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Secured Promissory Note - CAPRIUS INC - 1-20-2000

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									EXHIBIT 10.16.2 CAPRIUS, INC. SECURED PROMISSORY NOTE $247,500 December 28, 1999 (Principal Amount) CAPRIUS, INC., a Delaware corporation (herein called the "Company", which term shall also include its successors and assigns), for value received, hereby promises to pay to Enrique Levy or permitted assigns (the "Holder") on September 1, 2000, the principal sum of Two Hundred Forty-Seven Thousand Five Hundred Dollars ($247,500), with interest payable monthly commencing on February 1, 2000 and on the first day of each succeeding month at the rate of ten (10%) percent per annum accruing from December 28, 1999 on the outstanding principal amount until the entire principal shall become paid or otherwise satisfied, and subject to voluntary prepayment, both principal and interest to be payable at the principal office of the Company at One Parker Plaza, Fort Lee, New Jersey 07024, or at such other location as the Company and the Holder may agree upon in writing. This Note is one of a duly authorized issue of Notes of the Company to Jack Nelson and Enrique Levy (the "Nelson/Levy Notes") issued in conversion of payments due under certain termination and severance agreements (the "Termination Agreements"), dated as of June 28, 1999, by the Company with each Nelson and Levy. 1. DEFINITION OF TERMS For purposes of this Note, unless the context otherwise requires: 1.1 Bridge Notes. Bridge Notes shall mean, collectively, the Notes of a duly authorized issue of notes of the Company limited in aggregate principal amount to $600,000, maturing on February 29, 2000. 1.2 Business Day. Business Day shall mean a day other than a Saturday, Sunday or a day when banking institutions in New York City are authorized by law, regulation or order to remain closed. 1.3 Holder of Record. Holder of Record shall mean in connection with any Note the payee thereof unless a subsequent holder shall have presented to the Company such Note, duly assigned to him and delivered to the Company a written notice of his acquisition of the Note and designated in writing an address to which payments and notices in respect of the Note shall be mailed, in which case the term shall mean such subsequent holder.

1.4 Maturity. As used herein the terms "maturity" and "Maturity" shall mean October 1, 2000 or such earlier or later date on which the principal amount of this Note becomes payable hereunder. 1.5 Person. Person shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 2. SECURITY 2.1 Security Agreement. If the Nelson/Levy Notes are outstanding on March 1, 2000, Caprius will grant to the Holder a joint security interest with the holders of the other outstanding Nelson/Levy Notes in the inventory, receivables and non-leased equipment of the Strax Division of the Company. Such security interest shall be pursuant to the terms of a Security Agreement to be executed among the initial holders of the Nelson/Levy Notes and the Company and shall become effective only if the Nelson/Levy Notes are outstanding on March 1, 2000. Between December 28, 1999 and March 1, 2000, the Company will not grant a security interest to a third party in the assets of the Strax Division, except (i) in connection with a transaction on which the net proceeds will be used to prepay all or a portion of the then outstanding principal and accrued interest on the Nelson/Levy Notes pursuant to Section 3.3 hereof or (ii) in connection with an installment purchase or a capitalized lease of equipment. 3. PREPAYMENT OF NOTE 3.1 Note to Be Callable for Prepayment. The Company shall have the right, subject to compliance with the provisions of this Article 3, to call this Note for prepayment at any time (herein referred to as the "Prepayment Date"), either in whole or in part, at the principal amount so to be prepaid, together with accrued interest thereon to the Prepayment Date. Any prepayment on this Note shall be proportionate to a simultaneous prepayment on the other Nelson/Levy Notes. 3.2 Notice of Call for Prepayment. Notice of call for prepayment of this Note or any portion hereof shall be given to the Holder of Record at his address in accordance with Section 7.2 hereof at least three (3) Business Days prior to the Prepayment Date. Upon notice of call for prepayment being given as aforesaid, the Company shall prepay on the Prepayment Date the entire principal amount of this Note or the portion hereof, as the case may be, so called for prepayment as hereinabove provided, and shall pay all accrued and unpaid interest on the principal amount being prepaid. 3.3 Sale of the Strax Division. (a) If the Company shall sell or otherwise dispose of the Strax Division (the "Strax Sale") prior to the Maturity of this Note, the Company shall apply the net cash proceeds of such Sale (after payment of all commissions, expenses and taxes related to such Sale) toward prepayment of the Nelson/Levy Notes and the Bridge Notes (if they are still outstanding) in accordance with this Article 3. 2

(b) If the net cash proceeds to be received by the Company on a Strax Sale would be insufficient to pay the outstanding amounts on the Nelson/Levy Notes and the outstanding Bridge Notes, the Holders of Record of more than 50% of the outstanding principal amount of the Nelson/Levy Notes must consent to such Sale. The net cash proceeds from the Strax Sale shall be paid on a pro rata basis among the outstanding indebtedness on the Nelson/Levy Notes and the Bridge Notes in accordance with Section 3.3(c) hereof, and the remaining principal amounts on the Nelson/Levy Notes shall be payable on September 1, 2000. The Company and the Holders of Record of the Nelson/Levy Notes shall use their respective best efforts to reach agreement to secure such remaining principal amounts. (c) The Company shall effect the prepayment required by this Section within ten (10) Business Days after its receipt of the net proceeds from the Strax Sale. If less than the entire principal amount of the Nelson/Levy Notes and the Bridge Notes at the time outstanding shall be called for prepayment, upon the Strax Sale in accordance with Section 3.3(b) hereof, the Company shall allocate the principal amount so called for prepayment among the Holders of the Nelson/Levy and Bridge Notes in proportion, as nearly as may be, to the aggregate principal amount of Notes then held by the respective holders thereof. In any such allocation (i) the Company may, according to such method as it shall deem proper in its discretion, make such adjustments by increasing or decreasing by not more than $1,000 the amount which would be allocable on the basis of exact proportion to any holders, as may be necessary to the end that the principal amount so allocated shall be in each instance an integral multiple of $1,000 and (ii) the Company shall not be required to allocate any amount to any holder to which the amount allocable on the basis of the exact proportion would be less than $1,000. 3.4 Prepayment of Portion of Note. Upon any prepayment of a portion of the principal amount of this Note, the Holder, at his option, (i) may require the Company to execute and deliver at the expense of the Company a new Note dated as of the date to which interest on this Note has been paid, and payable to such person or persons as may be designated by the Holder, for the aggregate principal amount of this Note then remaining unpaid, upon surrender of this Note and payment of applicable transfer taxes, if any, or (ii) may present this Note to the Company for notation hereon of the payment of the portion of the principal amount of this Note so prepaid. 4. COVENANTS OF THE COMPANY The Company agrees, and covenants that until such time as this Note has been paid in full the Company will comply with the following covenants: 4.1 Payment of Principal and Interest. The Company will duly and punctually pay the principal of and interest on this Note in accordance with the terms of this Note. 4.2 Maintenance of Office or Agency. The Company will maintain an office in the State of New Jersey where this Note may be presented or surrendered for payment, where this Note may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of this Note may be served. The Company will give prompt written notice to the Holder of the location, and of any change in the location, of such office. 4.3 Corporate Existence. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchise; provided, however, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation 3

thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holder. 4.4 Consolidation, Merger, Conveyance or Transfer. The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person (excluding a sale of the Strax Division), unless: (a) the corporation formed by such consolidation into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume the due and punctual payment of the principal of and interest on all the Notes; and (b) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing. 5. REMEDIES 5.1 Events of Default. "Event of Default", wherever used herein means any one of the following events (whatever the reason for such Event of Default and whether it shall be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of principal or any installment of interest upon this Note for a period of five (5) Business Days after it becomes due and payable whether at its Maturity or otherwise; or (2) default in the performance, or breach, of any covenant of the Company in this Note (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), or, after its effectiveness, under the Security Agreement; or (3) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of 4

any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days; or (4) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (5) the Company shall have entered against it a final judgment by a court having jurisdiction which, if satisfied, would have a material adverse effect on the financial condition of the Company; then and in each and every case, unless the principal and accrued interest on this Note shall have already become due and payable, the Holder may by notice in writing to the Company declare the unpaid balance of this Note to be forthwith due and payable, and thereupon such balance, including the principal of this Note and accrued interest thereon, shall become so due and payable without presentation, protest or further demand or notice of any kind, all of which are hereby expressly waived. 5.2 Enforcement of Remedies. In case any one or more of the Events of Default specified in Section 5.1 hereof shall have occurred and be continuing, the Holder may proceed to protect and enforce his rights either by suit in equity or by action at law, for the specific performance of any covenant or provision contained herein, or proceed to enforce payment of this Note or to enforce any other legal or equitable right of the Holder of this Note; and under the Security Agreement if it is then in effect. 5.3 Waiver by Company. To the extent permitted by applicable law, the Company hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of any valuation, stay, appraisement, extension or redemption laws now existing or which may hereafter exist, which, but for this provision might be applicable to any sale made under the judgment, order or decree of any court or otherwise, based on this Note or any claim for interest on this Note or any foreclosure thereunder. 5.4 Amendments and Waivers. No course of dealing between the Company and the Holder of this Note and no delay on the part of the Holder in exercising any rights hereunder shall operate as a waiver of the rights of the Holder. No covenant or other provision of this Note nor any default or Event of Default in connection therewith may be waived otherwise than by a written instrument signed by the Holder. Any provision of this Note to the contrary notwithstanding, changes in or additions to this Note may be made, and compliance with any term, convenant, condition or provision set forth in this 5

Note may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), provided a similar change or addition is made in the remaining outstanding Nelson/Levy Notes, and any default or Event of Default and the consequences thereof may be waived. 5.5 Cost and Expense of Collection. The Company covenants and agrees that if default be made in any payment or prepayment of principal of, or interest on, the Notes, it will, to the extent permitted under applicable law, pay to the Holder such further amount as shall be sufficient to cover the cost or expense of collection, including reasonable compensation to the attorneys of the Holder for all services rendered in that connection. 6. PAYMENT; EXCHANGE AND TRANSFER; LOST NOTES 6.1 Payments. Interest and principal to be paid in respect of this Note shall be paid at the place provided herein, without any presentment or notation of payment, and the amount of principal so paid on this Note shall be regarded as having been retired and cancelled at the time of payment. The Holder of Record shall, however, at the place of payment of this Note at any time during its regular business hours on any day when a payment of principal is due, permit the Company to make appropriate notation hereon of the amount of principal which has been paid on this Note. The Holder of Record, before any transfer hereof, shall make a notation hereon of all principal payments theretofore made hereon, and shall in writing notify the Company of the name and address of the respect to which interest and transferee. 6.2 Exchange and Transfer. The Holder of Record of this Note may, prior to maturity or prepayment thereof, surrender the Note held by him for exchange, at the office designated by the Company pursuant to Section 3.2 hereof. Within a reasonable time thereafter and without expense (other than transfer taxes, if any) to such Holder of Record, the Company shall issue in exchange thereof, or in exchange for the portion thereof not surrendered in payment as aforesaid (as the case may be), in such denominations and made payable to such person or persons, or order, as such Holder of Record shall designate, a Note or Notes for the same aggregate principal amount as the unpaid principal amount of the Note or Notes so surrendered, having the same maturity and rate of interest, containing the same provisions and subject to the same terms and conditions as the Note or Notes as surrendered. 6.3 Lost, etc., Notes. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of indemnity satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such Note. 7. MISCELLANEOUS PROVISIONS 7.1 Benefits. This Note shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Holder and his heirs and administrators, provided that the Holder may transfer all or part 6

of the unpaid principal amount of this Note to a member of his immediate family or to a trust of which the Holder or a member of his immediate family is the beneficiary. 7.2 Addresses of Parties. All communications provided for herein or with reference to this Note shall be deemed to have been sufficiently given or served for all purposes if sent by certified or registered mail, postage and purposes if sent by certified or registered mail, postage and charges prepaid, to the following addresses: if to the Company, at its office, 1 Parker Plaza, Fort Lee, New Jersey 07024, Attention: President, or at any other address designated by the Company in writing to the Holder of Record of this Note; and if to any Holder of Record of the Note, as specified in writing to the Company by an initial or successor Holder of Record. 7.3 Governing Law. This Note shall be deemed to be a contract made under, and to be construed in accordance with, the laws of the State of New Jersey, without giving effect to conflicts of law. 7.4 Section Headings. The descriptive section headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof. IN WITNESS WHEREOF, the Company has caused this Note to be signed in its corporate name by its President, under its corporate seal, attested by its Secretary, and dated the day and year first above written. CAPRIUS, INC.
By: /s/ George Aaron ------------------------------George Aaron, President ATTEST: /s/ Jonathan Joels --------------------------------Jonathan Joels, Secretary

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EXHIBIT 10.16.3 SECURITY AGREEMENT AGREEMENT, dated as of December 28, 1999, by CAPRIUS, INC., a Delaware corporation ("the Company"), in favor of Enrique Levy (the "Agent"), acting in his capacity as agent for the holders (the "Holders") of the Secured Promissory Notes, dated December 28, 1999 (the "Nelson/Levy Notes"), issued by the Company to the Holders. WITNESSETH WHEREAS, the Company and the Holders agreed to the issuance of the Nelson/Levy Notes in exchange for certain obligations of the Company to the Holders; WHEREAS, the Holders requested in the event the Nelson/Levy Notes are not repaid by March 1, 2000, from that date until repayment in full the Company secure its obligations under the Nelson/Levy Notes by the grant of the security interest provided for herein, and the Company is willing to grant such security interest; NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS All terms used herein which are defined in Article 1 or Article 9 of the Uniform Commercial Code shall have the meanings given therein unless otherwise defined in this Agreement. All references to the plural herein shall also mean the singular and to the singular shall also mean the plural. All references to the Company, the Agent and the Lenders pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors, assigns, heirs and administrators. The words "hereof', "herein", "hereunder", "this Agreement" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 7.3 hereof. Any accounting term used herein unless otherwise defined in this Agreement shall have the meanings customarily given to such term in accordance with GAAP. For purposes of this Agreement, the following terms shall have the respective meanings given to them below: 1.1 "Accounts" shall mean all rights outstanding as of March 1, 2000 and future rights of the Strax Division to payment for goods sold or leased or for services rendered, which are not evidenced by instruments or chattel paper, and whether or not earned by performance. 1.2 "Collateral" shall have the meaning set forth in Section 2 hereof.

1.3 "Equipment" shall mean all of the Strax Division's owned as of March 1, 2000 and thereafter acquired equipment, machinery, computers and computer hardware and software (whether owned or licensed), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located, except any leased property. 1.4 "Event of Default" shall have the meaning set forth in Section 6.1 hereof. 1.5 "Financing Agreements" shall mean, collectively, this Agreement, the Nelson/Levy Notes and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by the Company, the Holders or the Agent in connection with the Financing Agreements, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 1.6 "Inventory" shall mean all of the Strax Division's owned as of March 1, 2000 and thereafter existing or acquired raw materials, work in process, finished goods and all other inventory of whatsoever kind or nature, wherever located. 1.7 "Obligations" shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by the Company to the Holders, including principal, interest, costs and expenses, however evidenced, as arising under the Nelson/Levy Notes or this Agreement. 1.8 "Person" or "person" shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any Government or any agency or instrumentality or political subdivision thereof. 1.9 "Records" shall mean all of the Strax Division's books as of March 1, 2000 and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of the Strax Division with respect to the foregoing maintained with or by any other person). 1.10 "Strax Division" shall mean The Strax Institute, a division of the Company. SECTION 2. GRANT OF SECURITY INTEREST In the event any principal or interest on the Nelson/Levy Notes is outstanding on March 1, 2000, to secure payment and performance of the Nelson/Levy Notes, as of March 1, 2000, the Company shall grant to the Holders a continuing security interest in, and shall assign to the Lenders as security, the following property and interests in property, whether owned as of March 1, 2000 or thereafter acquired or existing, and wherever located (collectively, the "Collateral"): 2.1 Accounts; 2

2.2 all contract rights, general intangibles (including, but not limited to, tax and duty refunds, registered and unregistered patents, trademarks, service marks, copyrights, trade names, applications for the foregoing, trade secrets, goodwill, processes, customer lists, licenses, whether as licensor or licensee, choses in action and other claims and existing and future leasehold interests in equipment, real estate and fixtures), chattel paper, documents, instruments, letters of credit, bankers' acceptances and guaranties outstanding as of March 1, 2000 and thereafter obtained; 2.3 Inventory; 2.4 Equipment; 2.5 Records; and 2.6 all products and proceeds of the foregoing, in any form, including, without limitation, insurance proceeds and any claims against third parties for loss or damage to or destruction of any or all of the foregoing. SECTION 3. COLLATERAL COVENANTS The Collateral covenants in this Section 3 shall be effective as of March 1, 2000 upon the effectiveness, if at all, of the security interest granted herein. 3.1 Accounts Covenants. (a) The Agent shall have the right at any time or times thereafter, to verify the validity, amount or any other matter relating to any Account or other Collateral, by mail, telephone, facsimile transmission or otherwise. (b) The Agent may, at any time or times that an Event of Default exists or has occurred and is continuing on or after March 1, 2000, (i) notify any or all account debtors that the Accounts have been assigned to the Agent and that the Holders have a security interest therein and the Agent, on behalf of the Holders may direct any or all accounts debtors to make payment of Accounts directly to the Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts or other obligations included in the Collateral and thereby discharge or release the account debtor or any other party or parties in any way liable for payment thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Accounts or such other obligations, but without any duty to do so, and the Agent shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action the Holders may deem necessary or desirable for the protection of the Holders' interests. At any time that such an Event of Default exists or has occurred and is continuing, at the Agent's request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to the Agent and are payable directly and only to the Agent and the Company shall deliver to the Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as the Agent may require. 3

3.2 Inventory Covenants. With respect to the Inventory on and after March 1, 2000: (a) the Company shall at all times maintain inventory records, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, the cost therefor and daily withdrawals therefrom and additions thereto; (b) the Company shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the Agent, except for sales of Inventory in the ordinary course of Strax Division's business and except to move Inventory directly from one location set forth or permitted herein to another such location; (c) the Company agrees that the Strax Division shall use, store and maintain the Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws; (d) the Company assumes all responsibility and liability arising from or relating to the use, sale or other disposition of the Inventory; and (e) the Company shall keep the Inventory in good and marketable condition. 3.3 Equipment Covenants. With respect to the Equipment on and after March 1, 2000: (a) the Strax Division shall keep the Equipment in good order, repair, running and marketable condition (ordinary wear and tear excepted); (b) the Strax Division shall use the Equipment with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all applicable laws; (c) the Equipment is and shall be used in the Strax Division's business and not for personal, family, household or farming use; (d) the Strax Division shall not remove any Equipment from the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary course of the business of the Strax Division or to move Equipment directly from one location set forth or permitted herein to another such location or to sell or dispose any Equipment which is no longer usable or operable, and except for the movement of motor vehicles used by or for the benefit of the Company in the ordinary course of business; (e) the Equipment is now and shall remain personal property and the Company shall not permit any of the Equipment to be or become a part of or affixed to real property; and (f) the Company assumes all responsibility and liability arising from the use of the Equipment. 3.4 Power of Attorney. If at any time after February 28, 2000 an Event of Default exists or has occurred and is then continuing, the Company shall irrevocably designate and appoint the Agent as the Company's true and lawful attorney-in-fact, and authorize the Agent, in the Company's or the Agent's name, to do all acts and things which are necessary, in the Agent's determination, to fulfill the Company's obligations under this Agreement and the other Financing Agreements. The Company hereby releases the Agent from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of the Agent's own negligence or misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction. 3.5 Access to Premises. From time to time after March 1, 2000, at the cost and expense of the Agent, if an Event of Default has occurred and is continuing (a) the Agent or his designee shall have complete access to all of the Strax Division's premises during normal business hours and after notice received by the Company not less than three (3) business days prior to the date of the proposed visit, for the purposes of inspecting, verifying and auditing the Collateral and all of the Strax Division's books and records, including, 4

without limitation, the Records, (b) on not less than three (3) business days prior notice the Company shall furnish to the Agent such copies of such books and records or extracts therefrom as the Agent may request, and (c) during normal business hours the Agent may use Strax Division personnel, equipment, supplies and premises as may be reasonably necessary for the collection of Accounts and realization of other Collateral. SECTION 4. REPRESENTATIONS AND WARRANTIES The Company hereby represents and warrants to the Lenders the following (which shall survive the execution and delivery of this Agreement): 4.1 Corporate Existence, Power. The Company is a corporation duly organized and in good standing under the laws of the State of Delaware and is duly qualified as a foreign corporation and in good standing in the State of Florida. 4.2 Chief Executive Office: Collateral Locations. The chief executive office of the Strax Division and the Strax Division's Records concerning Accounts are located only at the address set forth below and its only other places of business and are the only locations of the Collateral, and have been previously disclosed in writing to the Agent, subject to the right of the Company to establish new locations for the Strax Division in accordance with Section 5.2 hereof. 4.3 Priority of Liens, Title to Properties. The security interests and liens being granted to the Agent on behalf of the Lenders under this Agreement shall when they become effective constitute valid and perfected first priority liens and security interests in and upon the Collateral, subject to any preexisting liens under installment sale obligations or capitalized leases of Equipment. The Company has good and marketable title to all of its properties and assets comprising the Collateral subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind. SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS 5.1 Maintenance of Existence. The Company shall at all times preserve, renew and keep in full, force and effect its corporate existence and rights and franchises with respect thereto and maintain in full force and effect all permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts necessary to carry on the business of the Strax Division as presently or proposed to be conducted. The Company shall give the Agent ten (10) days prior written notice of any proposed change in its name or the Strax Division's name, which notice shall set forth the new name and the Company shall deliver to the Agent a copy of the business certificate for the name change of the Strax Division as soon as it is available. 5.2 New Collateral Locations. The Strax Division may open any new location within the continental United States. The Company shall give the Agent written notice of the intended opening of any such new location and shall execute and deliver, or cause to be executed and delivered, to the Agent such agreements, documents, and instruments as the Agent may deem reasonably necessary or desirable to protect the Holder's interests in the Collateral at such location, including, without limitation, UCC financing statements. 5

5.3 Compliance with Laws, Regulations, Etc. The Company shall, at all times, comply in all material respects with all laws, rules, regulations, licenses, permits, approvals and orders of any Federal, State or local governmental authority applicable to it with respect to the Collateral. 5.4 Payment of Taxes and Claims. The Company agrees that the Strax Division shall duly pay and discharge all taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to the Company and with respect to which adequate reserves have been set aside on its books. 5.5 Insurance. The Company shall, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. The Company shall furnish certificates, policies or endorsements to the Agent as the Agent shall require as proof of such insurance, certificate. 5.6 Sale of Assets. The Company shall not sell or otherwise dispose of the Strax Division or substantially all of the assets of the Strax Division or grant a security interest in the Collateral to someone other than the Holders unless the net proceeds of such sale are used to the prepay the Nelson/Levy Notes to the extent as provided therein (other than security interests under installment sale obligations or capitalized leases of Equipment). 5.7 Further Assurances. At the request of the Agent at any time and from time to time after March 1, 2000, the Company shall, at its expense, at any time or times duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper to evidence, perfect, maintain and enforce the security interests being granted and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements. 5.8 Financing Statements. The Company will execute and file such financing or continuation statements or amendments thereto as the Agent may reasonably request in order to perfect and preserve the security interests granted herein. Upon the execution of this Agreement, the Company shall deliver to Thelen Reid & Priest LLP (the "Escrow Agent") to hold in escrow executed Forms UCC-1 in form for filing in the States of Florida and New Jersey. If the security interest herein become effective on March 1, 2000, the Escrow Agent shall file such Forms UCC-1, and if the security interest does not become effective on March 1, 2000, the Escrow Agent shall deliver such Forms UCC-1 to the Company. SECTION 6. EVENTS OF DEFAULT AND REMEDIES 6.1 Events of Default. The occurrence or existence after February 29, 2002 of any Event of Default under the Nelson/Levy Notes is referred to herein individually as an "Event of Default", and collectively as "Events of Default". 6

6.2 Remedies. (a) At any time an Event of Default exists or has occurred and is continuing, the Agent shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the Uniform Commercial Code and other applicable law, all of which rights and remedies may be exercised without notice to or consent by the Company, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to the Agent hereunder, under any of the other Financing Agreements, the Uniform Commercial Code or other applicable law, are cumulative, not exclusive and enforceable, in the Agent's discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by the Company of this Agreement or any of the other Financing Agreements. The Agent may, at any time or times, proceed directly against the Company to collect the Obligations without prior recourse to the Collateral. (b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, the Agent may, in his discretion and without limitation, (i) accelerate the payment of all Obligations and demand immediate payment thereof to the Agent (provided, that, upon the occurrence of any Event of Default described in Section 5.1 of the Nelson/Levy Notes, all Obligations shall automatically become immediately due and payable), (ii) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing and repair of all or any portion of the Collateral, (iii) require the Company, at the Company's expense, to assemble and make available to the Agent any part or all of the Collateral, (iv) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (v) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (vi) sell, transfer, assign, deliver or otherwise dispose of any and all Collateral (including, without limitation, entering into contracts with respect thereto, public or private sales) at such prices or terms as would be realized in a bona fide sale to an unrelated third party, for cash, upon credit or for future delivery, with the Agent having the right to purchase the whole or any part of the Collateral at any such public sale. If notice of disposition of Collateral is required by law, five (5) days prior notice by the Agent to the Company designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and the Company waives any other notice. (c) The Agent may apply the cash proceeds of Collateral actually received by the Agent from any sale, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in such order as the Agent may elect, whether or not then due. The Company shall remain liable to the Agent for the payment of any deficiency with an interest rate of four percent (4%) per annum and all costs and expenses of collection or enforcement, including attorneys' fees and legal expenses. SECTION 7. MISCELLANEOUS 7

7.1 Governing Law. The validity, interpretation and enforcement of this Agreement shall be governed by the internal laws of the State of New Jersey (without giving effect to principles of conflicts of law). 7.2 Waiver of Notices. The Company hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and commercial paper, included in or evidencing any of the Collateral, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on the Company which the Agent may elect to give shall entitle the Company to any other or further notice or demand in the same, similar or other circumstances. 7.3 Effectiveness and Termination. The security interest granted herein shall become effective on March 1, 2000 in the event any of the Nelson/Levy Notes are then outstanding. In the event the Company has repaid all amounts due under the Nelson/Levy Notes on or before February 29, 2000, this Agreement shall be a nullity and have no force or effect. This Agreement shall terminate upon the earlier of the sale of the Strax Division in accordance with Section 5.6 hereof or the repayment of all amounts due under the Nelson/Levy Notes. Upon termination the Holders' rights, titles and interest in and to the Collateral shall be automatically terminated and released. 7.4 Amendments and Waivers. Neither this Agreement nor any provision hereof shall be amended, modified, waived or discharged orally or by course of conduct, but only by a written agreement signed by an authorized officer of the Agent. The Agent shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its rights, powers and/or remedies unless such waiver shall be in writing and signed by an authorized officer of the Agent. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by the Agent of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which the Agent would otherwise have on any future occasion, whether similar in kind or otherwise. 7.5 Notices. All notices, requests and demands hereunder shall be in writing and (a) made to the Agent at his address at 436 Cape May Street, Englewood, New Jersey 07631 and to the Company at its chief executive office set forth below, or to such other address as either party may designate by written notice to the other in accordance with this provision, and (b) deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next business day, one (1) business day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. 7.6 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law. 8

7.7 Successors. This Agreement shall be binding upon the Company and its successors and assigns and inure to the benefit of and be enforceable by the Lenders, the Agent and their successors, assigns, heirs and administrators. 7.8 Entire Agreement. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. IN WITNESS WHEREOF, the Company has caused these presents to be duly executed as of the day and year first above written. COMPANY CAPRIUS, INC. By: Title: CHIEF EXECUTIVE OFFICE: One Parker Plaza, Fort Lee, New Jersey 07024 AGREED TO: Enrique Levy, for himself and as Agent for Jack Nelson AGREED TO AS TO SECTION 5.8 HEREOF: THELEN REID & PRIEST LLP 9

Exhibit 21 LIST OF REGISTRANT'S ACTIVE SUBSIDIARIES OPUS DIAGNOSTICS INC. Delaware Corporation 100% owned

Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-47517, 33-70834 and 3378928 of Caprius, Inc. (the "Company") on Form S-8 of our report dated December 7, 1999 on the consolidated financial statements of the Company and its subsidiaries for the years ended September 30, 1999 and 1998, which contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern, appearing in this Annual Report on Form 10-KSB of the Company. BDO Seidman BDO Seidman, LLP Boston, Massachusetts January , 2000

ARTICLE 5 This schedule contains summary financial information extracted from Caprius, Inc. Form 10-KSB for the period ended September 30, 1999, and is qualified in its entirety by reference to such financial statements. CIK: 0000722567 NAME: CAPRIUS, INC. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

12 MOS SEP 30 1999 SEP 30 1999 116 0 564 (26) 211 956 503 151 4,353 2,037 0 0 2,700 135 2,009 4,353 3,274 3,274 0 0 10,777 (7,503) 135 (7,596) 0 (7,596) 1,100 0 0 (6,496) (.73) (.73)


								
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