CAPRIUS, INC. One University Plaza Hackensack, New Jersey 07601
EXHIBIT
4.3
CAPRIUS,
INC.
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
February
17,
2006
Xxxxxx
Securities, LLC.
00
Xxxxx
Xxxxxx 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Gentlemen:
The
undersigned, Caprius, Inc., a Delaware corporation (the “Company”),
proposes to sell to a limited number of “accredited investors,” as such term is
defined in Rule 501 of Regulation D promulgated under Section 4(2) of the
Securities Act of 1933, as amended (the “Securities
Act”),
a
minimum of $1,500,000 (“Minimum
Amount”)
and a
maximum of $3,000,000 (“Maximum
Amount”)
of
Series D Convertible Preferred Stock (the “Shares”),
together with warrants (the “Warrants”)
to
purchase the Company’s common stock (the Shares and Warrants shall hereinafter
be referred to as the “Securities”).
Purchases
of Securities shall be evidenced by the execution by investors of a Purchase
Agreement (collectively, with all other agreements contemplated therein,
schedules, exhibits and annexes thereto, the “Transaction
Documents”).
No
Purchase Agreement shall be effective unless and until it is accepted by the
Company. The Placement Agent (as hereinafter defined) shall not have any
obligation to independently verify the accuracy or completeness of any
information contained in any Transaction Document or the authenticity,
sufficiency, or validity of any check delivered by any prospective investor
in
payment for Securities. The sale of Securities pursuant to the Transaction
Documents is hereinafter referred to as the “Offering”
or
the
“Transaction”.
The
Offering period (the “Offering
Period”)
shall
commence as of the date hereof and shall continue through February 28, 2006,
which date may be extended at the mutual discretion of the Company and Xxxxxx
Securities, LLC (together with its dealers, the “Placement
Agent”
or
“Xxxxxx”).
The
day
that the Offering Period terminates is hereinafter referred to as the
“Termination
Date.” Any
terms
used and not otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement except that the term “Conversion Rate” shall
have the meaning assigned to it in Section 4.1 of the Certificate of
Designations.
Subject
to the performance by the Company of all of its obligations to be performed
under this Agreement and to the completeness and accuracy of all representations
and warranties of the Company contained in this Agreement, Xxxxxx is hereby
appointed placement agent of the Company for the purposes of assisting the
Company in finding qualified investors for the Offering and agrees to use its
reasonable efforts to assist the Company in finding qualified investors for
the
Offering. Except for the foregoing, it is understood that the Placement Agent
has no commitment to sell the
Securities.
Carter’s agency hereunder is not terminable by the Company prior to the
Termination Date.
1. Representations
Warranties and Covenants of the Company.
For the
benefit of Xxxxxx, the Company hereby incorporates by reference all of its
(i)
representations and warranties as set forth in Section 4 of the Purchase
Agreement and (ii) covenants set forth in Section 7 of the Purchase Agreement,
in each case with the same force and effect as if specifically set forth herein.
In addition, at each closing of the Transaction (“Closing”), the Company will
provide Xxxxxx with the same certificates of the officers of the Company as
are
furnished to the investors pursuant to the Purchase Agreement and such other
certification, opinions and documents as Xxxxxx or its counsel may deem
appropriate, in form and substance satisfactory to Xxxxxx and its counsel,
including any updates of the Company’s representations and warranties set forth
herein or in the Purchase Agreement.
2. Closing;
Fees.
Simultaneously with payment for and delivery of the Securities at each Closing,
the Company shall pay to the Placement Agent or its designees (i) a placement
fee equal to eight percent (8%) of the aggregate gross proceeds in each Closing
(for a placement fee of $160,000); (ii) warrants to purchase 8% of the number
of
shares of common stock initially issuable upon conversion of the Shares sold
at
each Closing (but using the Conversion Rate in effect after September 30, 2007
for purposes of this calculation) at an exercise price equal to $1.68 per share
(the “Placement Agent Warrants”) (for a total number of Placement Agent Warrants
of 119,403) and (iii) a non-accountable expense allowance equal to two percent
(2%) of the aggregate proceeds from the sale of the Securities, not to exceed
$35,000 (the “Expense Allowance” (for a total Expense Allowance of $35,000). The
foregoing fees shall not be paid to Xxxxxx with respect to Shares purchased
by
any investor who is a pre-existing stockholder of the Company or any investor
who is introduced to the Offering by management of the Company. The common
stock
issuable upon exercise of the Placement Agent Warrants shall be afforded the
same registration rights applicable to the common stock underlying the Shares
and issuable upon exercise of the Warrants, as described in the Registration
Rights Agreement included in the Transaction Documents. For the benefit of
Xxxxxx, the Company hereby incorporates by reference all of the provisions
of,
and rights and obligations under, the Registration Rights Agreement that apply
to “Investors” (as defined under such agreement), including but not limited to
Section 6 of such agreement, relating to indemnification and contribution,
in
each case with the same force and effect as if specifically set forth herein.
The Placement Agent Warrants contain the same terms and conditions as the
Warrants, except for the exercise price and any requirements imposed on such
securities by the NASD. In addition, the Company shall pay all filing and
reasonable legal expenses to be incurred in any Rule 2710 filing to made with
the NASD to the extent such filing is required, which determination shall be
made solely by the Placement Agent.
3. Covenants
of the Company.
(a). No
Closing.
Anything set forth herein to the contrary notwithstanding, in the event that
the
Closing does not occur in accordance with the terms provided herein for any
reason other than due to the gross negligence or willful misconduct of Xxxxxx,
no amounts shall be further payable to Xxxxxx hereunder, except for up to
$15,000 to reimburse Xxxxxx for legal fees incurred. In no event shall Xxxxxx
be
responsible
2
for
any
of the Company’s fees, costs or expenses incurred in connection with the
Transaction. The Company shall reimburse Xxxxxx for any out-of-pocket expenses
(including, but not limited to, reasonable legal fees and expenses) which Xxxxxx
may incur in connection with the enforcement of its rights
hereunder.
(b). Company
Expenses and Blue Sky.
(i). The
Company shall pay all reasonable expenses incurred in connection with the
preparation and printing of all necessary offering documents and instruments
related to the Transaction, the issuance of the Securities and will also pay
the
Company’s own expenses for accounting fees, legal fees, escrow account fees and
other costs involved with the Transaction, including the printing costs of
the
Transaction documentation. The Company will provide at its own expense such
quantities of the Transaction documentation and other documents and instruments
relating to the Transaction as the Placement Agent may reasonably request.
Further, as promptly as practicable after the final Closing Date of the Offering
(the “Final
Closing Date”),
the
Company shall prepare, at its own expense, no more than four “velobound volumes”
relating to the Transaction and will distribute such volumes to the individuals
designated by counsel to the Placement Agent.
(ii). The
Company will prepare and file the necessary documents so that offers and sales
of the securities to be offered in the Offering may be made in certain states
and jurisdictions in the United States. It is understood that such filings
may
be based on or rely upon: (i) the representations of each investor set forth
in
the Purchase Agreement delivered by such investor; (ii) the representations,
warranties and agreements of the Company set forth in Section 1 of this
Agreement; and (iii) the representations of the Company set forth in the
certificate to be delivered at the closing(s) pursuant to the Purchase
Agreement.
(iii). The
Company shall file five copies of a Notice of Sales of Securities on Form D
with
the SEC no later than 15 days after the commencement of the sale of the
Securities. The Company shall file promptly such amendments to such Notices
on
Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any state or jurisdiction in which offers
and
sales are made. The Company shall furnish the Placement Agent with copies of
all
such filings.
(c). Tail. From
the
date hereof until the date that is the one year anniversary of the Effective
Date,
Xxxxxx
will be entitled to receive the fees as set forth in Section 2 of this Agreement
in connection with any private financing transaction that the Company
consummates with any investor(s) introduced to the Company by Xxxxxx. Within
10
business days following the Final Closing Date, Xxxxxx shall deliver to the
Company a list of individuals and entities, that it has introduced to the
Company and who, if so requested, had meetings or substantive discussions with
a
member of the Company’s management (“Xxxxxx
Introduced Parties”).
This
list of investors, if agreed to by the Company (which agreement shall not be
unreasonably withheld), shall constitute the definitive list of investors
introduced to the Company by Xxxxxx for the purposes of this Agreement (the
“Xxxxxx
Introduced Parties List”).
The
Company acknowledges and agrees that for purposes of this Agreement the Xxxxxx
Introduced Parties List is proprietary
3
to
Xxxxxx
and shall be maintained in strict confidence by the Company except as may be
required by law.
(d). Legal
Opinion. The
Company agrees to instruct its counsel, Xxxxxx
Xxxx & Priest LLP,
to
include Xxxxxx as a named recipient on the legal opinion required to be
delivered in connection at the Closing.
4. Indemnification.
As
partial inducement for Xxxxxx to enter into this Agreement, the Company hereby
agrees to the indemnification terms set forth in Exhibit A
hereto.
5. Due
Diligence and Company Cooperation.
The
Company shall make members of management and other employees, advisors and
agents available to Xxxxxx as Xxxxxx shall reasonably request for consummating
the Offering, and shall commit such time and other resources as are necessary
or
appropriate to secure reasonable and timely success of the Offering. The Company
shall cooperate with Xxxxxx in connection with, and shall make available to
Xxxxxx, historic, current and prospective information concerning the business,
assets, prospects, operations and financial condition of the Company and such
documents and other information as Xxxxxx shall reasonably request in connection
with the services to be performed by it under this Agreement. The Company shall
inform Xxxxxx of any material events or developments reasonably expected to
lead
to material events that may come to the attention of the Company at any point
during the Offering Period. The Company recognizes and confirms that Xxxxxx
will
use and rely, without investigation as to accuracy and completeness, on the
documents and information (written and oral) provided by the Company and on
information available from generally recognized public sources in performing
the
services contemplated by this Agreement and that Xxxxxx does not assume nor
have
responsibility for the accuracy or completeness of such documents, information
or the Transaction Documents. Further, Xxxxxx does not assume any obligation
to
make any solvency determination or to conduct any appraisal of assets or
liabilities of the Company.
6. Securities
Law Compliance.
Each of
the Company and Xxxxxx agrees to conduct the Offering in a manner intended
(a) to qualify as a private placement of the Securities in any jurisdiction
in which the Securities are offered and (b) to comply with the requirements
of Rule 506 of Regulation D under the Securities Act. Assuming the accuracy
of
the representations and warranties given to the Company by each investor to
the
extent relevant for such determination, the Offering will be exempt from the
registration requirements of the Securities Act. In connection with offers
made
in the U.S. pursuant to Regulation D, the Company agrees (i) to limit
offers to sell, and solicitations of offers to buy, the Securities to persons
reasonably believed by it to be “accredited investors” within the meaning of
Rule 501(a) under the Securities Act, and (ii) not to engage in any form of
general solicitation or general advertising in connection with the Offering
within the meaning of Rule 502 under the Securities Act. The Company agrees
to
conduct the Offering in a manner intended to comply with the registration or
qualification requirements, or available exemptions there from, under applicable
state securities laws. The Company shall be responsible for compliance with
the
filing requirements of the securities laws of all applicable countries, states
of the U.S., and other jurisdictions. Xxxxxx shall advise the Company of those
states of the U.S. and other jurisdictions in which Xxxxxx
4
intends
to offer the Securities in order that the Company’s counsel can ensure that the
Offering has been qualified or exempted under the appropriate laws and
regulations. Xxxxxx shall not engage in sales of the Securities in any state
requiring pre-sale qualification until the Company has qualified to sell
Securities in such state. The Company has not in the six months prior to the
date of this Agreement and will not, for a period of six months following the
Final Closing Date, directly or indirectly, make any offers or sales of any
security or solicit any offer to buy any security unless such offer or sale
does
not (y) jeopardize the availability of exemptions from the registration and
qualification requirements under applicable U.S. federal securities laws, state
securities laws, or the securities laws of any other jurisdiction with respect
to the Offering and (z) cause the Offering to be integrated with such other
offering for purpose of any stockholder approval provisions applicable to the
Company or its securities.
7. Miscellaneous.
(a). Survival.
Any
termination of the Transaction without consummation thereof shall be without
obligation on the part of any party except that the provisions of Section 3
and
4 shall survive.
(b). Representations,
Warranties and Covenants to Survive Delivery.
The
representations, warranties, indemnities, agreements, covenants and other
statements of the Company contained herein shall survive execution of the
Purchase Agreement and the Closing for a period of twelve months.
(c). No
Other Beneficiaries.
This
Agreement is intended for the sole and exclusive benefit of the parties hereto
and their respective successors, controlling persons and permitted assigns,
and
no other person, firm or corporation shall have any third party beneficiary
or
other rights hereunder.
(d). Applicable
Law.
This
Agreement shall be governed by and construed under the laws of the State of
New
York as applied to agreements among New York residents entered into and to
be
performed entirely within New York. Each of the parties hereto (1) agree that
any legal suit, action or proceeding arising out of or relating to this
Agreement shall be instituted exclusively in New York State Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (2) waive any objection which the Company may have now
or
hereafter to the venue of any such suit, action or proceeding, and (3)
irrevocably consent to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of the parties
hereto further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the New York
State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York and agree that service of process upon it
mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it, in any such suit, action or proceeding.
THE
PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
5
(e). Notices.
All
notices, requests, demands and other communications which are required or may
be
given hereunder shall be in writing and shall be deemed to have been duly given
when delivered personally, receipt acknowledged or five (5) days after being
sent by registered or certified mail, return receipt requested, postage prepaid.
All notices shall be made to the parties at the addresses designated above
or at
such other or different addresses which a party may subsequently provide with
notice thereof, and to their respective legal counsel, as
follows:
|
(i).
|
If
to Xxxxxx, to:
Xxxxxx
Securities, LLC.
00
Xxxxx Xxxxxx 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx
Attention.:
Xxxx Xxxxxx, Managing Member
Fax
No.: (000) 000-0000
with
a copy to:
Xxxxxxx
Krooks LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention.:
Xxxxxx X. Xxxxxxx, Esq.
Fax
No.: (000) 000-0000
|
or
to
such other person or address as Xxxxxx shall furnish to the Company in
writing.
|
(ii)
|
If
to the Company, to:
Caprius,
Inc.
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxxxx Xxxxx, Chief Financial Officer
Fax
No.: (000) 000-0000
with
a copy to:
Xxxxxx
Xxxx & Priest LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000-0000
Attention:
Xxxxx Xxxx, Esq.
Fax
No.: (000) 000-0000
|
or
to
such other person or address as the Company shall furnish to Xxxxxx in
writing.
(f). Counterparts.
This
Agreement may be signed in counterparts with the same effect as if both parties
had signed one and the same instrument.
6
(g). Entire
Agreement.
This
Agreement and the Exhibits hereto constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
and contemporaneous agreements, understandings, documents, negotiations and
discussions, whether oral or written, of the parties hereto.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
7
If
you
find the foregoing is in accordance with our understanding, kindly sign and
return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement between us.
|
Very
truly yours,
CAPRIUS,
INC.
|
||
|
By:
|
/s/
Xxxxxxxx Xxxxx
|
|
|
Name:
Xxxxxxxx
Xxxxx
Title:
Chief Financial
Officer
|
||
|
AGREED
AND ACCEPTED TO
AS
OF THE DATE FIRST WRITTEN ABOVE:
XXXXXX
SECURITIES, LLC
|
||
|
By:
|
||
|
Name: Xxxx
Xxxxxx
Title:
Managing Member
|
8
Exhibit
A
In
consideration of the agreement of Xxxxxx Securities, LLC (“Xxxxxx”)
to act
as placement agent on behalf of the Company pursuant to this Placement Agency
Agreement (the “Agreement”),
the
Company agrees to indemnify and hold harmless Xxxxxx, its affiliates, and each
of their respective affiliates, directors, officers, agents, advisors,
consultants, employees and controlling persons (as defined in the Securities
Act
of 1933, as amended) (Xxxxxx and each such other person or entity are
hereinafter referred to as an “Indemnified
Person”),
from
and against any losses, claims, damages, expenses and liabilities or actions
in
respect thereof (collectively, “Losses”),
as
they may be incurred, including all reasonable legal fees and other expenses
incurred in connection with investigating, preparing, defending, paying,
settling or compromising any Losses, whether or not in connection with any
pending or threatened litigation in which any Indemnified Person is a named
party or to which any of them may become subject and which are related to or
arise out of any act, omission, transaction or event contemplated by the
Agreement, Carter’s role in connection therewith, or in connection with any
information including, without limitation, Transaction Documents provided to
purchasers or prospective purchasers of Securities. The Company will not,
however, be responsible under the foregoing provisions with respect to any
Losses to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such Losses resulted from an Indemnified
Person’s willful misconduct, bad faith or gross negligence.
If
the
indemnity referred to hereunder should be, for any reason whatsoever,
unenforceable, unavailable or otherwise insufficient to hold each Indemnified
Person harmless for all Losses incurred by it, the Company shall pay to or
on
behalf of each Indemnified Person contributions for Losses so that each
Indemnified Person ultimately bears only a portion of such Losses as is
appropriate (i) to reflect the relative benefits received by each such
Indemnified Person, respectively, on the one hand and the Company on the other
hand in connection with the transaction that is the subject of the Agreement
(the “Transaction”)
or
(ii) if the allocation on that basis is not permitted by applicable law, to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of each such Indemnified Person, respectively, and
the
Company as well as any other relevant equitable considerations; provided,
however, that in no event shall the aggregate contribution of all Indemnified
Persons to all Losses exceed the amount of the fees actually received by Xxxxxx
pursuant to the Agreement. The respective relative benefits received by Xxxxxx
and the Company in connection with the Transaction shall be deemed to be in
the
same proportion as the aggregate fees (excluding reimbursement of expenses)
paid
to Xxxxxx under the Agreement bear to the gross proceeds and/or other
consideration paid, or proposed to be paid, for the Transaction. The relative
fault of each Indemnified Person and the Company shall be determined by
reference to, among other things, whether the actions or omissions to act were
by such Indemnified Person or the Company, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action or omission to act.
The
Company also agrees that no Indemnified Person shall have any liability to
the
Company or its affiliates, directors, officers, employees, agents, advisors,
shareholders or
9
interest
holders, directly or indirectly, related to or arising out of the Agreement,
except Losses incurred by the Company that a court of competent jurisdiction
shall have determined by a final judgment to have resulted from such Indemnified
Person’s willful misconduct, bad faith or gross negligence. In no event,
regardless of the legal theory advanced, shall any Indemnified Person be liable
for any consequential, indirect, incidental or special damages of any nature.
If
multiple claims are brought against an Indemnified Person in an arbitration,
with respect to at least one of which indemnification is permitted under
applicable law and provided for hereunder, the Company agrees that any
arbitration award shall be conclusively deemed to be based on claims as to
which
indemnification is permitted and provided for, except to the extent the
arbitration award expressly states that the award, or any portion thereof,
is
based solely on a claim as to which indemnification is not
available.
Promptly
after receipt by any Indemnified Persons of notice of any pending or threatened
litigation, such Indemnified Persons will promptly notify the Company in writing
of such matter; provided, however, that the failure to provide such prompt
notice to the Company shall not relieve the Company of any liability which
it
may have to any Indemnified Person except to the extent such failure to provide
such prompt notice to the Company has materially prejudiced the defense of
the
litigation. In the event any such action is brought against any Indemnified
Person, the Company shall be entitled to participate therein and to assume
the
defense thereof, with counsel reasonably satisfactory to the Indemnified Person;
unless, however, the Indemnified Person reasonably determines that the
representation of the Indemnified Person and the Company by the same counsel
would be inappropriate due to actual or potential differing interests between
them, including situations in which there are one or more legal defenses
available to the Indemnified Person that are different from or additional to
those available to the Company. In such event, the Indemnified Person shall
have
the right to assume its own defense, with counsel reasonably satisfactory to
the
Company, and shall so signify by promptly notifying the Company in writing
of
its decision. Such decision shall not relieve the Company of any liability
which
it may have to the Indemnified Person, including the reimbursement of any
reasonable legal or other expenses incurred in connection with the Indemnified
Person’s defense; provided that in no event shall the Company be liable for the
fees and expenses of more than one counsel (in addition to local counsel) for
all Indemnified Persons in connection with any action. The Company shall not,
without the prior written consent of Xxxxxx, effect any settlement, compromise,
consent or termination of any pending or threatened proceeding arising out
of or
relating to the engagement for which indemnification could be claimed by any
Indemnified Person hereunder, unless such settlement, compromise, consent or
termination includes an express, complete release of all Indemnified Persons
from all liability as to all asserted or potential claims against each such
Indemnified Person.
The
obligations of the Company referred to above shall be in addition to any rights
that any Indemnified Person may otherwise have and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of any Indemnified Person and the Company. The provisions set
forth in this Exhibit A shall remain operative and in full effect regardless
of
(i) the completion by Xxxxxx of its assignment under the Agreement or (ii)
any
termination of the Agreement or any Indemnified Person. Solely for purposes
of
this Indemnification Agreement, the Company
10
hereby
consents to personal jurisdiction, service and venue in any court in which
any
claim or proceeding which is subject to this Agreement is brought against any
Indemnified Person and waives any defense of lack of personal jurisdiction
and
irrevocably agrees that all charges in respect of any suit, action or proceeding
may be heard or determined by any such court. The parties hereto waive all
right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of this Agreement or
any
transaction or conduct in connection therewith. This Indemnification Agreement
shall be governed by and construed in accordance with the internal laws of
the
State of New York without regard to principles of conflicts of law. No waiver,
amendment or other modification of this Agreement shall be effective unless
in
writing and signed by the parties thereto.
11
