UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
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14c-5(d)(2))
[X] Definitive Information Statement
CAPRIUS, INC.
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(Name of Registrant as Specified in its Charter)
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CAPRIUS, INC.
One Parker Plaza
Fort Lee, NJ 07024
NOTICE OF ACTION BY
WRITTEN CONSENT OF STOCKHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
To our Stockholders:
This Information Statement is being furnished by the Board of Directors
of Caprius, Inc., a Delaware corporation, to holders of record of our common
stock, $.01 par value per share, at the close of business on November 18, 2005,
pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as
amended. The purpose of this Information Statement is to inform our stockholders
of certain action that was taken by the written consent, dated as of November
18, 2005, by the holders of a majority of our outstanding voting stock. This
Information Statement also shall be considered the notice required under Section
228(e) of the Delaware General Corporation Law.
The action taken by the majority stockholders will not become effective
until at least 20 days after the initial mailing of this Information Statement
to the other stockholders.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER THE MATTER DESCRIBED HEREIN.
By order of the Board of Directors:
/s/ Jonathan Joels
-----------------------
Jonathan Joels
CFO, Treasurer and Secretary
Dated: December 6, 2005
CAPRIUS, INC.
One Parker Plaza
Fort Lee, NJ 07024
INFORMATION STATEMENT
INTRODUCTORY STATEMENT
Caprius, Inc. is a Delaware corporation with our principal executive offices
located at One Parker Plaza, Fort Lee, NJ 07024. Our telephone number is (201)
592-8838.
At the request of our Board of Directors, we are sending this Information
Statement to our stockholders to notify you about action taken by the holders of
55.3% of our outstanding voting capital stock (the "Majority Holders"), by
written consent, dated November 18, 2005, in lieu of a special meeting of the
stockholders, in accordance with the Delaware General Corporation Law. The
action taken was ratification and approval of an amendment (the "Amendment") to
our 2002 Stock Option Plan (the "2002 Plan") to increase to 700,000 shares the
number of shares of common stock reserved for grant and issuance thereunder. The
Amendment will be effective not less than 20 calendar days after the initial
mailing of this Information Statement.
This Information Statement is being mailed on or before December 8,
2005 to the holders of record on November 18, 2005 of the outstanding shares of
our common stock and preferred stock.
REASON FOR THE AMENDMENT
The reason for the Amendment is to increase the number of shares of
common stock authorized for grant of options under the 2002 Plan. The
one-for-twenty reverse stock split of our common stock effected on April 5, 2005
reduced the number of shares available for grant as stock options under the 2002
Plan from 1,500,000 to 75,000 shares.
As of November 18, 2005, outstanding options under the 2002 Plan were
held by seven persons for an aggregate of 51,800 shares of common stock, leaving
available only 23,200 shares for future option grants. The outstanding options
consisted of (i) 48,050 shares at an exercise price of $3.00 per share expiring
on October 7, 2012 and (ii) 3,750 shares at an exercise price of $4.00 per share
expiring on May 24, 2014. See "Security Ownership of Certain Beneficial Owners
and Management."
We believe that our ability to grant stock options plays an important role
in attracting and retaining our directors, officers, employees and consultants.
As a small public company with limited cash resources, a stock option program
provides us with an additional component to our compensation arrangements, while
allowing us to preserve our cash position. By providing talented personnel the
opportunity for equity ownership through our common stock, we strengthen their
commitment to our success and promote the identity of interests between our
stockholders and such persons. We need to have a sufficient number of shares
available for future grant and issuance under the 2002 Plan in order for us to
provide this equity incentive. Our 1993 Stock Option Plan (the "1993 Plan")
expired in 2003, leaving the 2002 Plan as our only stock
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option plan. The current reserve of 23,200 shares is believed to be insufficient
based upon certain growth expectations and upon the need to reward employees and
others for their past efforts. Our Board of Directors decided that increasing
the number of shares of common stock available for grant under the 2002 Plan by
625,000 shares to 700,000 shares would accomplish the desired objective.
Management has proposed that after the Amendment becomes effective the
Compensation/Option Committee (the "Committee") consider the grant of options to
16 persons, consisting of certain directors, employees and consultants,
including employees of our Israeli subsidiary, for an aggregate of 458,000
shares of common stock at fair market value at the time of grant. The proposal
includes options for 20,000 shares to each of the outside directors and 100,000
shares to each of George Aaron, Chairman, President, Chief Executive Officer, a
director and a Majority Holder, and Jonathan Joels, Treasurer, Chief Financial
Officer, Secretary, a director and a Majority Holder. Assuming the Committee
grants the options as proposed above, options for 190,000 shares would be
available for future grant under the 2002 Plan.
PURPOSES OF THE 2002 PLAN
The purposes of the 2002 Plan are to provide incentives to selected
directors, officers, employees and other persons who perform services on our
behalf and on behalf of any of our subsidiaries by giving them opportunities to
purchase our common stock pursuant to options granted thereunder. These options
may qualify as "incentive stock options" ("ISO") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), for certain employees
(including employee-directors); otherwise, for tax purposes the options would be
classified as Non-Qualified Options" or "NQSOs." Should any options terminate
unexercised, the underlying shares of common stock would be returned to the 2002
Plan and become available for future grants.
ADMINISTRATION
The 2002 Plan is administered by the Compensation/Option Committee of
the Board of Directors, each member of which is a Non-Employee Director within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, or by the
whole Board of Directors. Subject to specific provisions in the 2002 Plan, the
Committee has the authority (i) to select the individuals (the "Optionees") who
are to be granted options from among those eligible to participate in the 2002
Plan, (ii) to establish the number of shares which may be issued under each
option, (iii) to determine at when the options may be granted, (iv) to determine
the exercise price of shares subject to each option, (v) to determine the time
at which each option shall be come exercisable and the duration of the exercise
period, (vi) to determine whether restrictions are to be imposed on shares
subject to options and the nature of such restrictions, if any, and (vii) to
interpret the 2002 Plan and prescribe and rescind rules and regulations relating
to it.
ELIGIBILITY
Options may be granted only to individuals who are (i) present or
prospective employees of the Company and our subsidiaries, including officers
and directors who are also employees at the time the Option is granted, (ii)
outside Directors, and (iii) persons who perform services for us or on behalf of
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us or of our subsidiaries. Options that constitute ISOs may only be granted to
employees described in clause (i) above. No option may be granted under the 2002
Plan after May 15, 2012; however, options granted prior to that date would
remain outstanding for the period determined at the time of grant.
OPTION PRICE AND TERMS
The option price of each share of common stock subject to an option is
fixed by the Committee at the time of grant, but cannot be less than the fair
market value of the common stock on the date of grant, defined as the average
bid and ask price over the prior five days' trading. The aggregate fair market
value, determined at the time of grant, of the shares with respect to which
ISO's are exercisable for the first time by an individual during any calendar
year may not exceed $100,000. NQSOs are not subject to this requirement. Certain
adjustments in the option price and/or option shares may be made for customary
anti-dilution events. The Committee determines the option period, provided it is
not longer than five years in the case of ISOs granted to employees who hold 10%
of our outstanding stock, 10 years in the case of ISOs generally, or 10 years,
in the case of NQSOs, subject to earlier termination, and also the vesting
period, including any accelerated vesting, and the payment terms. In the event
of termination of employment, the Optionee may exercise his options at any time
up to one year of the termination, but in no event later than the expiration
date of the option; however, if the employee is terminated "for cause," the
option would expire immediately. All options would vest immediately upon a
"change of control" of the Company. Upon exercise of an option, payment for
shares may be made in cash, or, if the option agreement so provides, in shares
of common stock calculated based upon their fair market value as of the date of
their delivery or a combination of stock and cash.
TRANSFERABILITY
Options granted under the 2002 Plan are not assignable or transferable
by the Optionee otherwise than (i) by will or the laws of descent and
distribution, (ii) pursuant to a qualified domestic relations order or Title I
of the Employee Retirement Income Security Act or (iii) with respect to NQSOs,
to a spouse or lineal descendant of the Optionee. Options are exercisable during
the lifetime of the Optionee only by the Optionee or by the Optionee's guardian
or legal representative.
TERMINATION, SUSPENSION OR MODIFICATION OF THE 2002 PLAN
The Board of Directors may terminate, suspend or modify the 2002 Plan
at any time but may not, without authorization of our stockholders, effect any
change which under Section 16(b) of the Exchange Act, applicable Delaware
corporate law or tax law, or the rules of any national securities exchange or
national quotation system on which the common stock is then listed or traded
requires the prior approval of stockholders.
OTHER OPTIONS
As of November 18, 2005, we had outstanding options granted under our
1993 Plan for the purchase of an aggregate of 34,975 shares of common stock, as
described below. The 1993 Plan expired in 2003. As such, no new options may be
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granted under that Plan, but options granted prior to the expiration remain in
effect for their respective terms.
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Number of Exercise Price Expiration Date
Shares
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50 $ 58.50 January 24, 2006
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75 $100.00 April 3, 2006
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350 $ 58.50 August 22, 2006
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27,000 $ 3.00 October 14, 2009
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7,500 $ 5.00 July 7, 2010
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As of November 18, 2005, we had outstanding options granted outside of
the 2002 Plan and the 1993 Plan for the purchase of an aggregate of 52,500
shares of common stock. The outstanding options consisted of (i) options for
50,000 shares at an exercise price of $3.00 per share expiring on October 7,
2012 and (ii) options for 2,500 shares at an exercise price of $2.00 per share
expiring on December 5, 2009.
DESCRIPTION OF OUR CAPITAL STOCK
We are authorized to issue 50,000,000 shares of common stock and 1,000,000
shares of preferred stock, of which 27,000 shares have been designated as
Series B Convertible Redeemable Preferred Stock ("Series B"). At the close of
business on November 18, 2005, we had issued and outstanding 3,321,673 shares of
common stock and 27,000 shares of Series B Preferred Stock.
Each share of our common stock entitles the holder to one vote on all
matters to be voted on by stockholders. There is no cumulative voting with
respect to the election of directors. The holders of shares of our common stock
are entitled to dividends when and as declared by the Board of Directors from
funds legally available and upon liquidation they are entitled to share pro rata
in any distribution to holders of common stock, subject to the prior right of
holders of our outstanding preferred stock. No dividends have ever been declared
by the Board of Directors on the common stock. Holders of our common stock have
no preemptive rights. There are no conversion rights or redemption or sinking
fund provisions with respect to our common stock.
Each share of Series B Preferred Stock is convertible into 2.147765
shares of common stock, subject to customary anti-dilution provisions, or an
aggregate of 57,990 shares of common stock. The Series B Preferred Stock is
convertible at the election of the holder until August 17, 2007, and subject to
mandatory conversion upon a change of control or August 17, 2007. Unless an
action adversely affects the rights, powers or privileges of the shares of the
Series B Preferred Stock, the holders of Series B Preferred Stock are not
entitled to vote on any matter. The Series B Preferred Stock has a liquidation
preference of $100 per share.
As determined by our Board of Directors, and without any action by
stockholders, we may issue the remaining authorized preferred stock in one or
more series having the rights, privileges, and limitations, including voting
rights, conversion rights, liquidation preferences, dividend rights and
redemption rights, as may, from time to time be determined by the Board at time
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of issuance. The preferred stock may be issued in the future in connection with
acquisitions, financings or other matters, as the Board of Directors deems
appropriate. In the event that we determine to issue any shares of preferred
stock, a certificate of designation containing the rights, privileges and
limitations of this series of preferred stock will be filed with the Secretary
of State of the State of Delaware. The effect of this preferred stock
designation power is that our Board of Directors alone, subject to Federal
securities laws, applicable blue sky laws and Delaware law, may be able to
authorize the issuance of preferred stock which could have the effect of
delaying, deferring or preventing a change in control without further action by
our stockholders, and may adversely affect the voting and other rights of the
holders of our common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 18, 2005, certain
information with respect to the common stock beneficially owned by: (i) each
person who is known by us to own beneficially more than five percent of the
outstanding common stock, (ii) each of our directors and executive officers and
(iii) all directors and executive officers as a group:
Amount and
Position with Company / nature of
beneficial owner of over beneficial
Name of 5% of the outstanding ownership/1/ of Percentage of
beneficial owner* common stock common stock securities **
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Special Situations Private Holder of over five percent 1,448,274/2/ 38.8%
Equity Fund, L.P.
153 E. 53rd Street
55th Floor
New York, NY 10022
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Special Situations Fund III, L.P. Holder of over five percent 482,757/3/ 14.0%
153 E. 53rd Street
55th Floor
New York, NY 10022
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Shrikant Mehta Holder of over five percent 245,894/4/ 7.3%
Combine International
354 Indusco Court
Troy, Michigan 48083
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George Aaron Chairman of the Board; 260,887/5/ 7.8%
Chief Executive Officer;
President
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Jonathan Joels Director; Chief 255,226/6/ 7.6%
Financial Officer;
Treasurer;
Secretary
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Elliott Koppel VP Sales & Marketing 25,194/7/ **
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Sol Triebwasser, Ph.D. Director 5,545/8/ **
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Jeffrey L. Hymes, M.D. Director 2,500/9/ **
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All executive officers and
Directors as a group (5 persons) 549,352/10/ 16.2%
* Except otherwise indicated above, the address of the holder is c/o Caprius
Inc., One Parker Plaza, Fort Lee, NJ 07024.
** Less than one percent (1%)
(1) Includes voting and investment power, except where otherwise noted. The
number of shares beneficially owned includes shares each beneficial owner
has the right to acquire within 60 days of November 18, 2005 pursuant to
stock options, warrants and convertible securities.
(2) Includes 413,792 shares underlying warrants presently exercisable.
(3) Includes 137,930 shares underlying warrants presently exercisable.
(4) Includes (i) 10,000 shares underlying warrants presently exercisable and
(ii) 25,000 shares underlying options presently exercisable granted outside
our option plans.
(5) Includes (i) 353 shares in retirement accounts, (ii) 9,075 shares
underlying warrants presently exercisable, (iii) 5 shares jointly owned
with his wife and (iv) 20,000 shares underlying options presently
exercisable (15,000 shares granted under the 2002 Plan exercisable at $3.00
per share and 5,000 shares granted under the 1993 Plan exercisable at $3.00
per share).
(6) Includes (i) 48,000 shares as trustee for his children, (ii) 8,618 shares
underlying warrants presently exercisable, (iii) 875 shares underlying
warrants owned by his wife for which he disclaims beneficial ownership,
(iv) 20,000 shares underlying options presently exercisable (15,000 shares
granted under the 2002 Plan exercisable at $3.00 per share and 5,000 shares
granted under the 1993 Plan exercisable at $3.00 per share) and (v) 17,241
shares in a retirement account.
(7) Includes (i) 4,644 shares underlying warrants and (ii) 20,000 shares
underlying options presently exercisable (5,000 shares granted under the
2002 Plan exercisable at $3.00 per share and 15,000 shares granted under
the 1993 Plan, of which 7,500 shares are exercisable at $5.00 per share and
7,500 shares are exercisable at $3.00 per share).
(8) Includes 5,475 shares underlying options presently exercisable (5,000
shares granted under the 2002 Plan exercisable at $3.00 per share and 475
shares granted under the 1993 Plan, of which 400 shares are exercisable at
$58.50 per share and 75 shares are exercisable at $100.00 per share).
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(9) Includes 2,500 shares underlying options presently exercisable and excludes
1,250 shares underlying options which are currently not exercisable (3,750
shares granted under the 2002 Plan exercisable at $4.00 per share).
(10) Includes (i) 22,337 shares underlying warrants and (ii) 67,975 shares
underlying options presently exercisable.
NO DISSENTERS' RIGHTS
You do not have the right to dissent and obtain an appraisal of your shares
under Delaware law in connection with the Amendment described in this
Information Statement.
STOCKHOLDER PROPOSALS
Our Board of Directors has not yet determined the date on which the
next annual meeting of stockholders will be held. Any proposal by a stockholder
intended to be presented at the our next annual meeting of stockholders must be
received at our offices a reasonable amount of time prior to the date on which
the information or proxy statement for that meeting is mailed to stockholders in
order to be included in our information or proxy statement relating to that
meeting.
WHERE YOU CAN FIND MORE INFORMATION ABOUT THE COMPANY
We file our annual, quarterly and current reports, proxy statements and
other information with the SEC. You can read and copy any materials that we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site that contains information we file electronically with the
SEC, which you can access over the Internet at http://www.sec.gov. Copies of
these materials may also be obtained by mail from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
You also can view such documents on our website www.caprius.com.
Fort Lee, New Jersey
December 6, 2005
By order of the Board of Directors:
/s/ Jonathan Joels
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Jonathan Joels
CFO, Treasurer and Secretary
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