EQUITY RIGHTS AGREEMENT
Exhibit
4.4
THIS
EQUITY RIGHTS AGREEMENT (this “Agreement”) is
entered into as of January 22, 2010, by and among Vintage Capital Group,
LLC, a Delaware limited liability company (together with its successors and
assigns, the “Investor”), and
Caprius, Inc., a Delaware corporation (the “Company”), with
reference to the following facts:
R
E C I T A L S
A. The
Company and the Investor are parties to that certain Securities Purchase and
Sale Agreement, dated as of September 16, 2009 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Securities Purchase
Agreement”) providing for, among other things, (i) the issuance by
the Company and the purchase by the Investor of that certain Note, and
(ii) the issuance by the Company and the purchase by the Investor of a
warrant (the “Warrant”) to purchase
40% (in the aggregate) of the Company’s common stock, par value $0.01 per share
(the “Common
Stock”) on a Fully Diluted Basis (as defined in the
Warrant).
B. All
capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Securities Purchase Agreement.
A
G R E E M E N T
NOW,
THEREFORE, in consideration of the foregoing recitals and of the mutual promises
herein contained, the parties hereby agree as follows:
1. Preemptive
Rights.
(a) The
Company hereby grants to the Investor, from and after the initial exercise of
the Warrant, the right to purchase up to its pro rata share of any New Company
Securities (as such term is defined below) which the Company may from time to
time propose to sell and issue, and the Company shall not issue or sell any New
Company Securities without first complying with the provisions of this Section 1. For
purposes of this Section 1(a),
the Investor’s pro rata share shall be equal to a percentage based on a
fraction, (i) the numerator of which is equal to the number of issued and
outstanding shares of Common Stock beneficially owned by the Investor
immediately prior to the issuance of the New Company Securities, and
(ii) the denominator of which is equal to the total number of shares of
Common Stock outstanding or deemed outstanding on a Fully Diluted Basis (as
defined in the Warrant) immediately prior to the issuance of the New Company
Securities.
(b) The
term “New Company
Securities” shall mean any capital stock of the Company (including Common
Stock or preferred stock of the Company), whether now authorized or not, and any
equity rights of the Company (collectively, “Stock”); provided, however, that the
term New Company Securities does not include any stock issued pursuant
to: (i) any stock options, warrants or equity convertible into
Common Stock as of the Closing Date, (ii) any stock option or similar plan
approved by the Investor, (iii) any Common Stock issued in a bona fide
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), so
long as the Company receives proceeds in such public offering (net of selling
commissions and underwriting discounts) of at least $1,000,000 and so long as
the shares of Common Stock sold in such public offering are listed on Nasdaq or
any other national securities exchange, or (iv) any Stock issued in order
to acquire another company, business or assets, in a transaction approved by the
Board of Directors of the Company (the “Board”) and consented
to by the Investor.
(c) If
the Company proposes to undertake an issuance of New Company Securities, it
shall give the Investor written notice (an “Issuance Notice”) of
its intention, describing the number and type of New Company Securities, and
their proposed offer price and the general terms upon which the Company proposes
to issue the same. The Investor shall have ten (10) Business
Days (the “Acceptance
Period”) after the receipt of the Issuance Notice to agree to purchase up
to its pro rata share of such New Company Securities for the price and upon the
terms specified in the Issuance Notice by giving written notice to the Company
(the “Acceptance
Notice”) and indicating therein the number of New Company Securities to
be purchased. The Company shall, at the closing of the issuance of
the New Company Securities, sell to the Investor such number of New Company
Securities as it shall have agreed to purchase in the Acceptance Notice; provided, that the
Investor shall not be obligated to purchase such securities until ten (10)
Business Days after delivery of the Acceptance Notice.
(d) The
Company may, during the sixty (60) day period following the expiration of
the Acceptance Period, offer the remaining unsubscribed portion of the New
Company Securities, if any, to any person or persons at a price not less than,
and upon terms no more favorable to the offeree, than those specified in the
Issuance Notice. If the Company does not enter into an agreement for
the sale of the New Company Securities within such period, or if the terms of
such offer change from those described in the Issuance Notice, the preemptive
rights provided hereunder shall be deemed to be revived and such New Company
Securities shall not be offered unless first reoffered to the Investor in
accordance herewith.
2. Observation
Rights.
(a) Observation
Rights. The Investor shall at all times have the right to
designate a representative to be a Board observer (the “Investor Observer”),
whom the Company shall invite to attend, in a non-voting observer capacity, all
meetings of the Board and the committees thereof and all meetings of the
stockholders of the Company. Notice of such meetings shall be given
to the Investor Observer in the same manner and at the same time as to the
members of the Board or such committees or such stockholders, as the case may be
(which in any event shall not be less then forty-eight (48) hours prior to
such meeting unless otherwise agreed to by the Investors in advance and in
writing). The Investor Observer shall be provided with copies of
(i) a meeting agenda, if any is prepared, (ii) all information that is
provided to the members of the Board or such committees or such stockholders
(whether prior to, at, or subsequent to any such meetings), as the case may be,
at the same time as such materials are provided to the members of the Board or
such committee or such stockholders, as the case may be, and (iii) copies
of the minutes of all meetings of the Board and such committees or such
stockholders concurrently with the distribution of such minutes to one or more
members of the Board or such committees or such stockholders, as the case may
be, but in no event later than forty-five (45) days after each such
meeting, and copies of any action proposed to be taken by written consent shall
be provided to the Investor Observer reasonably prior to and promptly after
execution thereof. The Investor Observer may be excluded from any
meeting or portion thereof if the Board reasonably believes that there is a
legitimate business or legal reason to maintain the confidential nature of the
meeting or portion thereof; provided, that prior
to being excluded, the Investor Observer and the Investor shall be offered the
opportunity to enter into a joint defense agreement in a form reasonably
determined by Company counsel, unless the matter involves a dispute or
transaction with the Investor.
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(b) Indemnification and
Insurance.
(i) The
Company shall, to the maximum extent permitted by law, indemnify, defend and
hold harmless each Investor Observer, the Investor and each of their respective
employees, partners, principals, agents, attorneys, accountants, representatives
and other Affiliates (collectively, the “Investor Parties”),
from and against all costs, expenses, liabilities, claims, judgments, damages
and losses, including, without limitation, all reasonable attorneys’ fees, costs
and expenses and the cost of any investigation and preparation incurred in
connection therewith, incurred in connection with any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative (collectively, “Liabilities and
Costs”), arising out of or in any way related to the fact that any
Investor Party is or was a director, officer, employee, advisor or other agent
of the Company or any subsidiary of the Company, is or was serving as an
observer of the Board, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent, observer or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise and, in connection with any Investor Party serving as such director,
officer, employee, trustee, agent, observer or fiduciary, provided that such
Investor Party acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the Company and not in violation of
law.
(ii) Upon
request by any Investor Party, and upon receipt of an undertaking by the
applicable Investor Party to reimburse the Company if the Investor Party is
found by a court of competent jurisdiction in a final, non-appealable judgment
to not have been entitled to indemnification (except for amounts paid under the
next sentence), the Company shall advance (within five (5) Business Days of
such request) any and all expenses, including, without limitation, any and all
reasonable attorneys’ fees, costs and expenses and the fees, costs and expenses
of any investigation and preparation incurred in connection with any matter for
which such Investor Party is or may be entitled to indemnification
hereunder. The Company shall also indemnify each Investor Party from
and against any and all Liabilities and Costs incurred in connection with any
claim or action brought to enforce such Investor Party’s rights under this Section 2(b), or
under Applicable Law or the Company’s articles of incorporation or bylaws now or
hereafter in effect relating to indemnification, or for recovery under
directors’ and officers’ liability insurance policies maintained by the Company,
regardless of whether such Investor Party is ultimately determined to be
entitled to such indemnification or insurance recovery, as the case may
be. If, for any reason, the foregoing indemnification is not
available for any reason or is not sufficient to indemnify and hold the Investor
Parties harmless from all such Liabilities and Costs, then the Company shall
promptly contribute to the amount of all such Liabilities and Costs paid or
payable by any Investor Party in such proportion as is appropriate to reflect
not only the relative benefits received by the Company, on the one hand, and the
Investor, on the other hand, but also the relative fault of each, as well as any
other equitable considerations. The Company’s reimbursement,
indemnity and contribution obligations shall be in addition to any liability or
other obligation the Company may otherwise have at law or under any other
agreement or its organizational or governing documents, and such obligations
shall, to the extent permitted by law, extend, upon the same terms, to all
Investor Parties. This Section 2(b)
shall survive indefinitely after the termination of this Agreement.
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(iii) At
any time that the Obligations are outstanding and continuing for as long as any
claim may be made against any Investor Party during any applicable statute of
limitations periods, the Company shall have in place and shall maintain in force
and effect one or more directors’ and officers’ liability insurance policies
providing at least $5,000,000 (or such other amount as is acceptable to the
Investor) in insurance coverage for the Investor and for any Investor Party
serving as a director, observer or officer of the Company, for claims under
federal and state securities laws and other claims for which such coverage might
extend, under terms and conditions generally included in such policies and so
long as the Company can obtain such a policy under terms reasonably acceptable
to the Investor (including the premium amount).
3. Nondisclosure.
(a) The
Investor recognizes and acknowledges that the Investor has had access to certain
confidential information of the Company and that such information constitutes
valuable, special, and unique property of the Company. The Investor
agrees, therefore, that the Investor shall not use or disclose to any party for
any reason or purpose whatsoever, any of such confidential information unless
authorized by the Company’s management for use in furtherance of the Company’s
business or required by law (whether orally or in writing, by interrogatory,
subpoena, civil investigatory demand or any similar process relating to any
legal proceeding, investigation, hearing or otherwise) to make such
disclosure.
(b) The
Investor acknowledges that, to the extent any of the Company’s securities are at
any time publicly traded, possession of the information obtained pursuant to
this Agreement or any other agreement between the Investor and the Company may
constitute the possession of material non-public information and the possession
of that information or the use restriction set forth herein may preclude s the
Investor from buying or selling such publicly traded securities.
(c) Notwithstanding
anything in this Section 3 to the
contrary, any use and trading restrictions set forth herein shall in no event
apply to the purchase or sale by the Investor or its Affiliates of the Warrant,
any preferred stock of the Company, or any common stock of the Company pursuant
to a tender offer by the Investor or its Affiliates for all or substantially all
of the Common Stock of the Company, or a merger of the Company with or into
Investor or any Affiliate of Investor, except as may be required by
law.
4. Termination of
Agreement. This Agreement shall terminate upon the earliest to
occur of the following: (a) the written agreement of the parties
hereto, (b) the consummation of a merger transaction pursuant to which the
stockholders of the Company receive cash, securities or other consideration in
exchange for their shares of Stock, and (c) the Investor (together with its
successors and assignees) holding in the aggregate less than five
percent (5%) of the Stock on a Fully Diluted Basis (as defined in the
Warrant).
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5. General Provisions,
Assignments. The Investor may assign its rights hereunder to
any of its Affiliates or any person to whom the Investor may transfer or assign
securities of the Company.
(a) Notices. All
notices, requests, demands and other communications which are required or may be
given under this Agreement shall be in writing and shall be deemed to have been
duly given at the earliest of (i) the date received, (ii) one (1)
Business Day, after being sent by a nationally recognized overnight courier for
next Business Day delivery, with receipt acknowledged or
(iii) five (5) Business Days after being mailed, postage prepaid, by
certified mail, return receipt requested, addressed, in the case of each party
hereto, at its address specified on the signature page hereto, or to such other
address as may be designated by any party in a notice to the other parties as
herein provided.
(b) Governing
Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THAT STATE (WITHOUT REGARD
TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.
(c) Severability. Should
any one or more of the provisions of this Agreement or of any agreement entered
into pursuant to this Agreement be determined to be illegal or unenforceable,
all other provisions of this Agreement and of each other agreement entered into
pursuant to this Agreement, shall be given effect separately from the provision
or provisions determined to be illegal or unenforceable and shall not be
affected thereby.
(d) Equitable
Relief. The parties hereto agree that, in the event of a
breach by the Company of any of the provisions of this Agreement, damages alone
will be an inadequate remedy and that such breach will cause the parties great,
immediate and irreparable injury; accordingly, the Company agrees that the
Investor shall be entitled to injunctive and other equitable relief, and that
such relief shall be in addition to, and not in lieu of, any other remedies it
may have at law or under this Agreement.
(e) Waiver to Trial by
Jury. TO THE EXTENT PERMITTED AND ENFORCEABLE UNDER APPLICABLE
LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT
TO A TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR
RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR
THE ACTIONS OF THE INVESTOR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR
ACTIONS.
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(f) Consent to
Forum. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED,
AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS
OF THE COMPANY OR THE INVESTOR, EACH PARTY HERETO HEREBY CONSENTS AND AGREES
THAT THE SUPERIOR COURT OF LOS ANGELES COUNTY, CALIFORNIA, OR, AT THE
INVESTOR’S OPTION, THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF
CALIFORNIA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT. EACH PARTY HERETO EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND THE COMPANY AND THE INVESTOR HEREBY WAIVE ANY OBJECTION WHICH
THE COMPANY OR THE INVESTOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. THE COMPANY AND THE INVESTOR HEREBY WAIVE PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
CERTIFIED MAIL ADDRESSED TO THE COMPANY AND THE INVESTOR AT THE ADDRESSES SET
FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF THE COMPANY’S OR THE INVESTOR’S, AS APPLICABLE, ACTUAL RECEIPT
THEREOF OR FIVE (5) BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAIL, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE
TO AFFECT THE RIGHT OF THE INVESTOR TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE INVESTOR OF ANY JUDGMENT
OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
(g) Judicial
Reference. IN THE EVENT THE WAIVER PROVIDED IN SECTION 5(e) IS
DEEMED INEFFECTIVE, IN ORDER TO GIVE EFFECT TO THE PARTIES’ DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE OR RETIRED JUDGE APPLYING THE APPLICABLE LAW,
THE PARTIES AGREE TO REFER, FOR A COMPLETE AND FINAL ADJUDICATION, ANY AND ALL
ISSUES OF FACT OR LAW INVOLVED IN ANY LITIGATION OR PROCEEDING (INCLUDING,
WITHOUT LIMITATION, ALL DISCOVERY AND LAW AND MOTION MATTERS, PRETRIAL MOTIONS,
TRIAL MATTERS AND POST-TRIAL MOTIONS (E.G., MOTIONS FOR RECONSIDERATION, NEW
TRIAL AND TO TAX COSTS, ATTORNEY FEES, COSTS AND EXPENSES AND PREJUDGMENT
INTEREST)) UP TO AND INCLUDING FINAL JUDGMENT, BROUGHT TO RESOLVE ANY DISPUTE
(WHETHER SOUNDING IN CONTRACT, TORT, UNDER ANY STATUTE OR OTHERWISE) BETWEEN AND
AMONG ANY OF THE PARTIES HERETO, TO A JUDICIAL REFEREE WHO SHALL BE APPOINTED
UNDER A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
638. THE REFEREE’S DECISION WOULD STAND AS THE DECISION OF THE COURT,
WITH JUDGMENT TO BE ENTERED ON HIS/HER STATEMENT OF DECISION IN THE SAME MANNER
AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE PARTIES HERETO
SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL
JUDGE WITH AT LEAST FIVE YEARS OF JUDICIAL EXPERIENCE IN CIVIL
MATTERS. IN THE EVENT THAT THE PARTIES HERETO CANNOT AGREE UPON A
REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. WITHOUT
LIMITING OR AFFECTING ANY INDEMNITIES AVAILABLE TO THE INVESTOR PARTIES, THE
INVESTOR PARTIES, ON THE ONE HAND, AND THE COMPANY, ON THE OTHER HAND, SHALL
EQUALLY BEAR THE FEES AND EXPENSES OF THE REFEREE (50% BY THE INVESTOR AND 50%
BY THE COMPANY) UNLESS THE REFEREE OTHERWISE PROVIDES IN THE STATEMENT OF
DECISION.
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(h) Attorneys’
Fees. In the event that any party seeks to enforce his, her or
its rights under this Agreement, the prevailing party shall be entitled to
recover reasonable fees (including attorneys’ fees), costs and all other
reasonable expenses incurred in connection therewith, including the fees, costs
and expenses of appeals.
(i) Successors. Except
as otherwise provided herein, all the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto, their respective successors and permitted assigns.
(j) No Third-Party
Benefits. Except as expressly provided in this Agreement, none
of the provisions of this Agreement shall be for the benefit of, or enforceable
by, any third-party beneficiary.
(k) Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same
instrument. Facsimile or PDF signatures delivered
hereunder shall be deemed, and as effective as, originals.
(l) Modification, Amendment and
Waiver. This Agreement shall not be amended, waived,
discharged or terminated orally or by course of dealing, but only by a statement
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. With regard to any power, remedy
or right provided herein or otherwise available to any party hereunder
(i) no waiver or extension of time shall be effective unless expressly
contained in a writing signed by the waiving party; and (ii) no alteration,
modification or impairment shall be implied by reason of any previous waiver,
extension of time, delay or omission in exercise, or other
indulgence.
(m) Further
Assurances. The parties agree to execute such further
documents and instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
(n) Integration. This
Agreement (including the Exhibits hereto), and any documents referred to herein
or executed contemporaneously herewith, constitute the entire agreement of the
parties with respect to the collective subject matter hereof and thereof, and
supersede any prior or contemporaneous oral or written agreements or
understandings with respect to such collective subject matter.
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(o) Headings. The
headings of the Sections and paragraphs of this Agreement have been inserted for
convenience of reference only and do not constitute a part of this
Agreement.
(p) Gender and Number; Defined
Terms. As used in this Agreement, the masculine, feminine or
neuter gender, and the singular or plural, shall be deemed to include the others
whenever and whenever the context so requires. Additionally, unless
the context requires otherwise, “or” is not exclusive.
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IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused
this Agreement to be duly executed by their respective officers, partners or
other representatives, thereunto duly authorized, all as of the date first above
written.
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By:
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/s/Xxxxxx Xxxxxx
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Name:
Title:
Address:
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Xxxxxx Xxxxxx
Chief Executive Officer
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX
00000
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By:
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/s/Xxxx X.
Xxxxx
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Name:
Title:
Address:
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Xxxx X. Xxxxx
Chairman
00000
Xxx Xxxxxxx Xxxx.
00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
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