EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (together with any amendments and
exhibits hereto, this "Agreement") is made as of June 27, 2001 by and between
Endocare, Inc., a Delaware corporation (the "Company") and U.S. Therapies,
L.L.C., a Nevada limited liability company (the "Holder").
1. Definitions. As used in this Agreement:
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Company Violation" shall have the meaning ascribed to it in
Section 9 of this Agreement.
(d) "Other Shares" shall have the meaning ascribed to it in
Section 6 of this Agreement.
(e) "Purchase Agreement" means that certain Stock and Unit
Purchase and Sale Agreement, dated as of June 27, 2001, by and between the
Company and the Holder.
(f) "Registrable Securities" means (i) the shares of the
Company's common stock that are issued to the Holder pursuant to the Purchase
Agreement and (ii) any shares of the Company's common stock or any other
security that may be issued as a dividend or other distribution (including
shares of the Company's common stock issued in a subdivision and split of the
Company's outstanding common stock) with respect to, or in exchange for or in
replacement of, the shares of common stock described in clause (i) of this
Section 1(f) or in this clause (ii); excluding in all cases, however, any such
shares that are: (x) sold under any registration under the Securities Act; or
(y) sold pursuant to Rule 144 promulgated under the Securities Act. Except as
provided in clause (ii) of the first sentence of this Section 1(f), the term
"Registrable Securities" does not include: any shares of the Company's common
stock that were not issued pursuant to the Purchase Agreement.
(g) "Registration Expenses" mean all expenses incurred in
connection with the filing and obtaining effectiveness of a registration
statement pursuant to this Agreement, including, without limitation, all SEC,
NASD and "blue sky" registration and filing fees, printing expenses, transfer
agents' and registrars' fees, and fees and disbursements of outside counsel and
independent accountants for the Company, but shall not include Selling Expenses.
(h) "Securities Act" means the Securities Act of 1933, as
amended.
(i) "Selling Expenses" mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and fees and disbursements of any separate legal, accounting and
other advisors of the Holder in connection with the registration and sale of the
Registrable Securities.
Terms not otherwise defined herein have the meanings given such
terms in the Purchase Agreement.
2. Company Registration. If the Company shall determine to register any
of its securities for its own account, other than a registration relating solely
to employee benefit plans, or a registration relating solely to a Commission
Rule 145 transaction, or a registration on any registration form which does not
permit secondary sales, the Company will:
(a) Notice. Promptly give the Holder written notice of the
proposed registration (which information the Holder shall hold in confidence and
shall not use for any purpose other than as described in this Agreement).
(b) Registration. Use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth below, and in any underwriting involved
therein, all the Registrable Securities specified in a written request received
by the Company from the Holder within five (5) days after the written notice
from the Company described in clause (a) above is received by the Holder. The
written request from the Holder may specify all or a part of the Holder's
Registrable Securities. The Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2:
(i) in any particular jurisdiction in which the Company
would be required to qualify to do business or to
execute a general consent to service of process in
effecting such registration, qualification or
compliance; or
(ii) with respect to any Registrable Securities proposed
to be sold by the Holder if all such Registrable
Securities proposed to be sold by the Holder may
then be sold without registration and without
regard to, or required compliance with, any volume
limitations specified under the Securities Act
pursuant to Rule 144.
(c) Underwriting.
(i) if the registration of which the Company gives
notice is for a registered public offering
involving an underwriting, the Company shall so
advise the Holder as a part of the written notice
given pursuant to Section 2(a). In such event the
right of the Holder to registration pursuant to
this Section 2 shall be conditioned upon the
Holder's participation in such underwriting and the
inclusion of the Holder's Registrable Securities in
the underwriting to the extent provided herein. If
the Holder proposes to distribute its Registrable
Securities through such underwriting, it shall
(together with the Company and the other
stockholders of the Company distributing their
securities through such underwriting) enter into an
underwriting agreement in customary form with the
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representative of the underwriter or underwriters
selected by the Company.
(ii) If the Holder does not agree to the terms of any
such underwriting and enter into the underwriting
agreement referred to above, it shall be excluded
therefrom by written notice from the Company or the
underwriter.
(iii) Notwithstanding any other provision of this Section
2, if the representative of the underwriters
advises the Company that marketing factors require
a limitation on the number of shares to be
underwritten, the representatives may (in their
discretion and subject to the limitations set forth
below) exclude all Registrable Securities from, or
limit the number of Registrable Securities to be
included in, the registration and underwriting. The
Company shall so advise the Holder, and the number
of shares of securities that are entitled to be
included in the registration and underwriting shall
be allocated first to the Company for securities
being sold for its own account and thereafter as
set forth in Section 6. Any Registrable Securities
excluded or withdrawn from such underwriting
pursuant to Section 2(c)(ii) or Section 6 shall be
withdrawn from such registration.
3. Postponement or Cancellation of Registration.
(a) Registration. Notwithstanding Section 2 above, the Company
shall be entitled to postpone or cancel the filing or declaration of
effectiveness of any registration statement filed pursuant to this Agreement at
any time in its sole discretion.
4. Obligations of the Company.
Except as set forth in Sections 2 and 3, whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall:
(a) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be reasonably necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(b) Furnish to the Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as it may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by it that are
included in such registration.
(c) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that the Company shall not be required in
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connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process or subject itself to taxation in
any such states or jurisdictions.
(d) Use its reasonable efforts to cause all such Registrable
Securities registered pursuant hereunder to be listed on each securities
exchange or quotation system on which similar securities issued by the Company
are then listed.
5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2 that the
Holder shall furnish to the Company, in writing, such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of such securities as shall be required to timely effect the
registration of the Registrable Securities.
6. Allocation of Registration Opportunities. In any circumstance in
which all of the Registrable Securities of the Holder and other shares of common
stock of the Company (including shares of common stock issued or issuable upon
conversion of any currently issued or unissued series of preferred stock,
warrants or convertible debentures of the Company) with registration rights (the
"Other Shares") requested to be included in a registration on behalf of other
selling stockholders cannot be so included as a result of limitations of the
aggregate number of shares of the Registrable Securities and the Other Shares
which may be so included, the number of shares of the Registrable Securities and
the Other Shares which may be so allocated among the Holder and the other
selling stockholders requesting inclusion of shares shall be pro rata on the
basis of the number of shares of the Registrable Securities and the Other Shares
that are held by the Holder and the other selling stockholders on an as
converted, as exercised basis; provided, however, that such allocation shall not
operate to reduce the aggregate number of the Registrable Securities and the
Other Shares to be included in such registration, if the Holder or any other
selling stockholder does not request inclusion of the maximum number of shares
of the Registrable Securities and the Other Shares allocated to it pursuant to
the above-described procedure. In such event, the remaining portion of such
party's allocation shall be reallocated among the Holder and other selling
stockholders whose pro rata allocations did not satisfy their requests for
inclusion, pro rata on the basis of the number of shares of the Registrable
Securities and the Other Shares held by the Holder and other selling
stockholders on an as converted, as exercised basis and this procedure shall be
repeated until all of the shares of the Registrable Securities and the Other
Shares that may be included in the registration on behalf of the Holder and
other selling stockholders have been so allocated. In the event that this
Section 6 conflicts with the rights of any holder of Other Shares pursuant to an
agreement between the Company and such holder in effect on the date of this
Agreement then the rights of the Holder under this Section 6 shall be
subordinate to such other party's rights.
7. Delay of Registration. The Holder shall not have any right to take
any, action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Expenses. All Registration Expenses incurred in connection with the
registration statement pursuant to this Agreement shall be paid by the Company;
provided, however, the Company shall not be required to pay for any Registration
Expenses attributable to the Holder for any registration statement pursuant to
this Agreement if the Holder subsequently withdraws
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its registration request. The Holder shall pay all Selling Expenses related to a
registration under this Agreement.
9. Indemnification. In the event of any offering registered pursuant to
this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder, and each person, if any, who controls the Holder
within the meaning of Section 15 of the Securities Act, against any losses
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act or the 1934 Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following (collectively a "Company Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or (ii)
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, and
the Company will pay to the Holder, and any person who controls the Holder, 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 indemnity agreement contained in this Section 9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Company
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holder, or any person who controls or is employed by or is affiliated with
the Holder.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of Section 15 the Securities Act, and any underwriter,
attorney or other agent against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject
under the Securities Act, or the 1934 Act insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any of the following: (i) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto made in reliance upon and in conformity with
written information furnished by the Holder expressly for use in connection with
such registration, or (ii) the omission or alleged omission to state therein
material fact required to be stated therein, or necessary to make the statements
therein not misleading, and the Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 9(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld and provided, further, that, in no event shall any
indemnity under this Section 9(b) exceed the gross proceeds from the offering
received by the Holder.
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(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
9 but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 9.
(d) If the indemnification provided for in this Section 9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties' relative intent, knowledge access
to information, and opportunity to correct or prevent such statement or
omission.
(e) Notwithstanding the foregoing, to the extent that there are
provisions on indemnification and contribution in the underwriting agreement
entered into in connection with an underwritten public offering pursuant to
Section 2(c), the provisions in the underwriting agreement shall control.
(f) The obligations of the Company and the Holder under this
Section 9 shall survive the completion of any offering of securities in a
registration statement under this Agreement.
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10. Restrictions on Transfer. The Holder understands that the
Registrable Securities issued in connection with the Purchase Agreement shall
not be transferable except (a) in accordance with a registration statement filed
with the SEC, in which case the Holder may be required to deliver a current
prospectus, (b) in accordance with Rule 144, or (c) pursuant to an exemption
from the registration requirements of the Securities Act. The Company shall be
entitled to give stop transfer instructions to its transfer agent with respect
to the Registrable Securities in order to enforce the foregoing restrictions.
11. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may not be
assigned by the Holder to any person or entity without the Company's prior
written consent.
12. Amendment of Registration Rights; Waivers. This Agreement may be
amended and any provision may be waived by the Holder of the Registrable
Securities and the Company at any time by execution of an instrument in writing
signed on behalf of each of the parties. The failure of any party to enforce any
of the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
13. Limitation of Registration Rights. The Company shall not have any
obligation to register any Registrable Securities other than as set forth in
this Agreement.
14. Grant of Additional Registration Rights. The Holder acknowledges
that the Company may grant other parties registration rights with respect to
shares of common stock or other securities of the Company on terms which would
be negotiated at such time and may be more favorable than the terms of this
Agreement. The Holder hereby consents and agrees to the grant of registration
rights to third parties subsequent to the date of this Agreement whether or not
such rights are equal to or superior to the rights set forth in this Agreement.
15. Rule 144 Information. For the period from the first anniversary of
the Closing Date until the two year anniversary of the Closing Date, the Company
will file on a timely basis all reports required to be filed by it pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, referred to in
paragraph (c)(1) of Rule 144 under the Securities Act (or, if applicable, the
Company will make publicly available the information regarding itself referred
to in paragraph (c)(2) of Rule 144), in order to permit the Holders to sell the
Registrable Securities, pursuant to the terms and conditions of the applicable
provisions of Rule 144.
16. Termination. This Agreement shall terminate on the earlier of (a)
the two year anniversary of the Closing of the transactions described in the
Purchase Agreement or (b) the sale or transfer by Holder of all the Registrable
Securities.
17. Notices. All notices and other communications required or permitted
hereunder shall be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
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If to the Holder, to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
with a copy to:
U.S. Therapies, L.L.C.
0000 Xxxxx XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
If to the Company, to:
Endocare, Inc.
7 Studebaker
Xxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 16 be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided in this Section 16 be deemed given upon receipt, and (c) if delivered
by mail in the manner described above to the address as provided in this Section
16, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other party to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section 16). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other party hereto.
18. Governing Law; Interpretation. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to a contract executed and performed in such state, without giving effect to the
conflicts of laws principles thereof.
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19. Severability; Survival. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom, and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in economic and legal effect to such illegal, invalid or unenforceable provision
as may be possible.
20. Entire Agreement. This Agreement, the Purchase Agreement and the
other Ancillary Agreements supersede all prior discussions and agreements
between the parties with respect to the subject matter hereof and thereof and
contain the sole and entire agreement between the parties hereto with respect to
the subject matter hereof and thereof.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
22. Successors and Assigns. Subject to Section 11, this Agreement shall
bind and inure to the benefit of the Company and the Holder and their respective
successors and assigns.
23. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
24. Further Assurances. Each party to this Agreement hereby covenants
and agrees, without the necessity of any further consideration, to execute and
deliver any and all such further documents and take any and all such other
actions as may be necessary to appropriately carry out the intent and purposes
of this Agreement and to consummate the transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be executed as of the date first above written.
ENDOCARE, INC.
By: /s/ Xxxx Xxxxx
-----------------------------------
Name: Xxxx Xxxxx
Title: Chief Executive Officer & President
U.S. THERAPIES, L.L.C.
By: /s/ Xxxx X. House
-----------------------------------
Name: Xxxx X. House
Title: President
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
