Exhibit 10.2
Execution Version

THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH STATE
SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
 
SENIOR SECURED PROMISSORY NOTE
 

 
September 16, 2009

FOR VALUE RECEIVED, CAPRIUS, INC., a Delaware corporation (“Caprius”), M.C.M.
ENVIRONMENTAL TECHNOLOGIES, INC., a Delaware corporation (“M.C.M.”), and M.C.M.
ENVIRONMENTAL TECHNOLOGIES LTD., an Israeli corporation (“M.C.M. Israel” and,
together with Caprius and M.C.M., each a “Borrower” and, collectively, the
“Borrowers”), jointly and severally hereby promise to pay to the order of
VINTAGE CAPITAL GROUP, LLC, a Delaware limited liability company (the
“Purchaser”), or any registered permitted assigns of the Purchaser (together
with the Purchaser, the “Holder”), the aggregate principal amount of all
Advances as shall have been funded in accordance with the terms of the Purchase
Agreement (as defined below) in immediately available funds and in lawful money
of the United States of America, together with interest thereon, all as provided
in this Senior Secured Promissory Note (this “Note”).  This Note is being issued
in connection with the consummation of the transactions contemplated by the
Securities Purchase and Sale Agreement, dated of even date herewith, among the
Borrowers and the Purchaser (the “Purchase Agreement”).  All capitalized terms
used and not otherwise defined in this Note shall have the meanings set forth in
the Purchase Agreement.
 
1.           Payment of Interest; Default Rate.
 
(a)           So long as no Event of Default shall have occurred and be
continuing, the Borrowers shall pay interest on the unpaid principal balance of,
and accrued unpaid interest on, this Note from the date hereof until fully paid
as follows:
 
(i)           Interest.  Interest on the outstanding principal balance of this
Note shall be payable at a rate equal to fourteen percent (14%) per annum by
issuing additional senior notes of like tenor, in an amount equal to 100% of the
interest payment due on such Interest Payment Date (as defined below), and
including the same terms and other provisions contained in this Note (including
without limitation the interest terms contained in this Section 1) (each, a “PIK
Note”), with the principal amount of each such additional note equal to the
amount of such interest payment.  Any PIK Note not actually issued shall be
deemed issued on the applicable Interest Payment Date (as defined below) and
shall be payable in full on the Maturity Date, as provided in Section 2.
 

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(b)           If any Event of Default shall occur and be continuing, then, in
addition to the rights and remedies available to the Holder under the Purchase
Agreement, this Note, and all applicable laws, the Borrowers shall pay interest
in cash on the unpaid principal balance of, accrued and unpaid interest on, and
all other amounts owing under this Note and the PIK Notes at a rate per annum
equal to the then applicable rate per annum, plus three percent (3%) (the
“Default Rate”).
 
(c)           Interest on this Note shall be payable monthly in arrears on the
first Business Day of each calendar month (or portion thereof), commencing on
November 1, 2009 (each, an “Interest Payment Date”) and continuing on the first
Business Day of each calendar month thereafter until all principal, interest and
other amounts owing under this Note are paid in full.  Interest shall be
computed on the basis of the actual number of days elapsed over a 360-day year,
including the first and the last day.
 
2.           Payment of Principal; Maturity Date.  The Borrowers agree jointly
and severally to pay in full (a) the entire outstanding principal balance of
this Note and the PIK Notes, (b) all accrued and unpaid interest on this Note
and the PIK Notes, and (c) all other unpaid amounts owing under this Note and
the PIK Notes, on December 16, 2010 (the “Maturity Date”).  This Note may not be
prepaid except as provided in Section 3.
 
3.           Prepayment.
 
(a)           Except as provided in Section 3(b), the Borrowers shall not prepay
all or any portion of the principal amount of this Note at any time prior to the
Maturity Date.
 
(b)           Within three (3) Business Days after any Disposition (as defined
below) by any Borrower or its Subsidiaries, the Borrowers shall prepay, without
premium or penalty, the outstanding principal amount of this Note in an amount
equal to one hundred percent (100%) of the proceeds of such Disposition, net of
reasonable costs and expenses actually incurred by such Borrower or its
Subsidiaries in connection therewith, to the extent such net proceeds exceed
Fifty Thousand Dollars ($50,000).  Nothing contained in this Section 3 shall
permit any Borrower or its Subsidiaries to make a Disposition of any property
other than as specifically permitted under the Purchase Agreement.  As used in
this Note, “Disposition” means any transaction, or series of related
transactions, pursuant to which any Borrower or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or asset (whether now
owned or hereafter acquired) to any other Person, in each case, whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, excluding (A) any sales of Inventory in the ordinary
course of business, (B) transfers or other dispositions between and among the
Borrowers and their Subsidiaries to the extent permitted by the terms of the
Purchase Agreement, and (C) the transfer of leasehold interests to any lessor
upon the termination of such lease.
 
(c)           Each prepayment of principal shall be accompanied by the
prepayment of accrued interest to the date of such payment on the amount
prepaid.  Notwithstanding any provision to the contrary herein, any payment,
when made, shall be applied first to the payment of all accrued and unpaid fees,
expenses and costs under any Investment Document, next to the payment of all
interest and other amounts owed hereunder then accrued on the unpaid balance of
the principal and the balance of such payment, after paying such interest and
premiums, shall be applied in reduction of the unpaid balance of the principal.
 
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4.           Security.  The Borrowers’ due and punctual performance of this Note
is secured by the collateral pursuant to the Security Agreement and the Pledge
Agreement.
 
5.           Manner of Payment.  Payments of principal, interest and other
amounts due under this Note shall be made no later than 11:00 a.m. (Los Angeles
time) on the date when due and in lawful money of the United States of America
and (by wire transfer in funds immediately available at the place of payment or
by check as long as the funds are immediately available at such time on the due
date of the payment) to such account as the Holder may designate in writing to
the Borrowers from time to time (or such other place of payment as the Holder
may designate in writing).  All such payments shall be made without any
deduction whatsoever, including, without limitation, any deduction for set-off,
recoupment, counterclaim or taxes.  Any payments received after 11:00 a.m. (Los
Angeles time) shall be deemed to have been received on the next succeeding
Business Day.  Any payments due hereunder which are due on a day which is not a
Business Day shall be payable on the immediately succeeding Business Day,
together with all accrued and unpaid interest through the due date of
payment.  All payments received shall be applied first to any costs of
collection or other accrued but unpaid fees, expenses and costs under any
Investment Document, next to accrued and unpaid interest payable in cash, next,
to accrued PIK Interest, next to principal on the PIK Notes, and last, to
principal on the Note.
 
6.           Maximum Lawful Rate of Interest.  The rate of interest payable
under this Note shall in no event exceed the maximum rate permissible under
applicable law.  If the rate of interest payable on this Note is ever reduced as
a result of this Section 6 and at any time thereafter the maximum rate permitted
under applicable law exceeds the rate of interest provided for in this Note,
then the rate provided for in this Note shall be increased to the maximum rate
provided for under applicable law for such period as is required so that the
total amount of interest received by the Holder is that which would have been
received by the Holder but for the operation of the first sentence of this
Section 6.
 
7.           Waivers.  The Borrowers hereby waive presentment for payment,
demand and notice of demand, protest, notice of protest and notice of dishonor,
notice of nonpayment, diligence and all other notices of any kind whatsoever to
which they may be entitled under applicable law or otherwise (except for notices
to which the Borrowers are expressly entitled under this Note) and, to the full
extent permitted by law, the right to plead any statute of limitations as a
defense, in any suit or collection proceeding brought against the Borrowers.  No
delay or omission on the part of the Holder in exercising any rights under this
Note shall operate as a waiver of such right or any other right.
 
8.           Registration of Notes.  The Borrowers shall maintain at its
principal executive office a register in which it shall register this Note, any
assignments of this Note or any other notes issued hereunder and any other notes
issued upon surrender hereof and thereof.  At the option of the Holder, this
Note may be exchanged for one or more new notes of like tenor in the principal
denominations requested by the Holder, and the Borrowers shall, within five (5)
Business Days after the surrender of this Note at Caprius’ principal executive
offices, deliver to the Holder such new note or notes.  In addition, each
assignment of this Note, in whole or in part, shall be registered on the
register immediately following the surrender of this Note at Caprius’ principal
executive offices.
 
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9.           Persons Deemed Owners; Participations.  Prior to due presentment in
aggregate for registration of any assignment, the Borrowers may treat the person
or entity in whose name any Note is registered as the owner and the Holder of
such Note for all purposes whatsoever, and the Borrowers shall not be affected
by notice to the contrary.  Subject to the preceding sentence, the Holder may
grant to any other person or entity (each, a “Participant”), without the
Borrowers’ consent, participations from time to time in this Note on such terms
and conditions as may be determined by the Holder in its sole and absolute
discretion, subject to applicable federal and state securities
laws.  Notwithstanding anything to the contrary contained herein or otherwise,
nothing in this Note, the Purchase Agreement or any related document or
otherwise shall confer upon a Participant any rights under the Purchase
Agreement or any related document, and the Holder shall retain all rights with
respect to the administration, waiver, amendment, collection and enforcement of,
compliance with and consent to the terms and provisions of this Note, the
Purchase Agreement and any other related document.
 
10.           Assignment and Transfer.  Subject to applicable law, the Purchaser
may, at any time and from time to time and without the consent of the Borrowers,
assign or transfer to one or more Persons or entities all or any portion of the
principal balance of this Note.
 
11.           Loss, Theft, Destruction or Mutilation of this Note.  Upon receipt
of evidence reasonably satisfactory to the Borrowers of the loss, theft,
destruction or mutilation of this Note and, in the case of any such loss, theft,
destruction or mutilation, upon receipt of an indemnity agreement or other
indemnity reasonably satisfactory to the Borrowers or, in the case of any such
mutilation, upon surrender and cancellation of such mutilated Note, the
Borrowers shall issue and deliver within five (5) business days a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
 
12.           Extension of Time.  The Holder may, at its sole option, extend the
time for payment of this Note, postpone the enforcement hereof, or grant any
other indulgence without affecting or diminishing the Holder’s right to full
recourse against the Borrowers hereunder, which right is expressly
reserved.  Any such extension, postponement, waiver or other indulgence shall
only be effective if in writing and signed by the Holder.
 
13.           Governing Law.  IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND 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.
 
14.           Captions; Construction and Interpretation.  The captions contained
in this Note are for convenience of reference only, do not constitute a part of
this Note and are not to be considered in construing or interpreting this
Note.  The Borrowers and the Holder have each been represented by counsel in the
negotiation and drafting of this Note, and neither any Borrower nor the Holder
nor their respective counsel shall be deemed the drafter of this Note for
purposes of construing the provisions of this Note.  All provisions of this Note
shall be construed in accordance with their fair meaning, and not strictly for
or against any Borrower or the Holder.
 
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15.           Consent to California Jurisdiction and Exclusive Jurisdiction of
California Courts.  AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
ANY BORROWER OR THE HOLDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE
STATE COURTS OF CALIFORNIA, OR, AT THE HOLDER’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 BETWEEN THE BORROWERS
ON THE ONE HAND AND THE HOLDER ON THE OTHER HAND PERTAINING TO THIS NOTE OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE.  EACH BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH
SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO ANY
BORROWER AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER’S ACTUAL
RECEIPT THEREOF OR THE NEXT BUSINESS DAY IF SENT BY A NATIONALLY RECOGNIZED
OVERNIGHT COURIER FOR NEXT BUSINESS DAY DELIVERY.  NOTHING IN THIS NOTE SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF THE HOLDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE HOLDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS NOTE TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
 
16.           Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, EACH BORROWER AND THE HOLDER (BY ACCEPTANCE HEREOF) HEREBY
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING
BROUGHT TO RESOLVE ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATING
TO THIS NOTE, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION, SUIT OR OTHER
PROCEEDING.
 
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IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed and
delivered by their duly authorized representatives on the date first above
written.
 

 
BORROWER:
 

CAPRIUS, INC.,
a Delaware corporation
         
 
By: 
/s/Dwight Morgan
     
Name: Dwight Morgan
Title: Chief Executive Officer
                   
M.C.M. ENVIRONMENTAL TECHNOLOGIES, INC.,
a Delaware corporation
           
By: 

/s/Dwight Morgan
     
Name: Dwight Morgan
Title: Chief Executive Officer
                   
M.C.M. ENVIRONMENTAL TECHNOLOGIES LTD.,
an Israeli corporation
           
By: 

/s/George Aaron
     
Name: George Aaron
Title: Chairman
         

 
[SIGNATURE PAGE TO SENIOR SECURED PROMISSORY NOTE]

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