“Warrants”
means, the warrants to purchase shares of Common Stock issued to the Investors
pursuant to the Purchase Agreement, the form of which is attached to the
Purchase Agreement as Exhibit B.
“Warrant
Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants.
2. Registration.
(a)
Registration Statements.
(i) Promptly
following the Initial Closing Date (as defined in the Purchase Agreement),
but
no later than 45 days after the Initial Closing Date (the “Filing Deadline”),
the Company shall prepare and file with the SEC one Registration Statement
on
Form SB-2 (or, if Form SB-2 is not then available to the Company, on such form
of registration statement as is then available to effect a registration for
resale of the Registrable Securities), covering the resale of the Registrable
Securities in an amount at least equal to the Conversion Shares and the Warrant
Shares. Subject to any SEC comments, such Registration Statement
shall include the plan of distribution attached hereto as Exhibit
A. Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common Stock
resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. Such Registration Statement
shall not include any shares of Common Stock or other securities for the account
of any other holder without the prior written consent of the Required
Investors. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a Registration
Statement covering the Registrable Securities is not filed with the SEC on
or
prior to the Filing Deadline, the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to
1.5%
of the aggregate amount invested by such Investor for each 30-day period or
pro
rata for any portion thereof following the Filing Deadline for which no
Registration Statement is filed with respect to the Registrable
Securities. Such payments shall constitute the Investors’ exclusive
monetary remedy for such events, but shall not
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affect
the right of the Investors to seek injunctive relief. Such payments
shall be made to each Investor in cash.
(ii) Additional
Registrable Securities. Upon the written demand of any Investor
and upon any change in the Conversion Price (as defined in the Preferred Stock)
or the Warrant Price (as defined in the Warrant) such that additional shares
of
Common Stock become issuable upon the conversion of the Shares or the exercise
of the Warrants (the “Additional Shares”), the Company shall prepare and file
with the SEC one or more Registration Statements on Form SB-2 or amend the
Registration Statement filed pursuant to clause (i) above, if such Registration
Statement has not previously been declared effective (or, if Form SB-2 is not
then available to the Company, on such form of registration statement as is
then
available to effect a registration for resale of the Additional Shares, subject
to the Required Investors’ consent) covering the resale of the Additional
Shares, but only to the extent the Additional Shares are not at the time covered
by an effective Registration Statement. Subject to any SEC comments,
such Registration Statement shall include the plan of distribution attached
hereto as Exhibit A. Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Additional Shares. Such Registration
Statement shall not include any shares of Common Stock or other securities
for
the account of any other holder without the prior written consent of the
Required Investors. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a Registration
Statement covering the Additional Shares is required to be filed under this
Section 2(a)(ii) and is not filed with the SEC within five Business Days of
the
request of any Investor or upon the occurrence of any of the events specified
in
this Section 2(a)(ii), the Company will make pro rata payments to each Investor,
as liquidated damages and not as a penalty, in an amount equal to 1.5% of the
aggregate amount invested by such Investor for each 30-day period or pro rata
for any portion thereof following the date by which such Registration Statement
should have been filed for which no Registration Statement is filed with respect
to the Additional Shares. Such payments shall constitute the
Investors’ exclusive monetary remedy for such events, but shall not affect the
right of the Investors to seek injunctive relief. Such payments shall
be made to each Investor in cash.
(iii) S-3
Qualification. Promptly following the date (the “Qualification
Date”) upon which the Company becomes eligible to use a registration statement
on Form S-3 to register the Registrable Securities or Additional Shares, as
applicable, for resale, but in no event more than thirty (30) days after the
Qualification Date (the “Qualification Deadline”), the Company shall file a
registration statement on Form S-3 covering the Registrable Securities or
Additional Shares, as applicable (or a post-effective amendment on Form S-3
to
the registration statement on Form SB-2) (a “Shelf Registration Statement”) and
shall use commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective as promptly as practicable
thereafter. If a Shelf Registration Statement covering the
Registrable Securities is not filed with the SEC on or prior to the
Qualification Deadline, the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to
1.5%
of the aggregate purchase price paid by such Investor pursuant to the Purchase
Agreement attributable to those Registrable Securities that remain unsold at
that time
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for
each
30-day period or pro rata for any portion thereof following the date by which
such Shelf Registration Statement should have been filed for which no such
Shelf
Registration Statement is filed with respect to the Registrable Securities
or
Additional Shares, as applicable. Such payments shall constitute the
Investors’ exclusive monetary remedy for such events, but shall not affect the
right of the Investors to seek injunctive relief. Such payments shall
be made to each Investor in cash.
(b) Expenses. The
Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws, listing fees, fees and expenses of
one
counsel to the Investors and the Investors’ reasonable expenses in connection
with the registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being
sold.
(c) Effectiveness.
(i) The
Company shall use commercially reasonable efforts to have the Registration
Statement declared effective as soon as practicable. The Company
shall notify the Investors by facsimile or e-mail as promptly as practicable,
and in any event, within twenty-four (24) hours, after any Registration
Statement is declared effective and shall simultaneously provide the Investors
with copies of any related Prospectus to be used in connection with the sale
or
other disposition of the securities covered thereby. If (A)(x) a
Registration Statement covering the Registrable Securities is not declared
effective by the SEC prior to the earlier of (i) five (5) Business Days after
the SEC shall have informed the Company that no review of the Registration
Statement will be made or that the SEC has no further comments on the
Registration Statement or (ii) the 120th day after
the
Initial Closing Date (the 150th day if
the SEC
reviews the Registration Statement), (y) a Registration Statement covering
Additional Shares is not declared effective by the SEC within 120 days following
the time such Registration Statement was required to be filed pursuant to
Section 2(a)(ii) (150 days if the SEC reviews the Registration Statement) or
(z)
a Shelf Registration Statement is not declared effective by the SEC within
120
days after the Qualification Deadline (150 days if the SEC reviews the
Registration Statement), or (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company’s failure to update the Registration Statement), but
excluding the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions and except as excused pursuant to
subparagraph (ii) below, then the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to
1.5%
of the aggregate amount invested by such Investor for each 30-day period or
pro
rata for any portion thereof following the date by which such Registration
Statement should have been effective (the “Blackout Period”). Such
payments shall constitute the Investors’ exclusive monetary remedy for such
events, but shall not affect the right of the Investors to seek injunctive
relief. The amounts payable as liquidated damages pursuant to this
paragraph shall be paid monthly within three (3) Business Days of the last
day
of each month following the commencement of the Blackout Period until the
termination of the Blackout Period. Such payments shall be made to
each Investor in cash.
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(ii) For
not more than twenty (20) consecutive days or for a total of not more than
forty-five (45) days in any twelve (12) month period, the Company may delay
the
disclosure of material non-public information concerning the Company, by
suspending the use of any Prospectus included in any registration contemplated
by this Section containing such information, the disclosure of which at the
time
is not, in the good faith opinion of the Company, in the best interests of
the
Company (an “Allowed Delay”); provided, that the Company shall promptly (a)
notify the Investors in writing of the existence of (but in no event, without
the prior written consent of an Investor, shall the Company disclose to such
Investor any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, (b) advise the Investors in writing
to cease all sales under the Registration Statement until the end of the Allowed
Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay
as promptly as practicable.
(d) Rule
415.
(i) If
at any time the staff of the SEC (the “Staff”) takes the position that the
offering of some or all of the Registrable Securities in a Registration
Statement is not eligible to be made on a delayed or continuous basis under
the
provisions of Rule 415 under the 1933 Act or requires any Investor to be named
as an “underwriter” (the “Staff Interpretation”), the Company shall use its
commercially reasonable best efforts to persuade the Staff that the offering
contemplated by the Registration Statement is a valid secondary offering and
not
an offering “by or on behalf of the issuer” as defined in Rule 415 and that none
of the Investors is an “underwriter”. The date on which the Staff
informs the Company that the Staff Interpretation applies to the Registrable
Securities is hereinafter referred to as the “Interpretation Date.”
(ii) In
the event that, despite the Company’s commercially reasonable efforts and
compliance with the terms of this Section 2(d), the Staff refuses to allow
all
of the Registrable Securities to be included in the Registration Statement
and/or insists that one or more of the Investors must be named as an
“underwriter”, the Company shall (i) use commercially reasonable best efforts to
resolve any other remaining Staff comments as promptly as possible and, in
any
event, no later than the 30th day following
the
Interpretation Date (the “Interpretation Deadline Date”) and, (ii) within two
Business Days of the earlier of the Interpretive Deadline Date or the resolution
of any other Staff comments, file with the SEC a request for acceleration of
the
effectiveness of the Registration Statement as then on file with the SEC (which
shall not include any changes requested or required by the Staff pursuant to
the
Staff Interpretation) to a date and time not more than two Business Days after
the date such request is filed (the “Acceleration Date”).
(iii) If
the amended Registration Statement is not declared effective on or prior to
5:30
p.m., New York time, on the second Business Day following the Acceleration
Date
(the “Acceleration Deadline”), then no later than 5:30 p.m., New York time, on
the Business Day immediately following the Acceleration Deadline, the Company
shall file with the SEC an amendment to the Registration Statement (the “Section
8 Amendment”) to remove the delaying legend placed on the Registration Statement
pursuant to Rule 473(a), which Section 8 Amendment shall include the legend
specified in Rule 473(b) to the effect that the amended
5
Registration
Statement shall thereafter become effective in accordance with the provisions
of
Section 8(a) of the 1933 Act.
(iv) In
the event that the SEC commences an investigation, examination or other
proceeding with respect to the Registration Statement pursuant to Section 8(e)
of the 1933 Act, the Company and, if required, the Investors, shall cooperate
therewith in good faith and shall take such action as shall be necessary to
prohibit the issuance of a stop order pursuant to Section 8(d) of the 1933
Act
on the grounds that any of them have failed to cooperate with any such
investigation, examination or other proceeding; provided, however, that no
party
shall be required to waive any attorney-client privilege or attorney work
product privilege in connection therewith.
(v) In
the event that the SEC commences (i) a refusal order proceeding pursuant to
Section 8(b) of the 1933 Act with respect to the Registration Statement or
(ii)
a stop order proceeding pursuant to Section 8(d) of the 1933 Act with respect
to
the Registration Statement, the Company shall diligently oppose any such
proceedings unless (A) SSF, (B) the Company and (C) any other Investor who
is
required to be named an underwriter in the Registration Statement or whose
Registrable Securities are required to be cut back in the Registration Statement
as a result of the Staff Interpretation and who agrees to participate in the
costs thereof as provided below (a “Participating Investor”), mutually agree at
any time not to oppose such proceedings or to continue such
opposition. The costs of such opposition shall be borne by SSF and
each Participating Investor on a pro rata basis calculated based on the number
of Registrable Securities held by SSF or a Participating Investor compared
to
the total number of Registrable Securities held by SSF and all Participating
Investors. SSF and each Participating Investor shall have the right
to participate in such proceedings. In connection with its opposition
of such proceedings, the Company shall retain counsel reasonably satisfactory
to
SSF and each Participating Investor (which shall be SSF’s counsel unless SSF
otherwise agrees). The Company shall not agree to any settlement or
compromise of any proceeding without the prior written consent of SSF and each
Participating Investors, which shall not be unreasonably withheld or
delayed.
(vi) In
the event that the SEC issues (i) a refusal order pursuant to Section 8(b)
of
the 1933 Act refusing to declare the Registration Statement effective or (ii)
a
stop order pursuant to Section 8(d) of the 1933 Act with respect to the
Registration Statement, the Company shall file with the United States Court
of
Appeals for the District of Columbia Circuit and diligently prosecute through
appropriate proceedings a petition for judicial review of any such order in
a
timely fashion in accordance with the provisions of Section 9(a) of the 1933
Act
to a final, nonappealable determination unless SSF, the Company and any
Participating Investor mutually agree otherwise. The costs of
prosecuting such petition shall be borne by SSF and each Participating Investor
on the basis specified in clause (v) above. SSF and each
Participating Investor shall have the right to participate in such
proceedings. In connection with such proceedings, the Company shall
retain counsel reasonably satisfactory to SSF and each Participating Investor
(which shall be SSF’s counsel unless SSF otherwise agrees). The
Company shall not agree to any settlement or compromise of any proceeding
without the prior written consent of SSF and each Participating Investors,
which
shall not be unreasonably withheld or delayed.
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(vii) SSF
and each Participating Investors shall have the right to participate or have
its
counsel participate in any meetings or discussions with the Staff or the SEC
regarding the Staff Interpretation and to comment or have their counsel comment
on any written submission made to the Staff, the SEC or any court with respect
thereto. No such written submission shall be made by the Company to
which counsel to SSF or a Participating Investor reasonably
objects.
(viii) So
long as the Company is in compliance with the terms of this Section 2(d), no
liquidated damages shall accrue or be payable pursuant to Section 2(c)(i) of
this Agreement solely as a result of the failure of the amended Registration
Statement to become effective due to the Staff Interpretation until the earliest
of (i) the date that the Registration Statement (as amended, if necessary,
by
the Section 8 Amendment) is declared effective by the SEC; provided, however,
that if the Registration Statement becomes effective automatically pursuant
to
Section 8(a) of the 1933 Act after the Company has received written notice
that
the SEC has ordered an examination, investigation or other proceeding pursuant
to Section 8(e) of the 1933 Act, the Registration Statement shall not be deemed
to have become effective until such time as sales may be made thereunder
pursuant to Section 5(c) of the 1933 Act, (ii) the date which is 10 days after
receipt by the Company of written notice from SSF or any Participating Investor
that the Company is in material breach of the terms hereof is such breach is
not
cured to the reasonable satisfaction of such Investor prior thereto, or (iii)
the date on which a court of competent jurisdiction upholds the Staff
Interpretation (or modifies the Staff Interpretation in such a manner that
either (i) all of the Registrable Securities are not able to be included in
the
Registration Statement or (ii) one or more of the Investors are required to
be
named as an “underwriter” therein) by a final and nonappealable
judgment.
(ix) In
the event that the Staff Interpretation is not contested by the Company in
compliance with the terms of this Section 2(d) or is upheld (or modified in
a
such a manner that either (i) all of the Registrable Securities are not able
to
be included in the Registration Statement or (ii) one or more of the Investors
are required to be named as an “underwriter” therein) by a final and
nonappealable judgment of a court of competent jurisdiction, the Company shall
(i) remove from the Registration Statement such portion of the Registrable
Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and
limitations on the registration and resale of the Registrable Securities as
the
Staff Interpretation as then in effect may require to assure the Company’s
compliance with the requirements of Rule 415; provided, however, that the
Company shall not agree to name any Investor as an “underwriter” in such
Registration Statement without the prior written consent of such Investor
(collectively, the “415 Restrictions”). Any cut-back imposed on the
Investors pursuant to this Section 2(d)(ix) shall be allocated among the
Investors on a pro rata basis, and shall be allocated first to any Warrant
Shares, unless, in either case, the 415 Restrictions otherwise require or
provide. No liquidated damages shall accrue on or as to any Cut Back
Shares until such time as the Company is able to effect the registration of
the
Cut Back Shares in accordance with any 415 Restrictions (such date, the
“Restriction Termination Date”). From and after the Restriction
Termination Date, all of the provisions of Section 2 of this Agreement
(including the liquidated damages provisions) shall again be applicable to
the
Cut Back Shares; provided, however, that for such purposes, references to the
Initial Closing Date shall be deemed to be the Restriction Termination
Date.
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(x) Time
shall be of the essence in the performance of the obligations contained in
this
Agreement, including, without limitation, the performance of the obligations
set
forth in this Section 2(d).
(xi) The
Company acknowledges that SSF and the Participating Investors have specifically
requested the inclusion of the provisions set forth in this Section 2(d) as
a
condition to their investment in the Company and that SSF and the Participating
Investors would not have made such investment without such
provisions. The Company further acknowledges that in the event of any
breach of this Section 2(d), SSF and the Participating Investors would suffer
a
material loss for which damages at law would be difficult or impossible to
determine. Accordingly, in addition to all other rights and remedies
available to them at law or in equity, SSF and each Participating Investor
shall
have the right to have the provisions of this Section 2(d) specifically enforced
against the Company and neither SSF nor any Participating Investor shall be
obligated to post any bond or other security in connection with any action
to
compel such specific performance.
3. Company
Obligations. The Company will use commercially reasonable efforts
to effect the registration of the Registrable Securities in accordance with
the
terms hereof, and pursuant thereto the Company will, as expeditiously as
possible:
(a) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate
upon the earlier of (i) the date on which all Registrable Securities covered
by
such Registration Statement as amended from time to time, have been sold, and
(ii) the date on which all Registrable Securities covered by such Registration
Statement may be sold pursuant to Rule 144(k) (the “Effectiveness Period”) and
advise the Investors in writing when the Effectiveness Period has
expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the Effectiveness Period and to comply
with
the provisions of the 1933 Act and the 1934 Act with respect to the distribution
of all of the Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer
than
three (3) Business Days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(d) furnish
to the Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but
not later than two (2) Business Days after the filing date, receipt date or
sending date, as the case may be) one (1) copy of any Registration Statement
and
any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on behalf of
the
Company to the SEC or the staff of the SEC, and each item of correspondence
from
the SEC or the staff of the SEC, in each case relating to such
8
Registration
Statement (other than any portion of any thereof which contains information
for
which the Company has sought confidential treatment), and (ii) such number
of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor that are covered by the related Registration
Statement;
(e) subject
to the provisions of Section 2(d), use commercially reasonable efforts to (i)
prevent the issuance of any stop order or other suspension of effectiveness
and,
(ii) if such order is issued, obtain the withdrawal of any such order at the
earliest possible moment;
(f) prior
to any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investors and their counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution
in
such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to
do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(f), (ii) subject itself to general taxation in any
jurisdiction where it would not otherwise be so subject but for this Section
3(f), or (iii) file a general consent to service of process in any such
jurisdiction;
(g) use
commercially reasonable efforts to cause all Registrable Securities covered
by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
(h) immediately
notify the Investors, at any time prior to the end of the Effectiveness Period,
upon discovery that, or upon the happening of any event as a result of which,
the Prospectus includes an untrue statement of a material fact or omits to
state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement
to or an amendment of such Prospectus as may be necessary so that such
Prospectus shall not include an untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and
(i) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, including, without
limitation, Rule 172 under the 1933 Act, file any final Prospectus, including
any supplement or amendment thereof, with the SEC pursuant to Rule 424 under
the
1933 Act, promptly inform the Investors in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified
in
Rule 172 and, as a result thereof, the Investors are required to deliver a
Prospectus in connection with any disposition of Registrable Securities and
take
such other actions as may be reasonably necessary to facilitate the
9
registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 3(i), “Availability Date” means the 45th day
following the end of the fourth fiscal quarter that includes the effective
date
of such Registration Statement, except that, if such fourth fiscal quarter
is
the last quarter of the Company’s fiscal year, “Availability Date” means the
90th day after the end of such fourth fiscal quarter).
(j) With
a view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investors to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to: (i) make and keep
public information available, as those terms are understood and defined in
Rule
144, until the earlier of (A) three months after such date as all of the
Registrable Securities may be resold pursuant to Rule 144(k) or any other rule
of similar effect or (B) such date as all of the Registrable Securities shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act; and (iii) furnish
to
each Investor upon request, as long as such Investor owns any Registrable
Securities, (A) a written statement by the Company that it has complied with
the
reporting requirements of the 1934 Act, (B) a copy of the Company’s most recent
Annual Report on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such
other information as may be reasonably requested in order to avail such Investor
of any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due
Diligence Review; Information. The Company shall make available,
during normal business hours, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors and who are reasonably acceptable to the Company),
all financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents
and
properties of the Company as may be reasonably necessary for the purpose of
such
review, and cause the Company’s officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested
by
the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response
to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants
and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
The
Company
shall not disclose material nonpublic information to the Investors, or to
advisors to or representatives of the Investors, unless prior to disclosure
of
such information the Company identifies such information as being material
nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such
10
information
enters into an appropriate confidentiality agreement with the Company with
respect thereto.
5. Obligations
of the Investors.
(a) Each
Investor shall furnish in writing to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request. At least five (5) Business Days prior to the
first anticipated filing date of any Registration Statement, the Company shall
notify each Investor of the information the Company requires from such Investor
if such Investor elects to have any of the Registrable Securities included
in
the Registration Statement. An Investor shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement.
(b) Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all
of
its Registrable Securities from such Registration Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of either
(i)
the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
happening of an event pursuant to Section 3(h) hereof, such Investor will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the Investor
is advised by the Company that such dispositions may again be made.
6. Indemnification.
(a) Indemnification
by the Company. The Company will indemnify and hold harmless each
Investor and its officers, directors, members, employees and agents, successors
and assigns, and each other person, if any, who controls such Investor within
the meaning of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which they may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary Prospectus or final Prospectus, or any amendment
or
supplement thereof; (ii) any blue sky application or other document executed
by
the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order
to
qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information herein called a
“Blue Sky Application”); (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iv) any violation
by the Company or its agents of any rule or regulation promulgated under the
1933 Act applicable to the Company or its agents and relating to action or
inaction required of the
11
Company
in connection with such registration; or (v) any failure to register or qualify
the Registrable Securities included in any such Registration in any state where
the Company or its agents has affirmatively undertaken or agreed in writing
that
the Company will undertake such registration or qualification on an Investor’s
behalf and will reimburse such Investor, and each such officer, director or
member and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
so
made in conformity with information furnished by such Investor or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus.
(b) Indemnification
by the Investors. Each Investor agrees, severally but not
jointly, to indemnify and hold harmless, to the fullest extent permitted by
law,
the Company, its directors, officers, employees, stockholders and each person
who controls the Company (within the meaning of the 0000 Xxx) against any
losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from any untrue statement of a material fact or any omission
of
a material fact required to be stated in the Registration Statement or
Prospectus or preliminary Prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but
only
to the extent that such untrue statement or omission is contained in any
information furnished in writing by such Investor to the Company specifically
for inclusion in such Registration Statement or Prospectus or amendment or
supplement thereto. In no event shall the liability of an Investor be
greater in amount than the dollar amount of the proceeds (net of all expense
paid by such Investor in connection with any claim relating to this Section
6
and the amount of any damages such Investor has otherwise been required to
pay
by reason of such untrue statement or omission) received by such Investor upon
the sale of the Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying
party
of any claim with respect to which it seeks indemnification and (ii) permit
such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled
to indemnification hereunder shall have the right to employ separate counsel
and
to participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying
party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims
(in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense
of
such claim on behalf of such person); and provided, further, that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It
is understood that the indemnifying party shall not, in connection with any
12
proceeding
in the same jurisdiction, be liable for fees or expenses of more than one
separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.
(d) Contribution. If
for any reason the indemnification provided for in the preceding paragraphs
(a)
and (b) is unavailable to an indemnified party or insufficient to hold it
harmless, other than as expressly specified therein, then the indemnifying
party
shall contribute to the amount paid or payable by the indemnified party as
a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a
holder of Registrable Securities be greater in amount than the dollar amount
of
the proceeds (net of all expenses paid by such holder in connection with any
claim relating to this Section 6 and the amount of any damages such holder
has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution
obligation.
7. Miscellaneous.
(a) Amendments
and Waivers. This Agreement may be amended only by a writing
signed by the Company and the Required Investors, which shall be binding on
all
of the Investors. The Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the Required Investors.
(b) Notices. All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 9.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investors. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Investors and their
respective successors and assigns. An Investor may transfer or
assign, in whole or from time to time in part, to one or more persons its rights
hereunder in connection with the transfer of Registrable Securities by such
Investor to such person, provided that such Investor complies with all laws
applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.
(d) Assignments
and Transfers by the Company. This Agreement may not be assigned
by the Company (whether by operation of law or otherwise) without the prior
written consent of the Required Investors, provided, however, that the Company
may assign its rights and delegate its duties hereunder to any surviving or
successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition
of
all or substantially all of the Company’s assets to another corporation,
13
without
the prior written consent of the Required Investors, after notice duly given
by
the Company to each Investor.
(e) Benefits
of the Agreement. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
may also be executed via facsimile, which shall be deemed an
original.
(g) Titles
and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
(h) Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision
of
law which renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and
to
evidence the fulfillment of the agreements herein contained.
(j) Entire
Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of
the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District
of
New York for the purpose of any suit, action, proceeding or judgment relating
to
or arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the
14
world
by
the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to
the
laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
15
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly
authorized officers to execute this Agreement as of the date first above
written.
|
The
Company:
|
CAPRIUS,
INC.
|
|
|
By:
|
/s/
Xxxxxxxx Xxxxx
|
|
|
Name: Xxxxxxxx
Xxxxx
Title:
Vice President
|
||
16
|
SPECIAL
SITUATIONS FUND III QP, L.P.
|
||
|
By:
|
/s/
Xxxxx Greenhouse
|
|
|
Name:
Xxxxx Greenhouse
Title:
Managing Director
|
||
|
SPECIAL
SITUATIONS FUND III, L.P.
|
||
|
By:
|
/s/
Xxxxx Greenhouse
|
|
|
Name:
Xxxxx Greenhouse
Title:
Managing Director
|
||
|
SPECIAL
SITUATIONS PRIVATE EQUITY FUND, L.P.
|
||
|
By:
|
/s/
Xxxxx Greenhouse
|
|
|
Name:
Xxxxx Greenhouse
Title:
Managing Director
|
||
|
XXXXXXX
XXXXXXX, C/O LITTLE BEAR
INVESTMENTS
LLC
|
||
|
By:
|
/s/
Xxxxxxx Xxxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxxx
|
||
|
/s/
WOLF PRENSKY
|
|
|
WOLF
PRENSKY
|
|
/s/
XXXXXX XXXXX & XXXXXXX XXXXX,
|
|
|
XXXXXX
XXXXX & XXXXXXX XXXXX,
|
|
/s/
XXXXXX XXXXXX
|
|
|
XXXXXX
XXXXXX
|
17
|
BIOMEDICAL
VALUE FUND, L.P.
|
||
|
By:
|
/s/
Xxxxx Xxxxxx
|
|
|
Name:
Xxxxx Xxxxxx
Title:
Managing Director
|
||
|
BIOMEDICAL
OFFSHORE VALUE FUND, LTD.
|
||
|
By:
|
/s/
Xxxxx Xxxxxx
|
|
|
Name:
Xxxxx Xxxxxx
Title:
Managing Director
|
||
|
DOLPHIN
OFFSHORE PARTNERS, L.P.
|
||
|
By:
|
/s/
Xxxxx X. Xxxxx
|
|
|
Name:
Xxxxx X. Xxxxx
Title:
General Partner
|
||
18
Exhibit
A
Plan
of Distribution
The
selling stockholders, which as used
herein includes donees, pledgees, transferees or other successors-in-interest
selling shares of common stock or interests in shares of common stock received
after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their shares of common stock
or
interests in shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any
one or more of the following methods when disposing of shares or interests
therein:
-
ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;
-
block trades in which the
broker-dealer will attempt to sell the shares as agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as
principal and resale by the broker-dealer for its account;
-
an exchange distribution in
accordance with the rules of the applicable exchange;
-
privately negotiated
transactions;
-
settlement of short sales effected
after the date the registration statement of which this Prospectus is a part
is
declared effective by the SEC;
-
through the writing or settlement of
options or other hedging transactions, whether through an options exchange
or
otherwise;
-
broker-dealers may agree with the
selling stockholders to sell a specified number of such shares at a stipulated
price per share; and
-
a combination of any such methods of
sale.
The
selling stockholders may, from time
to time, pledge or grant a security interest in some or all of the shares of
common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of common stock, from time to time, under this prospectus, or under
an
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling stockholders to include
the
pledgee, transferee or other successors in interest as
19
selling
stockholders under this prospectus. The selling stockholders also may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
Broker-dealers
engaged by the selling
stockholders may arrange for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated. The selling
stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.
In
connection with the sale of our
common stock or interests therein, the selling stockholders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the common stock in the course of hedging
the positions they assume. The selling stockholders may also sell
shares of our common stock short and deliver these securities to close out
their
short positions, or loan or pledge the common stock to broker-dealers that
in
turn may sell these securities. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The
aggregate proceeds to the selling
stockholders from the sale of the common stock offered by them will be the
purchase price of the common stock less discounts or commissions, if
any. Each of the selling stockholders reserves the right to accept
and, together with their agents from time to time, to reject, in whole or in
part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Upon any exercise of the warrants by payment of cash, however, we will receive
the exercise price of the warrants.
The
selling stockholders also may
resell all or a portion of the shares in open market transactions in reliance
upon Rule 144 under the Securities Act of 1933, provided that they meet the
criteria and conform to the requirements of that rule.
The
selling stockholders and any
underwriters, broker-dealers or agents that participate in the sale of the
common stock or interests therein may be "underwriters" within the meaning
of
Section 2(11) of the Securities Act. Any discounts, commissions,
concessions or profit they earn on any resale of the shares may be underwriting
discounts and commissions under the Securities Act. Selling
stockholders who are "underwriters" within the meaning of Section 2(11) of
the
Securities Act will be subject to the prospectus delivery requirements of the
Securities Act.
To
the extent required, the shares of
our common stock to be sold, the names of the selling stockholders, the
respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect
to a
particular offer will be set forth in an accompanying prospectus supplement
or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.
20
In
order to comply with the securities
laws of some states, if applicable, the common stock may be sold in these
jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the common stock may not be sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
We
have advised the selling
stockholders that the anti-manipulation rules of Regulation M under the Exchange
Act may apply to sales of shares in the market and to the activities of the
selling stockholders and their affiliates. In addition, to the extent
applicable we will make copies of this prospectus (as it may be supplemented
or
amended from time to time) available to the selling stockholders for the purpose
of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities
Act.
We
have agreed to indemnify the selling
stockholders against liabilities, including liabilities under the Securities
Act
and state securities laws, relating to the registration of the shares offered
by
this prospectus.
We
have agreed with the selling
stockholders to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of (1) such time as all of the
shares covered by this prospectus have been disposed of pursuant to and in
accordance with the registration statement or (2) the date on which the shares
may be sold pursuant to Rule 144(k) of the Securities Act.
21
