exhibit10_2.htm


    Exhibit
      10.2

    
 

    REGISTRATION
      RIGHTS AGREEMENT

    


    This
      Registration Rights Agreement (the “Agreement”) is made and entered into as of
      this 6th day of December, 2007 by and among Caprius, Inc., a Delaware
      corporation (the “Company”), and the “Investors” named in that certain Purchase
      Agreement by and among the Company and the Investors (the “Purchase
      Agreement”).

     

    The
      parties hereby agree as follows:

     

    1.           Certain
      Definitions.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Affiliate”
      means, with respect to any person, any other person which directly or indirectly
      controls, is controlled by, or is under common control with, such
      person.

     

    “Business
      Day” means a day, other than a Saturday or Sunday, on which banks in New
      York City are open for the general transaction of business.

     

    “Common
      Stock” shall mean the Company’s common stock, par value $0.01 per share, and
      any securities into which such shares may hereinafter be
      reclassified.

     

    “Conversion
      Shares” means the shares of Common Stock issuable upon conversion of the
      Shares.

     

    “Investors”
      shall mean the Investors identified in the Purchase Agreement and any Affiliate
      or permitted transferee of any Investor who is a subsequent holder of any
      Warrants or Registrable Securities.

     

    “Preferred
      Stock” means the Company’s Series F Convertible Preferred Stock, par value
      $0.01 per share.

     

    “Prospectus”
      shall mean (i) the prospectus included in any Registration Statement, as amended
      or supplemented by any prospectus supplement, with respect to the terms of
      the
      offering of any portion of the Registrable Securities covered by such
      Registration Statement and by all other amendments and supplements to the
      prospectus, including post-effective amendments and all material incorporated
      by
      reference in such prospectus, and (ii) any “free writing prospectus” as defined
      in Rule 405 under the 1933 Act.

     

    “Register,”
      “registered” and “registration” refer to a registration made by
      preparing and filing a Registration Statement or similar document in compliance
      with the 1933 Act (as defined below), and the declaration or ordering of
      effectiveness of such Registration Statement or document.

     

    “Registrable
      Securities” shall mean (i) the Conversion Shares, (ii) the Warrant Shares
      and (iii) any other securities issued or issuable with respect to or in exchange
      for Registrable Securities; provided, that, a security shall cease to be a
      Registrable Security upon (A) sale pursuant to a Registration Statement or
      Rule
      144 under the 1933 Act, or (B) such security becoming eligible for sale by
      the
      Investors pursuant to Rule 144(k).

     

    “Registration
      Statement” shall mean any registration statement of the Company filed under
      the 1933 Act that covers the resale of any of the Registrable Securities
      pursuant to

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    the
      provisions of this Agreement, amendments and supplements to such Registration
      Statement, including post-effective amendments, all exhibits and all material
      incorporated by reference in such Registration Statement.

     

    “Required
      Investors” means the Investors holding at least 66% of the Registrable
      Securities at the time of the action taken by the Required
      Investors.

     

    “SEC”
      means the U.S. Securities and Exchange Commission.

     

    “Shares”
      means the shares of Preferred Stock issued pursuant to the Purchase
      Agreement.

     

    “SSF”
      means the Investors affiliated with AWM Investment Company, Inc.

     

    “1933
      Act” means the Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder.

     

    “1934
      Act” means the Securities Exchange Act of 1934, as amended, and the rules
      and regulations promulgated thereunder.

     

    “Warrants”
      means, the warrants to purchase shares of Common Stock issued to the Investors
      pursuant to the Purchase Agreement, the form of which is attached to the
      Purchase Agreement as Exhibit B.

     

    “Warrant
      Shares” means the shares of Common Stock issuable upon the exercise of the
      Warrants.

     

    2.           Registration.

     

             
      (a)            
Registration Statements.

     

                    (i)           Promptly
      following the Initial Closing Date (as defined in the Purchase Agreement),
      but
      no later than 45 days after the Initial Closing Date (the “Filing Deadline”),
      the Company shall prepare and file with the SEC one Registration Statement
      on
      Form SB-2 (or, if Form SB-2 is not then available to the Company, on such form
      of registration statement as is then available to effect a registration for
      resale of the Registrable Securities), covering the resale of the Registrable
      Securities in an amount at least equal to the Conversion Shares and the Warrant
      Shares.  Subject to any SEC comments, such Registration Statement
      shall include the plan of distribution attached hereto as Exhibit
      A.  Such Registration Statement also shall cover, to the extent
      allowable under the 1933 Act and the rules promulgated thereunder (including
      Rule 416), such indeterminate number of additional shares of Common Stock
      resulting from stock splits, stock dividends or similar transactions with
      respect to the Registrable Securities.  Such Registration Statement
      shall not include any shares of Common Stock or other securities for the account
      of any other holder without the prior written consent of the Required
      Investors.  The Registration Statement (and each amendment or
      supplement thereto, and each request for acceleration of effectiveness thereof)
      shall be provided in accordance with Section 3(c) to the Investors and their
      counsel prior to its filing or other submission.  If a Registration
      Statement covering the Registrable Securities is not filed with the SEC on
      or
      prior to the Filing Deadline, the Company will make pro rata payments to each
      Investor, as liquidated damages and not as a penalty, in an amount equal to
      1.5%
      of the aggregate amount invested by such Investor for each 30-day period or
      pro
      rata for any portion thereof following the Filing Deadline for which no
      Registration Statement is filed with respect to the Registrable
      Securities.  Such payments shall constitute the Investors’ exclusive
      monetary remedy for such events, but shall not

     

    
      
        
        

      

      
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    affect
      the right of the Investors to seek injunctive relief.  Such payments
      shall be made to each Investor in cash.

     

    (ii)           Additional
      Registrable Securities.  Upon the written demand of any Investor
      and upon any change in the Conversion Price (as defined in the Preferred Stock)
      or the Warrant Price (as defined in the Warrant) such that additional shares
      of
      Common Stock become issuable upon the conversion of the Shares or the exercise
      of the Warrants (the “Additional Shares”), the Company shall prepare and file
      with the SEC one or more Registration Statements on Form SB-2 or amend the
      Registration Statement filed pursuant to clause (i) above, if such Registration
      Statement has not previously been declared effective (or, if Form SB-2 is not
      then available to the Company, on such form of registration statement as is
      then
      available to effect a registration for resale of the Additional Shares, subject
      to the Required Investors’ consent) covering the resale of the Additional
      Shares, but only to the extent the Additional Shares are not at the time covered
      by an effective Registration Statement.  Subject to any SEC comments,
      such Registration Statement shall include the plan of distribution attached
      hereto as Exhibit A.  Such Registration Statement also shall
      cover, to the extent allowable under the 1933 Act and the rules promulgated
      thereunder (including Rule 416), such indeterminate number of additional shares
      of Common Stock resulting from stock splits, stock dividends or similar
      transactions with respect to the Additional Shares.  Such Registration
      Statement shall not include any shares of Common Stock or other securities
      for
      the account of any other holder without the prior written consent of the
      Required Investors.  The Registration Statement (and each amendment or
      supplement thereto, and each request for acceleration of effectiveness thereof)
      shall be provided in accordance with Section 3(c) to the Investors and their
      counsel prior to its filing or other submission.  If a Registration
      Statement covering the Additional Shares is required to be filed under this
      Section 2(a)(ii) and is not filed with the SEC within five Business Days of
      the
      request of any Investor or upon the occurrence of any of the events specified
      in
      this Section 2(a)(ii), the Company will make pro rata payments to each Investor,
      as liquidated damages and not as a penalty, in an amount equal to 1.5% of the
      aggregate amount invested by such Investor for each 30-day period or pro rata
      for any portion thereof following the date by which such Registration Statement
      should have been filed for which no Registration Statement is filed with respect
      to the Additional Shares.  Such payments shall constitute the
      Investors’ exclusive monetary remedy for such events, but shall not affect the
      right of the Investors to seek injunctive relief.  Such payments shall
      be made to each Investor in cash.

     

    (iii)           S-3
      Qualification.  Promptly following the date (the “Qualification
      Date”) upon which the Company becomes eligible to use a registration statement
      on Form S-3 to register the Registrable Securities or Additional Shares, as
      applicable, for resale, but in no event more than thirty (30) days after the
      Qualification Date (the “Qualification Deadline”), the Company shall file a
      registration statement on Form S-3 covering the Registrable Securities or
      Additional Shares, as applicable (or a post-effective amendment on Form S-3
      to
      the registration statement on Form SB-2) (a “Shelf Registration Statement”) and
      shall use commercially reasonable efforts to cause such Shelf Registration
      Statement to be declared effective as promptly as practicable
      thereafter.  If a Shelf Registration Statement covering the
      Registrable Securities is not filed with the SEC on or prior to the
      Qualification Deadline, the Company will make pro rata payments to each
      Investor, as liquidated damages and not as a penalty, in an amount equal to
      1.5%
      of the aggregate purchase price paid by such Investor pursuant to the Purchase
      Agreement attributable to those Registrable Securities that remain unsold at
      that time 

     

    
      
        
        

      

      
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    for
      each
      30-day period or pro rata for any portion thereof following the date by which
      such Shelf Registration Statement should have been filed for which no such
      Shelf
      Registration Statement is filed with respect to the Registrable Securities
      or
      Additional Shares, as applicable.  Such payments shall constitute the
      Investors’ exclusive monetary remedy for such events, but shall not affect the
      right of the Investors to seek injunctive relief.  Such payments shall
      be made to each Investor in cash.

     

             
      (b)           Expenses.  The
      Company will pay all expenses associated with each registration, including
      filing and printing fees, the Company’s counsel and accounting fees and
      expenses, costs associated with clearing the Registrable Securities for sale
      under applicable state securities laws, listing fees, fees and expenses of
      one
      counsel to the Investors and the Investors’ reasonable expenses in connection
      with the registration, but excluding discounts, commissions, fees of
      underwriters, selling brokers, dealer managers or similar securities industry
      professionals with respect to the Registrable Securities being
      sold.

     

               (c)           Effectiveness.

     

                    (i)           The
      Company shall use commercially reasonable efforts to have the Registration
      Statement declared effective as soon as practicable.  The Company
      shall notify the Investors by facsimile or e-mail as promptly as practicable,
      and in any event, within twenty-four (24) hours, after any Registration
      Statement is declared effective and shall simultaneously provide the Investors
      with copies of any related Prospectus to be used in connection with the sale
      or
      other disposition of the securities covered thereby.  If (A)(x) a
      Registration Statement covering the Registrable Securities is not declared
      effective by the SEC prior to the earlier of (i) five (5) Business Days after
      the SEC shall have informed the Company that no review of the Registration
      Statement will be made or that the SEC has no further comments on the
      Registration Statement or (ii) the 120th day after
      the
      Initial Closing Date (the 150th day if
      the SEC
      reviews the Registration Statement), (y) a Registration Statement covering
      Additional Shares is not declared effective by the SEC within 120 days following
      the time such Registration Statement was required to be filed pursuant to
      Section 2(a)(ii) (150 days if the SEC reviews the Registration Statement) or
      (z)
      a Shelf Registration Statement is not declared effective by the SEC within
      120
      days after the Qualification Deadline (150 days if the SEC reviews the
      Registration Statement), or (B) after a Registration Statement has been declared
      effective by the SEC, sales cannot be made pursuant to such Registration
      Statement for any reason (including without limitation by reason of a stop
      order, or the Company’s failure to update the Registration Statement), but
      excluding the inability of any Investor to sell the Registrable Securities
      covered thereby due to market conditions and except as excused pursuant to
      subparagraph (ii) below, then the Company will make pro rata payments to each
      Investor, as liquidated damages and not as a penalty, in an amount equal to
      1.5%
      of the aggregate amount invested by such Investor for each 30-day period or
      pro
      rata for any portion thereof following the date by which such Registration
      Statement should have been effective (the “Blackout Period”).  Such
      payments shall constitute the Investors’ exclusive monetary remedy for such
      events, but shall not affect the right of the Investors to seek injunctive
      relief.  The amounts payable as liquidated damages pursuant to this
      paragraph shall be paid monthly within three (3) Business Days of the last
      day
      of each month following the commencement of the Blackout Period until the
      termination of the Blackout Period.  Such payments shall be made to
      each Investor in cash.

     

    
      
        
        

      

      
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              (ii)           For
      not more than twenty (20) consecutive days or for a total of not more than
      forty-five (45) days in any twelve (12) month period, the Company may delay
      the
      disclosure of material non-public information concerning the Company, by
      suspending the use of any Prospectus included in any registration contemplated
      by this Section containing such information, the disclosure of which at the
      time
      is not, in the good faith opinion of the Company, in the best interests of
      the
      Company (an “Allowed Delay”); provided, that the Company shall promptly (a)
      notify the Investors in writing of the existence of (but in no event, without
      the prior written consent of an Investor, shall the Company disclose to such
      Investor any of the facts or circumstances regarding) material non-public
      information giving rise to an Allowed Delay, (b) advise the Investors in writing
      to cease all sales under the Registration Statement until the end of the Allowed
      Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay
      as promptly as practicable.

     

    


    (d)           Rule
      415.

    


    (i)           If
      at any time the staff of the SEC (the “Staff”) takes the position that the
      offering of some or all of the Registrable Securities in a Registration
      Statement is not eligible to be made on a delayed or continuous basis under
      the
      provisions of Rule 415 under the 1933 Act or requires any Investor to be named
      as an “underwriter” (the “Staff Interpretation”), the Company shall use its
      commercially reasonable best efforts to persuade the Staff that the offering
      contemplated by the Registration Statement is a valid secondary offering and
      not
      an offering “by or on behalf of the issuer” as defined in Rule 415 and that none
      of the Investors is an “underwriter”.  The date on which the Staff
      informs the Company that the Staff Interpretation applies to the Registrable
      Securities is hereinafter referred to as the “Interpretation Date.”

     

    (ii)           In
      the event that, despite the Company’s commercially reasonable efforts and
      compliance with the terms of this Section 2(d), the Staff refuses to allow
      all
      of the Registrable Securities to be included in the Registration Statement
      and/or insists that one or more of the Investors must be named as an
“underwriter”, the Company shall (i) use commercially reasonable best efforts to
      resolve any other remaining Staff comments as promptly as possible and, in
      any
      event, no later than the 30th day following
      the
      Interpretation Date (the “Interpretation Deadline Date”) and, (ii) within two
      Business Days of the earlier of the Interpretive Deadline Date or the resolution
      of any other Staff comments, file with the SEC a request for acceleration of
      the
      effectiveness of the Registration Statement as then on file with the SEC (which
      shall not include any changes requested or required by the Staff pursuant to
      the
      Staff Interpretation) to a date and time not more than two Business Days after
      the date such request is filed (the “Acceleration Date”).

     

    (iii)           If
      the amended Registration Statement is not declared effective on or prior to
      5:30
      p.m., New York time, on the second Business Day following the Acceleration
      Date
      (the “Acceleration Deadline”), then no later than 5:30 p.m., New York time, on
      the Business Day immediately following the Acceleration Deadline, the Company
      shall file with the SEC an amendment to the Registration Statement (the “Section
      8 Amendment”) to remove the delaying legend placed on the Registration Statement
      pursuant to Rule 473(a), which Section 8 Amendment shall include the legend
      specified in Rule 473(b) to the effect that the amended 

     

    
      
        
        

      

      
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    Registration
      Statement shall thereafter become effective in accordance with the provisions
      of
      Section 8(a) of the 1933 Act.

     

    (iv)           In
      the event that the SEC commences an investigation, examination or other
      proceeding with respect to the Registration Statement pursuant to Section 8(e)
      of the 1933 Act, the Company and, if required, the Investors, shall cooperate
      therewith in good faith and shall take such action as shall be necessary to
      prohibit the issuance of a stop order pursuant to Section 8(d) of the 1933
      Act
      on the grounds that any of them have failed to cooperate with any such
      investigation, examination or other proceeding; provided, however, that no
      party
      shall be required to waive any attorney-client privilege or attorney work
      product privilege in connection therewith.

     

    (v)           In
      the event that the SEC commences (i) a refusal order proceeding pursuant to
      Section 8(b) of the 1933 Act with respect to the Registration Statement or
      (ii)
      a stop order proceeding pursuant to Section 8(d) of the 1933 Act with respect
      to
      the Registration Statement, the Company shall diligently oppose any such
      proceedings unless (A) SSF, (B) the Company and (C) any other Investor who
      is
      required to be named an underwriter in the Registration Statement or whose
      Registrable Securities are required to be cut back in the Registration Statement
      as a result of the Staff Interpretation and who agrees to participate in the
      costs thereof as provided below (a “Participating Investor”), mutually agree at
      any time not to oppose such proceedings or to continue such
      opposition.  The costs of such opposition shall be borne by SSF and
      each Participating Investor on a pro rata basis calculated based on the number
      of Registrable Securities held by SSF or a Participating Investor compared
      to
      the total number of Registrable Securities held by SSF and all Participating
      Investors.  SSF and each Participating Investor shall have the right
      to participate in such proceedings.  In connection with its opposition
      of such proceedings, the Company shall retain counsel reasonably satisfactory
      to
      SSF and each Participating Investor (which shall be SSF’s counsel unless SSF
      otherwise agrees).  The Company shall not agree to any settlement or
      compromise of any proceeding without the prior written consent of SSF and each
      Participating Investors, which shall not be unreasonably withheld or
      delayed.

     

    (vi)           In
      the event that the SEC issues (i) a refusal order pursuant to Section 8(b)
      of
      the 1933 Act refusing to declare the Registration Statement effective or (ii)
      a
      stop order pursuant to Section 8(d) of the 1933 Act with respect to the
      Registration Statement, the Company shall file with the United States Court
      of
      Appeals for the District of Columbia Circuit and diligently prosecute through
      appropriate proceedings a petition for judicial review of any such order in
      a
      timely fashion in accordance with the provisions of Section 9(a) of the 1933
      Act
      to a final, nonappealable determination unless SSF, the Company and any
      Participating Investor mutually agree otherwise.  The costs of
      prosecuting such petition shall be borne by SSF and each Participating Investor
      on the basis specified in clause (v) above.  SSF and each
      Participating Investor shall have the right to participate in such
      proceedings.  In connection with such proceedings, the Company shall
      retain counsel reasonably satisfactory to SSF and each Participating Investor
      (which shall be SSF’s counsel unless SSF otherwise agrees).  The
      Company shall not agree to any settlement or compromise of any proceeding
      without the prior written consent of SSF and each Participating Investors,
      which
      shall not be unreasonably withheld or delayed.

     

    
      
        
        

      

      
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    (vii)           SSF
      and each Participating Investors shall have the right to participate or have
      its
      counsel participate in any meetings or discussions with the Staff or the SEC
      regarding the Staff Interpretation and to comment or have their counsel comment
      on any written submission made to the Staff, the SEC or any court with respect
      thereto.  No such written submission shall be made by the Company to
      which counsel to SSF or a Participating Investor reasonably
      objects.

     

    (viii)                      So
      long as the Company is in compliance with the terms of this Section 2(d), no
      liquidated damages shall accrue or be payable pursuant to Section 2(c)(i) of
      this Agreement solely as a result of the failure of the amended Registration
      Statement to become effective due to the Staff Interpretation until the earliest
      of (i) the date that the Registration Statement (as amended, if necessary,
      by
      the Section 8 Amendment) is declared effective by the SEC; provided, however,
      that if the Registration Statement becomes effective automatically pursuant
      to
      Section 8(a) of the 1933 Act after the Company has received written notice
      that
      the SEC has ordered an examination, investigation or other proceeding pursuant
      to Section 8(e) of the 1933 Act, the Registration Statement shall not be deemed
      to have become effective until such time as sales may be made thereunder
      pursuant to Section 5(c) of the 1933 Act, (ii) the date which is 10 days after
      receipt by the Company of written notice from SSF or any Participating Investor
      that the Company is in material breach of the terms hereof is such breach is
      not
      cured to the reasonable satisfaction of such Investor prior thereto, or (iii)
      the date on which a court of competent jurisdiction upholds the Staff
      Interpretation (or modifies the Staff Interpretation in such a manner that
      either (i) all of the Registrable Securities are not able to be included in
      the
      Registration Statement or (ii) one or more of the Investors are required to
      be
      named as an “underwriter” therein) by a final and nonappealable
      judgment.

     

    (ix)           In
      the event that the Staff Interpretation is not contested by the Company in
      compliance with the terms of this Section 2(d) or is upheld (or modified in
      a
      such a manner that either (i) all of the Registrable Securities are not able
      to
      be included in the Registration Statement or (ii) one or more of the Investors
      are required to be named as an “underwriter” therein) by a final and
      nonappealable judgment of a court of competent jurisdiction, the Company shall
      (i) remove from the Registration Statement such portion of the Registrable
      Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and
      limitations on the registration and resale of the Registrable Securities as
      the
      Staff Interpretation as then in effect may require to assure the Company’s
      compliance with the requirements of Rule 415; provided, however, that the
      Company shall not agree to name any Investor as an “underwriter” in such
      Registration Statement without the prior written consent of such Investor
      (collectively, the “415 Restrictions”).  Any cut-back imposed on the
      Investors pursuant to this Section 2(d)(ix) shall be allocated among the
      Investors on a pro rata basis, and shall be allocated first to any Warrant
      Shares, unless, in either case, the 415 Restrictions otherwise require or
      provide.  No liquidated damages shall accrue on or as to any Cut Back
      Shares until such time as the Company is able to effect the registration of
      the
      Cut Back Shares in accordance with any 415 Restrictions (such date, the
“Restriction Termination Date”).  From and after the Restriction
      Termination Date, all of the provisions of Section 2 of this Agreement
      (including the liquidated damages provisions) shall again be applicable to
      the
      Cut Back Shares; provided, however, that for such purposes, references to the
      Initial Closing Date shall be deemed to be the Restriction Termination
      Date.

     

    
      
        
        

      

      
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    (x)           Time
      shall be of the essence in the performance of the obligations contained in
      this
      Agreement, including, without limitation, the performance of the obligations
      set
      forth in this Section 2(d).

     

    (xi)           The
      Company acknowledges that SSF and the Participating Investors have specifically
      requested the inclusion of the provisions set forth in this Section 2(d) as
      a
      condition to their investment in the Company and that SSF and the Participating
      Investors would not have made such investment without such
      provisions.  The Company further acknowledges that in the event of any
      breach of this Section 2(d), SSF and the Participating Investors would suffer
      a
      material loss for which damages at law would be difficult or impossible to
      determine.  Accordingly, in addition to all other rights and remedies
      available to them at law or in equity, SSF and each Participating Investor
      shall
      have the right to have the provisions of this Section 2(d) specifically enforced
      against the Company and neither SSF nor any Participating Investor shall be
      obligated to post any bond or other security in connection with any action
      to
      compel such specific performance.

     

    3.    Company
      Obligations.  The Company will use commercially reasonable efforts
      to effect the registration of the Registrable Securities in accordance with
      the
      terms hereof, and pursuant thereto the Company will, as expeditiously as
      possible:

     

     
    (a)           use
      commercially reasonable efforts to cause such Registration Statement to become
      effective and to remain continuously effective for a period that will terminate
      upon the earlier of (i) the date on which all Registrable Securities covered
      by
      such Registration Statement as amended from time to time, have been sold, and
      (ii) the date on which all Registrable Securities covered by such Registration
      Statement may be sold pursuant to Rule 144(k) (the “Effectiveness Period”) and
      advise the Investors in writing when the Effectiveness Period has
      expired;

     

     
    (b)           prepare
      and file with the SEC such amendments and post-effective amendments to the
      Registration Statement and the Prospectus as may be necessary to keep the
      Registration Statement effective for the Effectiveness Period and to comply
      with
      the provisions of the 1933 Act and the 1934 Act with respect to the distribution
      of all of the Registrable Securities covered thereby;

     

               (c)           provide
      copies to and permit counsel designated by the Investors to review each
      Registration Statement and all amendments and supplements thereto no fewer
      than
      three (3) Business Days prior to their filing with the SEC and not file any
      document to which such counsel reasonably objects;

     

           (d)           furnish
      to the Investors and their legal counsel (i) promptly after the same is prepared
      and publicly distributed, filed with the SEC, or received by the Company (but
      not later than two (2) Business Days after the filing date, receipt date or
      sending date, as the case may be) one (1) copy of any Registration Statement
      and
      any amendment thereto, each preliminary prospectus and Prospectus and each
      amendment or supplement thereto, and each letter written by or on behalf of
      the
      Company to the SEC or the staff of the SEC, and each item of correspondence
      from
      the SEC or the staff of the SEC, in each case relating to such 

     

    
      
        
        

      

      
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    Registration
      Statement (other than any portion of any thereof which contains information
      for
      which the Company has sought confidential treatment), and (ii) such number
      of
      copies of a Prospectus, including a preliminary prospectus, and all amendments
      and supplements thereto and such other documents as each Investor may reasonably
      request in order to facilitate the disposition of the Registrable Securities
      owned by such Investor that are covered by the related Registration
      Statement;

     

          
      (e)           subject
      to the provisions of Section 2(d), use commercially reasonable efforts to (i)
      prevent the issuance of any stop order or other suspension of effectiveness
      and,
      (ii) if such order is issued, obtain the withdrawal of any such order at the
      earliest possible moment;

     

          
      (f)           prior
      to any public offering of Registrable Securities, use commercially reasonable
      efforts to register or qualify or cooperate with the Investors and their counsel
      in connection with the registration or qualification of such Registrable
      Securities for offer and sale under the securities or blue sky laws of such
      jurisdictions requested by the Investors and do any and all other commercially
      reasonable acts or things necessary or advisable to enable the distribution
      in
      such jurisdictions of the Registrable Securities covered by the Registration
      Statement; provided, however, that the Company shall not be
      required in connection therewith or as a condition thereto to (i) qualify to
      do
      business in any jurisdiction where it would not otherwise be required to qualify
      but for this Section 3(f), (ii) subject itself to general taxation in any
      jurisdiction where it would not otherwise be so subject but for this Section
      3(f), or (iii) file a general consent to service of process in any such
      jurisdiction;

     

          
      (g)           use
      commercially reasonable efforts to cause all Registrable Securities covered
      by a
      Registration Statement to be listed on each securities exchange, interdealer
      quotation system or other market on which similar securities issued by the
      Company are then listed;

     

          
      (h)           immediately
      notify the Investors, at any time prior to the end of the Effectiveness Period,
      upon discovery that, or upon the happening of any event as a result of which,
      the Prospectus includes an untrue statement of a material fact or omits to
      state
      any material fact required to be stated therein or necessary to make the
      statements therein not misleading in light of the circumstances then existing,
      and promptly prepare, file with the SEC and furnish to such holder a supplement
      to or an amendment of such Prospectus as may be necessary so that such
      Prospectus shall not include an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein not misleading in light of the circumstances then existing;
      and

     

          
      (i)           otherwise
      use commercially reasonable efforts to comply with all applicable rules and
      regulations of the SEC under the 1933 Act and the 1934 Act, including, without
      limitation, Rule 172 under the 1933 Act, file any final Prospectus, including
      any supplement or amendment thereof, with the SEC pursuant to Rule 424 under
      the
      1933 Act, promptly inform the Investors in writing if, at any time during the
      Effectiveness Period, the Company does not satisfy the conditions specified
      in
      Rule 172 and, as a result thereof, the Investors are required to deliver a
      Prospectus in connection with any disposition of Registrable Securities and
      take
      such other actions as may be reasonably necessary to facilitate the


     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    registration
      of the Registrable Securities hereunder; and make available to its security
      holders, as soon as reasonably practicable, but not later than the Availability
      Date (as defined below), an earnings statement covering a period of at least
      twelve (12) months, beginning after the effective date of each Registration
      Statement, which earnings statement shall satisfy the provisions of Section
      11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
      purpose of this subsection 3(i), “Availability Date” means the 45th day
      following the end of the fourth fiscal quarter that includes the effective
      date
      of such Registration Statement, except that, if such fourth fiscal quarter
      is
      the last quarter of the Company’s fiscal year, “Availability Date” means the
      90th day after the end of such fourth fiscal quarter).

     

          
      (j)           With
      a view to making available to the Investors the benefits of Rule 144 (or its
      successor rule) and any other rule or regulation of the SEC that may at any
      time
      permit the Investors to sell shares of Common Stock to the public without
      registration, the Company covenants and agrees to:  (i) make and keep
      public information available, as those terms are understood and defined in
      Rule
      144, until the earlier of (A) three months after such date as all of the
      Registrable Securities may be resold pursuant to Rule 144(k) or any other rule
      of similar effect or (B) such date as all of the Registrable Securities shall
      have been resold; (ii) file with the SEC in a timely manner all reports and
      other documents required of the Company under the 1934 Act; and (iii) furnish
      to
      each Investor upon request, as long as such Investor owns any Registrable
      Securities, (A) a written statement by the Company that it has complied with
      the
      reporting requirements of the 1934 Act, (B) a copy of the Company’s most recent
      Annual Report on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such
      other information as may be reasonably requested in order to avail such Investor
      of any rule or regulation of the SEC that permits the selling of any such
      Registrable Securities without registration.

     

    4.           Due
      Diligence Review; Information.  The Company shall make available,
      during normal business hours, for inspection and review by the Investors,
      advisors to and representatives of the Investors (who may or may not be
      affiliated with the Investors and who are reasonably acceptable to the Company),
      all financial and other records, all SEC Filings (as defined in the Purchase
      Agreement) and other filings with the SEC, and all other corporate documents
      and
      properties of the Company as may be reasonably necessary for the purpose of
      such
      review, and cause the Company’s officers, directors and employees, within a
      reasonable time period, to supply all such information reasonably requested
      by
      the Investors or any such representative, advisor or underwriter in connection
      with such Registration Statement (including, without limitation, in response
      to
      all questions and other inquiries reasonably made or submitted by any of them),
      prior to and from time to time after the filing and effectiveness of the
      Registration Statement for the sole purpose of enabling the Investors and such
      representatives, advisors and underwriters and their respective accountants
      and
      attorneys to conduct initial and ongoing due diligence with respect to the
      Company and the accuracy of such Registration Statement.

     

         The
      Company
      shall not disclose material nonpublic information to the Investors, or to
      advisors to or representatives of the Investors, unless prior to disclosure
      of
      such information the Company identifies such information as being material
      nonpublic information and provides the Investors, such advisors and
      representatives with the opportunity to accept or refuse to accept such material
      nonpublic information for review and any Investor wishing to obtain such


     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    information
      enters into an appropriate confidentiality agreement with the Company with
      respect thereto.

     

    5.           Obligations
      of the Investors.

     

               (a)           Each
      Investor shall furnish in writing to the Company such information regarding
      itself, the Registrable Securities held by it and the intended method of
      disposition of the Registrable Securities held by it, as shall be reasonably
      required to effect the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.  At least five (5) Business Days prior to the
      first anticipated filing date of any Registration Statement, the Company shall
      notify each Investor of the information the Company requires from such Investor
      if such Investor elects to have any of the Registrable Securities included
      in
      the Registration Statement.  An Investor shall provide such
      information to the Company at least two (2) Business Days prior to the first
      anticipated filing date of such Registration Statement if such Investor elects
      to have any of the Registrable Securities included in the Registration
      Statement.

     

           (b)           Each
      Investor, by its acceptance of the Registrable Securities agrees to cooperate
      with the Company as reasonably requested by the Company in connection with
      the
      preparation and filing of a Registration Statement hereunder, unless such
      Investor has notified the Company in writing of its election to exclude all
      of
      its Registrable Securities from such Registration Statement.

     

           (c)           Each
      Investor agrees that, upon receipt of any notice from the Company of either
      (i)
      the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
      happening of an event pursuant to Section 3(h) hereof, such Investor will
      immediately discontinue disposition of Registrable Securities pursuant to the
      Registration Statement covering such Registrable Securities, until the Investor
      is advised by the Company that such dispositions may again be made.

     

    6.           Indemnification.

     

        
      (a)           Indemnification
      by the Company.  The Company will indemnify and hold harmless each
      Investor and its officers, directors, members, employees and agents, successors
      and assigns, and each other person, if any, who controls such Investor within
      the meaning of the 1933 Act, against any losses, claims, damages or liabilities,
      joint or several, to which they may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon: (i) any untrue statement or
      alleged untrue statement of any material fact contained in any Registration
      Statement, any preliminary Prospectus or final Prospectus, or any amendment
      or
      supplement thereof; (ii) any blue sky application or other document executed
      by
      the Company specifically for that purpose or based upon written information
      furnished by the Company filed in any state or other jurisdiction in order
      to
      qualify any or all of the Registrable Securities under the securities laws
      thereof (any such application, document or information herein called a
“Blue Sky Application”); (iii) the omission or
      alleged omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading; (iv) any violation
      by the Company or its agents of any rule or regulation promulgated under the
      1933 Act applicable to the Company or its agents and relating to action or
      inaction required of the 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Company
      in connection with such registration; or (v) any failure to register or qualify
      the Registrable Securities included in any such Registration in any state where
      the Company or its agents has affirmatively undertaken or agreed in writing
      that
      the Company will undertake such registration or qualification on an Investor’s
      behalf and will reimburse such Investor, and each such officer, director or
      member and each such controlling person for any legal or other expenses
      reasonably incurred by them in connection with investigating or defending any
      such loss, claim, damage, liability or action; provided, however,
      that the Company will not be liable in any such case if and to the extent that
      any such loss, claim, damage or liability arises out of or is based upon an
      untrue statement or alleged untrue statement or omission or alleged omission
      so
      made in conformity with information furnished by such Investor or any such
      controlling person in writing specifically for use in such Registration
      Statement or Prospectus.

     

     
    (b)                      Indemnification
      by the Investors.  Each Investor agrees, severally but not
      jointly, to indemnify and hold harmless, to the fullest extent permitted by
      law,
      the Company, its directors, officers, employees, stockholders and each person
      who controls the Company (within the meaning of the 1933 Act) against any
      losses, claims, damages, liabilities and expense (including reasonable attorney
      fees) resulting from any untrue statement of a material fact or any omission
      of
      a material fact required to be stated in the Registration Statement or
      Prospectus or preliminary Prospectus or amendment or supplement thereto or
      necessary to make the statements therein not misleading, to the extent, but
      only
      to the extent that such untrue statement or omission is contained in any
      information furnished in writing by such Investor to the Company specifically
      for inclusion in such Registration Statement or Prospectus or amendment or
      supplement thereto.  In no event shall the liability of an Investor be
      greater in amount than the dollar amount of the proceeds (net of all expense
      paid by such Investor in connection with any claim relating to this Section
      6
      and the amount of any damages such Investor has otherwise been required to
      pay
      by reason of such untrue statement or omission) received by such Investor upon
      the sale of the Registrable Securities included in the Registration Statement
      giving rise to such indemnification obligation.

     

     
    (c)           Conduct
      of Indemnification Proceedings.  Any person entitled to
      indemnification hereunder shall (i) give prompt notice to the indemnifying
      party
      of any claim with respect to which it seeks indemnification and (ii) permit
      such
      indemnifying party to assume the defense of such claim with counsel reasonably
      satisfactory to the indemnified party; provided that any person entitled
      to indemnification hereunder shall have the right to employ separate counsel
      and
      to participate in the defense of such claim, but the fees and expenses of such
      counsel shall be at the expense of such person unless (a) the indemnifying
      party
      has agreed to pay such fees or expenses, or (b) the indemnifying party shall
      have failed to assume the defense of such claim and employ counsel reasonably
      satisfactory to such person or (c) in the reasonable judgment of any such
      person, based upon written advice of its counsel, a conflict of interest exists
      between such person and the indemnifying party with respect to such claims
      (in
      which case, if the person notifies the indemnifying party in writing that such
      person elects to employ separate counsel at the expense of the indemnifying
      party, the indemnifying party shall not have the right to assume the defense
      of
      such claim on behalf of such person); and provided, further, that
      the failure of any indemnified party to give notice as provided herein shall
      not
      relieve the indemnifying party of its obligations hereunder, except to the
      extent that such failure to give notice shall materially adversely affect the
      indemnifying party in the defense of any such claim or litigation.  It
      is understood that the indemnifying party shall not, in connection with any
      

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    proceeding
      in the same jurisdiction, be liable for fees or expenses of more than one
      separate firm of attorneys at any time for all such indemnified
      parties.  No indemnifying party will, except with the consent of the
      indemnified party, consent to entry of any judgment or enter into any settlement
      that does not include as an unconditional term thereof the giving by the
      claimant or plaintiff to such indemnified party of a release from all liability
      in respect of such claim or litigation.

     

     
    (d)           Contribution.  If
      for any reason the indemnification provided for in the preceding paragraphs
      (a)
      and (b) is unavailable to an indemnified party or insufficient to hold it
      harmless, other than as expressly specified therein, then the indemnifying
      party
      shall contribute to the amount paid or payable by the indemnified party as
      a
      result of such loss, claim, damage or liability in such proportion as is
      appropriate to reflect the relative fault of the indemnified party and the
      indemnifying party, as well as any other relevant equitable
      considerations.  No person guilty of fraudulent misrepresentation
      within the meaning of Section 11(f) of the 1933 Act shall be entitled to
      contribution from any person not guilty of such fraudulent
      misrepresentation.  In no event shall the contribution obligation of a
      holder of Registrable Securities be greater in amount than the dollar amount
      of
      the proceeds (net of all expenses paid by such holder in connection with any
      claim relating to this Section 6 and the amount of any damages such holder
      has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission) received by it upon the sale of
      the
      Registrable Securities giving rise to such contribution
      obligation.

     

    7.           Miscellaneous.

     

     
    (a)           Amendments
      and Waivers.  This Agreement may be amended only by a writing
      signed by the Company and the Required Investors, which shall be binding on
      all
      of the Investors.  The Company may take any action herein prohibited,
      or omit to perform any act herein required to be performed by it, only if the
      Company shall have obtained the written consent to such amendment, action or
      omission to act, of the Required Investors.

     

     
    (b)           Notices.  All
      notices and other communications provided for or permitted hereunder shall
      be
      made as set forth in Section 9.4 of the Purchase Agreement.

     

     
    (c)           Assignments
      and Transfers by Investors.  The provisions of this Agreement
      shall be binding upon and inure to the benefit of the Investors and their
      respective successors and assigns.  An Investor may transfer or
      assign, in whole or from time to time in part, to one or more persons its rights
      hereunder in connection with the transfer of Registrable Securities by such
      Investor to such person, provided that such Investor complies with all laws
      applicable thereto and provides written notice of assignment to the Company
      promptly after such assignment is effected.

     

     
    (d)           Assignments
      and Transfers by the Company.  This Agreement may not be assigned
      by the Company (whether by operation of law or otherwise) without the prior
      written consent of the Required Investors, provided, however, that the Company
      may assign its rights and delegate its duties hereunder to any surviving or
      successor corporation in connection with a merger or consolidation of the
      Company with another corporation, or a sale, transfer or other disposition
      of
      all or substantially all of the Company’s assets to another corporation,


     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    without
      the prior written consent of the Required Investors, after notice duly given
      by
      the Company to each Investor.

     

     
    (e)           Benefits
      of the Agreement.  The terms and conditions of this Agreement
      shall inure to the benefit of and be binding upon the respective permitted
      successors and assigns of the parties.  Nothing in this Agreement,
      express or implied, is intended to confer upon any party other than the parties
      hereto or their respective successors and assigns any rights, remedies,
      obligations, or liabilities under or by reason of this Agreement, except as
      expressly provided in this Agreement.

     

     
    (f)           Counterparts;
      Faxes.  This Agreement may be executed in two or more
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument.  This Agreement
      may also be executed via facsimile, which shall be deemed an
      original.

     

     
    (g)           Titles
      and Subtitles.  The titles and subtitles used in this Agreement
      are used for convenience only and are not to be considered in construing or
      interpreting this Agreement.

     

     
    (h)           Severability.  Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction.  To the
      extent permitted by applicable law, the parties hereby waive any provision
      of
      law which renders any provisions hereof prohibited or unenforceable in any
      respect.

     

         
      (i)           Further
      Assurances.  The parties shall execute and deliver all such
      further instruments and documents and take all such other actions as may
      reasonably be required to carry out the transactions contemplated hereby and
      to
      evidence the fulfillment of the agreements herein contained.

     

     
    (j)           Entire
      Agreement.  This Agreement is intended by the parties as a final
      expression of their agreement and intended to be a complete and exclusive
      statement of the agreement and understanding of the parties hereto in respect
      of
      the subject matter contained herein.  This Agreement supersedes all
      prior agreements and understandings between the parties with respect to such
      subject matter.

     

     
    (k)           Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.  This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof.  Each of the parties hereto irrevocably submits to the
      exclusive jurisdiction of the courts of the State of New York located in New
      York County and the United States District Court for the Southern District
      of
      New York for the purpose of any suit, action, proceeding or judgment relating
      to
      or arising out of this Agreement and the transactions contemplated
      hereby.  Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the


     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    world
      by
      the same methods as are specified for the giving of notices under this
      Agreement.  Each of the parties hereto irrevocably consents to the
      jurisdiction of any such court in any such suit, action or proceeding and to
      the
      laying of venue in such court.  Each party hereto irrevocably waives
      any objection to the laying of venue of any such suit, action or proceeding
      brought in such courts and irrevocably waives any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
      REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
      REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      IN
        WITNESS WHEREOF, the parties have executed this Agreement or caused their
        duly
        authorized officers to execute this Agreement as of the date first above
        written.

      


      


      
        	
                The
                  Company:

              	
                CAPRIUS,
                  INC.

                 

                 

                 

              
	 	
                By:

              	
                
                  /s/
                    Jonathan Joels

                

              
	 	
                Name:  Jonathan
                  Joels

                Title:
                  Vice President

              


      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	 	
                SPECIAL
                  SITUATIONS FUND III QP, L.P.

                 

              
	 	
                By:

              	
                
                  /s/
                    David Greenhouse

                

              
	 	
                Name:
                  David Greenhouse

                Title:
                  Managing Director

              


      

       

      


      


      
        	 	
                SPECIAL
                  SITUATIONS FUND III, L.P.

                 

              
	 	
                By:

              	
                
                  /s/
                    David Greenhouse

                

              
	 	
                Name:
                  David Greenhouse

                Title:
                  Managing Director

              


      

      
 

      


      
        	 	
                SPECIAL
                  SITUATIONS PRIVATE EQUITY FUND, L.P.

                 

              
	 	
                By:

              	
                
                  /s/
                    David Greenhouse

                

              
	 	
                Name:
                  David Greenhouse

                Title:
                  Managing Director

              


      

      
 

      


      
        	 	
                ZACHARY
                  PRENSKY, C/O LITTLE BEAR

                INVESTMENTS
                  LLC

                 

              
	 	
                By:

              	
                
                  /s/
                    Zachary Prensky

                

              
	 	
                Name:
                  Zachary Prensky

              


      

      
 

      


      
        	 	
                
                  /s/
                    WOLF PRENSKY

                

              
	 	
                WOLF
                  PRENSKY

              


      

      
 

      


      
        	 	
                
                  /s/
                    EUGENE CINER & NATALIE CINER,

                

              
	 	
                EUGENE
                  CINER & NATALIE CINER,

              


      

      
 

      


      
        	 	
                
                  /s/
                    MARTHA LIPTON

                

              
	 	
                MARTHA
                  LIPTON

              


      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      


      
        	 	
                BIOMEDICAL
                  VALUE FUND, L.P.

                 

              
	 	
                By:

              	
                
                  /s/
                    David Gerber

                

              
	 	
                Name:
                  David Gerber

                Title:
                  Managing Director

              




      


      
        	 	
                BIOMEDICAL
                  OFFSHORE VALUE FUND, LTD.

                 

              
	 	
                By:

              	
                
                  /s/
                    David Gerber

                

              
	 	
                Name:
                  David Gerber

                Title:
                  Managing Director

              


      

      
 

      


      
        	 	
                DOLPHIN
                  OFFSHORE PARTNERS, L.P.

                 

              
	 	
                By:

              	
                
                  /s/
                    Peter E. Salas

                

              
	 	
                Name:
                  Peter E. Salas

                Title:
                  General Partner

              


      

       

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    


    Plan
      of Distribution

    


    The
      selling stockholders, which as used
      herein includes donees, pledgees, transferees or other successors-in-interest
      selling shares of common stock or interests in shares of common stock received
      after the date of this prospectus from a selling stockholder as a gift, pledge,
      partnership distribution or other transfer, may, from time to time, sell,
      transfer or otherwise dispose of any or all of their shares of common stock
      or
      interests in shares of common stock on any stock exchange, market or trading
      facility on which the shares are traded or in private
      transactions.  These dispositions may be at fixed prices, at
      prevailing market prices at the time of sale, at prices related to the
      prevailing market price, at varying prices determined at the time of sale,
      or at
      negotiated prices.

    


    The
      selling stockholders may use any
      one or more of the following methods when disposing of shares or interests
      therein:

    


    -
      ordinary brokerage transactions and
      transactions in which the broker-dealer solicits purchasers;

    


    -
      block trades in which the
      broker-dealer will attempt to sell the shares as agent, but may position and
      resell a portion of the block as principal to facilitate the
      transaction;

    


    -
      purchases by a broker-dealer as
      principal and resale by the broker-dealer for its account;

    


    -
      an exchange distribution in
      accordance with the rules of the applicable exchange;

    


    -
      privately negotiated
      transactions;

    


    -
      settlement of short sales effected
      after the date the registration statement of which this Prospectus is a part
      is
      declared effective by the SEC;

    


    -
      through the writing or settlement of
      options or other hedging transactions, whether through an options exchange
      or
      otherwise;

    


    -
      broker-dealers may agree with the
      selling stockholders to sell a specified number of such shares at a stipulated
      price per share; and

    


    -
      a combination of any such methods of
      sale.

    


    The
      selling stockholders may, from time
      to time, pledge or grant a security interest in some or all of the shares of
      common stock owned by them and, if they default in the performance of their
      secured obligations, the pledgees or secured parties may offer and sell the
      shares of common stock, from time to time, under this prospectus, or under
      an
      amendment to this prospectus under Rule 424(b)(3) or other applicable provision
      of the Securities Act amending the list of selling stockholders to include
      the
      pledgee, transferee or other successors in interest as 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    selling
      stockholders under this prospectus.  The selling stockholders also may
      transfer the shares of common stock in other circumstances, in which case the
      transferees, pledgees or other successors in interest will be the selling
      beneficial owners for purposes of this prospectus.

    


    Broker-dealers
      engaged by the selling
      stockholders may arrange for other brokers-dealers to participate in sales.
      Broker-dealers may receive commissions or discounts from the selling
      stockholders (or, if any broker-dealer acts as agent for the purchaser of
      shares, from the purchaser) in amounts to be negotiated. The selling
      stockholders do not expect these commissions and discounts to exceed what is
      customary in the types of transactions involved.

    


    In
      connection with the sale of our
      common stock or interests therein, the selling stockholders may enter into
      hedging transactions with broker-dealers or other financial institutions, which
      may in turn engage in short sales of the common stock in the course of hedging
      the positions they assume.  The selling stockholders may also sell
      shares of our common stock short and deliver these securities to close out
      their
      short positions, or loan or pledge the common stock to broker-dealers that
      in
      turn may sell these securities.  The selling stockholders may also
      enter into option or other transactions with broker-dealers or other financial
      institutions or the creation of one or more derivative securities which require
      the delivery to such broker-dealer or other financial institution of shares
      offered by this prospectus, which shares such broker-dealer or other financial
      institution may resell pursuant to this prospectus (as supplemented or amended
      to reflect such transaction).

    


    The
      aggregate proceeds to the selling
      stockholders from the sale of the common stock offered by them will be the
      purchase price of the common stock less discounts or commissions, if
      any.  Each of the selling stockholders reserves the right to accept
      and, together with their agents from time to time, to reject, in whole or in
      part, any proposed purchase of common stock to be made directly or through
      agents.  We will not receive any of the proceeds from this offering.
      Upon any exercise of the warrants by payment of cash, however, we will receive
      the exercise price of the warrants.

    


    The
      selling stockholders also may
      resell all or a portion of the shares in open market transactions in reliance
      upon Rule 144 under the Securities Act of 1933, provided that they meet the
      criteria and conform to the requirements of that rule.

    


    The
      selling stockholders and any
      underwriters, broker-dealers or agents that participate in the sale of the
      common stock or interests therein may be "underwriters" within the meaning
      of
      Section 2(11) of the Securities Act.  Any discounts, commissions,
      concessions or profit they earn on any resale of the shares may be underwriting
      discounts and commissions under the Securities Act.  Selling
      stockholders who are "underwriters" within the meaning of Section 2(11) of
      the
      Securities Act will be subject to the prospectus delivery requirements of the
      Securities Act.

    


    To
      the extent required, the shares of
      our common stock to be sold, the names of the selling stockholders, the
      respective purchase prices and public offering prices, the names of any agents,
      dealer or underwriter, any applicable commissions or discounts with respect
      to a
      particular offer will be set forth in an accompanying prospectus supplement
      or,
      if appropriate, a post-effective amendment to the registration statement that
      includes this prospectus.

     

    
      
        
        

      

      
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    In
      order to comply with the securities
      laws of some states, if applicable, the common stock may be sold in these
      jurisdictions only through registered or licensed brokers or
      dealers.  In addition, in some states the common stock may not be sold
      unless it has been registered or qualified for sale or an exemption from
      registration or qualification requirements is available and is complied
      with.

    


    We
      have advised the selling
      stockholders that the anti-manipulation rules of Regulation M under the Exchange
      Act may apply to sales of shares in the market and to the activities of the
      selling stockholders and their affiliates.  In addition, to the extent
      applicable we will make copies of this prospectus (as it may be supplemented
      or
      amended from time to time) available to the selling stockholders for the purpose
      of satisfying the prospectus delivery requirements of the Securities
      Act.  The selling stockholders may indemnify any broker-dealer that
      participates in transactions involving the sale of the shares against certain
      liabilities, including liabilities arising under the Securities
      Act.

    


    We
      have agreed to indemnify the selling
      stockholders against liabilities, including liabilities under the Securities
      Act
      and state securities laws, relating to the registration of the shares offered
      by
      this prospectus.

    


    We
      have agreed with the selling
      stockholders to keep the registration statement of which this prospectus
      constitutes a part effective until the earlier of (1) such time as all of the
      shares covered by this prospectus have been disposed of pursuant to and in
      accordance with the registration statement or (2) the date on which the shares
      may be sold pursuant to Rule 144(k) of the Securities Act.

     

    
      
        
        

      

      
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