EXHIBIT 10.6
VOID AFTER 5:00 P.M., EASTERN TIME,
ON April 25, 2009
THIS WARRANT AND THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR IN A
TRANSACTION THAT, IN THE OPINION OF COUNSEL TO CAPRIUS, INC., QUALIFIES AS AN
EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
CAPRIUS, INC.
COMMON STOCK PURCHASE WARRANT AGREEMENT
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CAPRIUS, INC., a Delaware corporation (the "Company"), hereby grants to
SANDS BROTHERS INTERNATIONAL, LIMITED (the "Initial Holder"), subject to the
terms set forth in this Common Stock Purchase Warrant Agreement (the "Warrant
Agreement"), the right to exercise Common Stock Purchase Warrants (the
"Warrants") for the purchase from the Company, of 1,106,250 (the "Shares") of
the Company's Common Stock, at an exercise price of $0.28 per Share, subject to
adjustment from time to time pursuant to Section 3 hereof (collectively, the
"Exercise Price"). The term "Common Stock" means, unless the context otherwise
requires, the Company's Common Stock, par value $.01 per share, or other
securities or property at the time deliverable upon the exercise of this
Warrant.
This Warrant is issued to the Initial Holder as partial consideration for
services rendered by the Initial Holder to the Company, pursuant to a Selected
Dealer Agreement, dated April 12, 2004, between the Company and the Initial
Holder.
1. Exercise.
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1.1 Timing of Exercise. The Warrants shall be exercisable at any time in
whole or in part from time to time commencing as of April 26, 2004 and expiring
at 5:00 P.M., New York time, on April 25, 2009 (the "Expiration Date"), subject
to earlier termination as provided herein, and may not be exercised thereafter.
1.2 Manner of Exercise. The purchase rights evidenced by this Warrant
Agreement shall be exercised by the Initial Holder or any person permitted by
Section 6 hereof (collectively, the "Holder"), by surrendering this Warrant
Agreement, together with the Notice of Exercise in the form of Exhibit A annexed
hereto duly executed by the Holder, to the Company at the address in Section 12
hereof for sending of notices, accompanied by payment (in cash, by wire transfer
or by certified or official bank check or checks) of the applicable Exercise
Price.
1.3 Net Issue Exercise.
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(a) In lieu of making payment as provided in Section 1.2 hereof upon
exercise, the Holder may elect, in its sole discretion, to receive shares of
Common Stock equal to the value of Warrants then being exercised by surrender of
this Warrant Agreement to the Company, together with the Notice of Exercise and
notice of the net issue election, and the Company shall issue to the Holder the
number of Shares computed using the following formula:
X = Y(A-B) / A
Where: X= the number of Shares to be issued to the Holder.
Y= the number of Shares sought to be purchased upon exercise
of the Warrants.
A= the fair market value of one share of Common Stock.
B= the Exercise Price for the Shares to be purchased.
(b) For the purpose of this Section, the fair market value of the
Shares shall mean with respect to each share of Common Stock:
(i) If the Shares are listed on any national securities exchange
or quoted on the Nasdaq National Market, Nasdaq Small Cap Market or the OTC
Bulletin Board, the average of the closing prices of the Shares, sold on the
primary securities exchange or market on which the Shares are at the time listed
or traded, on the ten (10) trading days immediately prior to the day the Notice
of Exercise is received by the Company;
(ii) If the Shares are not quoted on any national securities
exchange or quoted on the Nasdaq National Market, Nasdaq Small Cap Market or the
OTC Bulletin Board, the average of the mean between the highest bid and lowest
asked price on such a day in the domestic over-the-counter market as reported by
the National Quotation Bureau or any similar successor organization, on the
thirty (30) calendar days immediately prior to the day the Notice of Exercise is
received by the Company;
(iii) If there is no public market for the Shares, the price
determined by the Board of Directors of the Company acting in good faith; or
(iv) If there is a consolidation, merger or sale of assets by the
Company pursuant to Section 3.4 hereof, then the greater of: (a) clauses (i),
(ii) or (iii) above, or (b) the value of the Shares upon such consolidation,
merger or sale of assets by the Company.
1.4 Partial Exercise. This Warrant may be exercised for less than the full
number of Shares available for exercise at the time the Notice of Exercise is
submitted, in which case the number of Shares receivable upon the exercise of
this Warrant as a whole, and the amount payable upon the exercise of this
Warrant as a whole, shall be proportionately reduced. Upon any such partial
exercise, the Company at its expense will forthwith issue to the Holder a new
Warrant Agreement of like tenor calling for Warrants to purchase the number of
shares of Common Stock as to which rights have not been exercised.
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2. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of any Warrants, and in any event within five (5) business
days thereafter, the Company, at its expense, will cause to be issued in the
name of and delivered to the Holder a certificate or certificates for the number
of fully paid and non-assessable shares of Common Stock to which the Holder
shall be entitled upon such exercise, subject to compliance with Section 7
hereof. Any shares of Common Stock as to which this Warrant is exercised shall
be deemed issued on and as of the date of such exercise, and the Holder shall
thereupon be deemed to be the owner of record of such Shares.
3. Anti-Dilution Adjustments.
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3.1 Change in Capitalization. In case of any stock split (forward or
reverse), stock dividend or similar transaction prior to the Expiration Date
which increases or decreases the number of outstanding shares of Common Stock,
appropriate adjustment shall be made by the Board of Directors of the Company to
the number of Shares, and the Exercise Price per Share, of Common Stock which
may be purchased under this Warrant Agreement.
3.2 Reclassification. In case of any reclassification, capital
reorganization or change of the outstanding Common Stock of the Company (other
than as a result of a subdivision, combination or stock dividend covered by
Section 3.1 hereof), at any time prior to the Expiration Date, then, as a
condition of such reclassification, reorganization or change, lawful provision
shall be made, and duly executed documents evidencing the same from the Company
or its successor shall be delivered to the Holder, so that the Holder shall have
the right prior to the expiration of this Warrant Agreement to purchase, at a
total price not to exceed that payable upon the exercise of the unexercised
portion of the Warrants, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization or
change, by a holder of the number of shares of Common Stock of the Company which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization or change, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
to the end that the provisions hereof (including, without limitation, provisions
for the adjustment of the Exercise Price and of the number of Shares purchasable
upon exercise of the Warrants) shall thereafter be applicable in relation to any
shares of stock and other securities and property thereafter deliverable upon
exercise hereof.
3.3 Consolidation, Merger and Sale of Assets. In case of any consolidation
of the Company with or a merger of the Company into another corporation or in
case of any sale or conveyance and to another corporation of the property of the
Company as an entirety or substantially as an entirety, upon any such
consolidation, merger, sale or conveyance where (i) the surviving entity is a
publicly traded company, and (ii) the consideration to be received by the
holders of the Company's Common Stock includes publicly traded equity securities
in the surviving entity or parent corporation, the Company agrees that a
condition of such transaction will be that the successor or purchasing
corporation, as the case may be, shall assume the obligations of the Company
hereunder in writing. In the case of any such consolidation, merger or sale or
conveyance, the Holder shall have the right until the Expiration Date upon
payment of the Exercise Price in effect immediately prior to such action, to
receive the kind and amount of shares and other securities and/or property which
it would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had this Warrant been exercised
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immediately prior to such action, subject to adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3. The provisions of this Section 3.3 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
3.4 Non-Public Successor. In case of any consolidation of the Company with
or a merger of the Company into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, upon any such consolidation, merger, sale or
conveyance where (i) the surviving entity is a non-publicly traded company, or
(ii) the consideration to be received by the holders of the Company's Common
Stock does not include any publicly traded equity securities in the surviving
entity or its parent corporation, the Company agrees that a condition of such
transaction will be that the Company shall mail to the Holder at the earliest
applicable time (and, in any event not less than ten (10) business days before
any record date for determining the persons entitled to receive the
consideration payable in such transaction) written notice of such record date.
Such notice shall also set forth facts as shall indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price of and the kind and amount of the Shares and other securities
and property deliverable upon exercise of this Warrant. Upon the closing of the
transaction referenced in the foregoing notice, this Warrant Agreement to the
extent then unexercised shall terminate, provided, however, that prior to such
closing, the Holder shall be entitled to exercise this Warrant pursuant to
Section 1.3 and the fair market value of the Shares shall be determined in
accordance with Section 1.3(b)(iv) hereof.
3.5 Exchanges and Distributions With Respect to Common Stock. If the
Company shall exchange for its Common Stock or distribute with respect to its
Common Stock other securities issued by it, the Company shall give notice
thereof to the Holder, and the Holder shall have the right thereafter (until the
Expiration Date) to exercise the Warrants for the kind and amount of shares of
stock and other securities retained or received by a holder of the number of
shares of Common Stock of the Company into which the Warrants might have been
exercised immediately prior to such exchange or distribution, subject to
adjustment as provided hereinabove.
3.6 Officer's Certificate. Whenever the Exercise Price per Share or the
number of shares of Common Stock subject to this Warrant Agreement is adjusted,
the Company shall promptly mail to the Holder a notice of adjustment. The notice
of adjustment shall include a statement in reasonable detail of the facts
requiring the adjustment and the manner of computing it, and shall be certified
by the chief financial officer of the Company. The determination of the
adjustment shall be made by the Company in its sole discretion and shall be
final and binding upon the Holder.
4. Shares to Be Fully Paid; Reservation of Capital Stock Issuable Upon
Exercise of Warrants. The Company covenants and agrees that any Shares issued
hereunder will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issuance thereof. The Company
shall at all times reserve and keep available out of its authorized but unissued
capital stock, solely for the issuance and delivery upon the exercise of the
Warrants, such number of its duly authorized shares of Common Stock as from time
to time shall be issuable upon the exercise of the Warrants.
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5. Fractional Shares. The Company shall not issue fractions of shares of
Common Stock upon exercise of the Warrants or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 5, be issuable upon exercise of the Warrants, then the number of shares
of Common Stock to be issued shall be rounded up or down to the nearest whole
share.
6. Transfer Restrictions. A Holder, including the Initial Holder or any
subsequent Holder, may transfer this Warrant Agreement only to (i) any other
Holder of Warrants that were originally issued to the Initial Holder under the
Selected Dealer Agreement, (ii) any entity controlled by, controlling or under
common control of the Holder, or for which the Holder is acting as the
representative, or to one or more of its shareholders, directors, officers,
members, employees or limited or general partners, or to entities that manage or
co- manage the Holder or any of its limited or general partners, or (iii) any
member of the immediate family (which shall be deemed to include a spouse,
parent, or child) of an individual Holder or trust for the benefit of any such
individual. Prior to any such transfer, the Holder must deliver the Assignment
Form in the form of Exhibit B hereto and provide an investor representation
letter to the Company in the form of Exhibit C hereto, regarding the proposed
transferee sufficient for the Company to determine the eligibility of such
transferee under this Section 6.
7. Securities Law Compliance.
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7.1 Investment. Unless the Shares to be issued upon exercise of the
Warrants are then included in an effective registration statement filed under
the Securities Act of 1933, as amended (the "Securities Act"), the Holder, by
accepting this Warrant Agreement, covenants and agrees that, at the time of
exercise hereof, and at the time of any proposed transfer of Shares acquired
upon exercise hereof, the Holder will deliver to the Company a written statement
that the securities acquired by the Holder upon exercise hereof are for the
account of the Holder or are being held by the Holder as trustee, investment
manager, investment advisor or as any other fiduciary for the account of the
beneficial owner or owners for investment and are not acquired with a view to,
or for sale in connection with, any distribution thereof (or any portion
thereof) and with no present intention (at any such time) of offering and
distributing such securities (or any portion thereof), and including such other
representations as may be reasonably requested by counsel to the Company.
Further, the Holder shall comply with such provisions of applicable state
securities laws as counsel to the Company or other counsel reasonably acceptable
to the Company shall advise. The Holder shall have certain rights to include the
Common Stock underlying this Warrant in a registration statement in accordance
with Section 8 hereof.
7.2 Legend. Unless the Shares issuable upon exercise of the Warrants are
registered under the Securities Act, upon exercise of any part of the Warrants
and the issuance of any of such Shares, the Company shall instruct its transfer
agent to enter stop transfer orders with respect to such Shares, and all
certificates representing the Shares issued upon exercise hereof shall bear on
the face thereof substantially the following legend, insofar as is consistent
with applicable law:
"The shares of Common Stock represented by this Certificate have not
been registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or otherwise
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disposed of unless registered pursuant to the provisions of that Act
or an opinion of counsel to the Company is obtained stating that such
disposition is in compliance with an available exemption from such
registration."
8. Registration Under the Securities Act of 1933. The shares of Common
Stock issuable upon exercise of this Warrant are entitled to the benefits of
that certain registration rights agreement of even date herewith between the
Company and certain investors named therein (the "Registration Rights
Agreement").
9. Replacement of Warrant Agreement. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Agreement and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement, or (in the case mutilation) upon surrender
and cancellation hereof, the Company will issue in lieu thereof a new Warrant
Agreement of like tenor. 10. Rights as a Warrant Holder. The Holder shall not,
by virtue hereof, be entitled to any rights of a stockholder in the Company,
either at law or equity, except with respect to certificates representing shares
of Common Stock issued upon exercise of this Warrant. The rights of the Holder
are limited to those expressed in this Warrant Agreement and are not enforceable
against the Company except to the extent set forth herein. Prior to due
presentment for transfer of this Warrant Agreement, the Company may deem and
treat the Holder as the absolute owner of this Warrant Agreement for purposes of
any exercise hereof and for all other purposes and such right of the Company
shall not be affected by any notice to the contrary.
11. Subdivision of Rights. This Warrant Agreement (as well as any new
Warrants issued pursuant to the provisions of this Section) is exchangeable upon
the surrender hereof by the Holder at the principal office of the Company for
any number of new Warrants of like tenor and date representing in the aggregate
the right to subscribe for and purchase the number of shares of Common Stock of
the Company that may be subscribed for and purchased hereunder.
12. Sending of Notices. All notices and other communications with respect
to this Warrant Agreement shall be in writing and sent by express mail or
courier service or by personal delivery, if to the Holder, to the address set
forth at the end of this Warrant, and if to the Company, to One Xxxxxx Plaza,
Fort Xxx, New Jersey 07024, or to such other address as either party hereto may
duly give to the other.
13. Headings. The headings in this Warrant Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning of the terms
hereof.
14. Change, Waiver, Discharge or Termination. This Warrant Agreement sets
forth the entire agreement between the Company and the Holder with respect to
the matters herein. Neither this Warrant Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
15. Binding. This Warrant Agreement shall be binding upon and inure to the
benefit of the Company and the Holder, and their respective successors and
permitted assigns.
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16. Governing Law. This Warrant Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to principles of conflicts of law.
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CAPRIUS, INC.
By: /s/ Xxxxxx Xxxxx
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Dated: April 26, 2004. Name: Xxxxxx Xxxxx
Title: President
Agreed to:
SANDS BROTHERS INTERNATIONAL LIMITED
By: /s/ Xxxxxxx Xxxxx
--------------------
Name: Xxxxxxx Xxxxx
Title: President
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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Tax Identification No.
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EXHIBIT A
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NOTICE OF EXERCISE
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(To be executed by a Holder desiring to exercise the right to purchase Shares
pursuant to a Warrant.)
The undersigned Holder of the attached Warrant Agreement hereby:
1. Irrevocably elects to exercise the Warrant therein by (please check the
applicable blank):
(a) _____ Cash Exercise to the extent of purchasing:
________ Shares at $ 0.28 per share; and makes
payment in full of the aggregate Exercise Price for
those Shares in the amount of $___________ by wire
transfer or the delivery of certified funds or a bank
cashier's check; or
(b) _____ Net Issue Exercise pursuant to the provision of Section 1.3
for the purchase of ________ Shares at $ 0.28 per share;
such Number of Shares and Exercise Price subject to Section 3 of the Warrant
Agreement.
2. Requests that a certificate for the Shares be issued in the name of the
undersigned, or, if the name and address of some other person is specified
below, in the name of such other person:
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-------------------------------------------
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(Name, address and tax identification number
of person other than the undersigned in whose
name Shares are to be registered.)
3. Requests, if the number of Shares purchased are not all the Shares
purchasable pursuant to the unexercised portion of the Warrants, that a new
Warrant Agreement of like tenor for the remaining Shares purchasable pursuant to
the Warrants be issued and delivered to the undersigned at the address stated
below.
Dated:
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Signature
(This signature must conform in all respects to the name of the Holder as
specified on the face of the Warrant Agreement)
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Social Security or Tax Identification Number Printed Name
Address:
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Stock Warrant No.: ##
EXHIBIT B
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ASSIGNMENT FORM
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FOR VALUE RECEIVED, the undersigned,
-------------------------------, hereby sells, assigns and transfers unto:
Name:
-------------------------------------------------------
(Please type or print in block letters.)
Address:
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the right to purchase _______________ shares (the "Shares") of Caprius, Inc.
(the "Company") pursuant to the terms and conditions of the Warrant Agreement
held by the undersigned. The undersigned hereby authorizes and directs the
Company (i) to issue and deliver to the above-named assignee at the above
address a new Warrant Agreement pursuant to which the rights to purchase being
assigned may be exercised, and (ii) if there are rights to purchase Shares
remaining pursuant to the undersigned's Warrants after the assignment
contemplated herein, to issue and deliver to the undersigned at the address
stated below a new Warrant Agreement evidencing the right to purchase the number
of Shares remaining after issuance and delivery of the Warrants to the
above-named assignee. Except for the number of Shares purchasable, the new
Warrant Agreement to be issued and delivered by the Company is to contain the
same terms and conditions as the undersigned's Warrant Agreement. This
Assignment is subject to receipt by the Company of such investment
representations by the assignee, as may be reasonably required under the
Securities Act of 1933, as amended. To complete the assignment contemplated by
this Assignment Form, the undersigned hereby irrevocably constitutes and
appoints ________________________________ as the undersigned's attorney-in-fact
to transfer the Warrants and the rights thereunder on the books of the Company
with full power of substitution for these purposes.
Dated:
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Signature
(This signature must conform in all respects to the name of the Holder as
specified on the face of the Warrant Agreement)
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Social Security or Tax Identification Number Printed Name
Address:
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Stock Warrant No.: ##
EXHIBIT C
FORM OF INVESTOR REPRESENTATION LETTER
DATE
Caprius, Inc.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, XX 00000
Attention: Xxxxxxxx Xxxxx, CFO
Gentlemen:
In connection with my receipt of warrants ("Warrants") to purchase the
number of shares of common stock referred to below, I hereby represent, warrant
and covenant as follows:
1. Check each one which is applicable:
|_| --- I am an "accredited investor" within the meaning of Regulation
D promulgated under the Securities Act of 1933 (the
"Act").
|_| --- I have such knowledge and experience in financial, tax, and
business matters so as to utilize information made available
to me in order to evaluate the merits and risks of an
investment decision with respect thereto.
2. I am affiliated with Sands Brothers International
---
Limited ("Selected Dealer") and have had the opportunity to
ask questions and receive and review such answers and
information concerning Caprius, Inc. (the "Issuer") as I
have deemed pertinent.
3. I am acquiring the Warrants and the underlying
---
securities related thereto solely for my own account for
investment and not with a view to resale or distribution. I
acknowledge that neither the Warrants nor the underlying
securities have been registered under the Act and may not be
resold except pursuant to an effective registration
statement thereunder or an exemption therefrom.
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Print Name:
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Signature
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Address
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Social Security Number or
Tax Identification Number
Holder of Warrants to purchase shares
-------
of Caprius, Inc. pursuant to the terms of the
Common Stock Purchase Warrant of even date
herewith
