AMENDMENT NO. 3 TO RIGHTS AGREEMENT
Exhibit 4.1
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 3 TO RIGHTS AGREEMENT (this “Amendment”), dated as of June 8, 2009, between
Endocare, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A. as
successor Rights Agent to U.S. Stock Transfer Corporation (the “Rights Agent”), amends that certain
Rights Agreement, dated as of March 31, 1999, between the Company and the Rights Agent, as amended
on June 24, 2005 and March 26, 2009 (as amended, the “Rights Agreement”). All capitalized terms
used herein but not otherwise defined shall have the meanings given to them in the Rights
Agreement.
WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights
Agreement;
WHEREAS, the Company and the Rights Agent desire to enter into this Amendment;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time
supplement or amend the Rights Agreement in accordance with the provisions thereof and the Company
may direct the Rights Agent to execute such supplement or amendment to the Rights Agreement; and
WHEREAS, all acts necessary to make this Amendment a valid agreement according to its terms
have been done and performed, and the execution and delivery of this Amendment by the Company and
the Rights Agent have been in all respects authorized by the Company and the Rights Agent.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for
other good and valuable consideration the receipt and sufficiency of which the parties expressly
acknowledge, the parties hereto agree as follows:
1. Amendment to Section 1.
(a) The definition of “Acquiring Person” in Section 1 of the Rights Agreement is hereby
amended and restated in its entirety to read as follows:
““Acquiring Person” shall mean (i) any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock of the Company then
outstanding or (ii) any Person who is an Adverse Person (as such
term is hereinafter defined), but shall not include (1) the Company,
any Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan, or (2) any Person who
becomes the Beneficial Owner of 20% or more of the then-outstanding
shares of Company Common Stock as a result of the acquisition of (A)
shares of Company Common Stock
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directly from the Company or one of its Subsidiaries in one or more
transactions approved in advance by the Board of Directors, or (B)
outstanding shares of Company Common Stock from third parties, in
one or more transactions approved in advance by the Board of
Directors. Notwithstanding the foregoing:
(x) no Person shall become an “Acquiring Person” as
the result of an acquisition of shares of Common
Stock by the Company or one or more Subsidiaries of
the Company which, by reducing the number of shares
outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or
more of the shares of Common Stock of the Company
then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 20% or
more of the shares of Common Stock of the Company
then outstanding by reason of share purchases by the
Company or any of its Subsidiaries and shall, after
such share purchases by the Company or its
Subsidiaries, become the Beneficial Owner of any
additional shares of Common Stock of the Company,
then, subject to clause (z) below, such Person shall
be deemed to be an “Acquiring Person” hereunder;
(y) HealthTronics, Inc., a Georgia corporation
(“HealthTronics”), HT Acquisition, Inc., a Delaware
corporation (“HT Acquisition”), or any other wholly
owned subsidiary of HealthTronics, shall not be an
“Acquiring Person” under clauses (i) or (ii) above,
solely to the extent that HealthTronics, HT
Acquisition or such other wholly owned subsidiary of
HealthTronics purchases shares of Company Common
Stock pursuant to and in accordance with that
certain Agreement and Plan of Merger, dated as of
June 7, 2009, by and among the Company, HT
Acquisition and HealthTronics (as such agreement may
be amended from time to time in accordance with its
terms, the “Merger Agreement”), including in the
Offer and the Merger contemplated by and as defined
in the Merger Agreement; and
(z) if the Board of Directors of the Company
determines in good faith that a Person who would
otherwise be an “Acquiring Person” as defined
pursuant to the foregoing provisions of this
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paragraph 1(a), has become such inadvertently
(including, without limitation, because (A) such
Person was unaware that it Beneficially Owned a
percentage of Company Common Stock that would
otherwise cause such Person to be an “Acquiring
Person” or (B) such Person was aware of the extent
of its Beneficial Ownership of Company Common Stock
but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement), and
without any intention of changing or influencing
control of the Company, and such Person divests as
promptly as practicable a sufficient number of
shares of Common Stock so that such Person would no
longer be an “Acquiring Person” (as defined pursuant
to the foregoing provisions of this paragraph 1(a)),
then such Person shall not be deemed to be an
“Acquiring Person” for any purpose of this
Agreement.”
2. Amendment to Section 3. Section 3(a)(ii) of the Rights Agreement is hereby amended by
adding “, or HealthTronics, HT Acquisition or another wholly owned subsidiary of HealthTronics, if
pursuant to and in accordance with the Merger Agreement,” immediately following each of the
references to “any such plan” therein.
3. Amendment to Section 24. Section 24(a) of the Rights Agreement is hereby amended by
adding “, or HealthTronics, HT Acquisition or another wholly owned subsidiary of HealthTronics, if
pursuant to and in accordance with the Merger Agreement,” immediately following each of the
references to “in such capacity” therein.
4. Amendment to Summary of Rights. The Summary of Rights to Purchase Shares of Series A
Preferred Stock, attached as Exhibit C to the Rights Agreement (the “Summary of Rights”) is hereby
amended by deleting the Summary of Rights in its entirety and replacing it with the amended Summary
of Rights to Purchase Shares of Series A Preferred in the form attached hereto as Exhibit
A.
5. Entire Agreement. This Amendment and the Rights Agreement (including schedules and
exhibits thereto) set forth the entire understanding of the parties relating to the subject matter
hereof and thereof and supersede all prior agreements and understandings among or between any of
the parties relating to the subject matter hereof.
6. Benefits of this Amendment. Nothing in this Amendment shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the shares of Common
Stock) any legal or equitable right, remedy or claim under this Amendment; but this Amendment shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock).
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7. Severability. If any term, provision, covenant or restriction of this Amendment is held
by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated; provided, however,
that notwithstanding anything in this Amendment to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void or unenforceable and
the Board of Directors of the Company determines in its good faith judgment that severing the
invalid language from this Amendment would adversely affect the purpose or effect of this
Amendment, if terminated, the right of redemption set forth in Section 23 of the Rights Agreement
shall be reinstated and shall not expire until the tenth Business Day following the date of such
determination by the Board of Directors of the Company.
8. Governing Law. This Amendment shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts to be made and performed entirely within such
State.
9. Counterparts. This Amendment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
10. Descriptive Headings. Descriptive headings of the several sections of this Amendment
are inserted for convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
11. Continued Full Force and Effect. Except as expressly amended above, the Rights
Agreement shall continue in full force and effect in accordance with its terms.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
attested, all as of the day and year first above written.
| ATTEST | ENDOCARE, INC. | |||||||||||
| By: | /s/ Xxxxx X. Xxxxx | By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||||||||
| Name: | Xxxxx X. Xxxxx | Name: | Xxxxxxx X. Xxxxxxxxx | |||||||||
| Title: | Senior Vice President, Legal Affairs, General Counsel and Secretary | Title: | Senior Vice President, Finance and Chief Financial Officer | |||||||||
| ATTEST: | COMPUTERSHARE TRUST COMPANY, N.A. | |||||||||||
| By: | /s/ Xxxxxxx Xxxxxxx | By: | /s/ Xxx Xxxxx | |||||||||
| Name: | Xxxxxxx Xxxxxxx | Name: | Xxx Xxxxx | |||||||||
| Title: | Manager Client Service | Title: | Branch President | |||||||||
SIGNATURE PAGE TO AMENDMENT NO. 3 TO RIGHTS AGREEMENT
Exhibit C
AMENDED SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
SHARES OF SERIES A PREFERRED STOCK
ENDOCARE, INC.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
On March 5, 1999 the Board of Directors of ENDOCARE, INC. (the “Company”) declared a dividend
of one preferred share purchase right (a “Right”) for each outstanding share of Common Stock (the
“Common Stock”), par value $0.001 per share, of the Company. The dividend was paid on April 15,
1999 (the “Record Date”) to the stockholders of record on that date. The Board of Directors of the
Company further authorized and directed the issuance of one Right with respect to each share of
Common Stock that shall become outstanding between the Record Date and the Distribution Date (or
earlier redemption or expiration of the Rights). Each Right entitled the registered holder to
purchase from the Company one one-thousandth of a share (a “Unit”) of Series A Junior Participating
Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), of the Company at an
initial price of $25.00 per Unit (the “Purchase Price”), subject to adjustment. The Purchase Price
was adjusted to $75.00 per Unit as a result of the one-for-three reverse stock split of the Common
Stock on August 20, 2007. The following is a brief summary of the Rights. The description and terms
of the Rights are set forth in a Rights Agreement dated as of March 31, 1999, as amended on June
24, 2005, March 26, 2009 and June 8, 2009 (as amended, the “Rights Agreement”) between the Company
and COMPUTERSHARE TRUST COMPANY, N.A. as successor to U.S. STOCK TRANSFER CORPORATION, as Rights
Agent (the “Rights Agent”), which are incorporated herein by this reference.
Until the earlier to occur of (i) the tenth business day after a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial
ownership of 20% or more of the outstanding Common Stock (subject to certain exceptions as provided
in the Rights Agreement) and (ii) ten (10) business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a person or group of
20% or more of such outstanding Common Stock (subject to certain exceptions as provided in the
Rights Agreement) (the earlier of such dates being called the “Distribution Date”), the Rights will
be evidenced, with respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after the Record Date, upon
transfer or new issuance of Common Stock will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock, which become outstanding on or after
the Record Date, but prior to the Distribution Date or Expiration Date,
even without such notation or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Rights Certificates”) will be mailed to holders of record of the Common
Stock as of the Close of Business on the Distribution Date and thereafter such separate Rights
Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on March 31, 2011 (the “Final Expiration
Date”), unless the Final Expiration Date is amended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the Units of Preferred
Stock of certain rights or warrants to subscribe for or purchase Units of Preferred Stock at a
price, or securities convertible into Units of Preferred Stock with a conversion price, less than
the then current market price of the Units of Preferred Stock or (iii) upon the distribution to
holders of the Units of Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends payable in Units of
Preferred Stock) or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of Units of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Units of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each
Unit of Preferred Stock will be entitled to a dividend equal to any dividend declared per share of
Common Stock. In the event of liquidation, each Unit of Preferred Stock will be entitled to a
payment equal to any payment made per share of Common Stock. Each Unit of Preferred Stock will have
one vote, voting together with the Common Stock. Finally, in the event of any merger, consolidation
or other transaction in which shares of Common Stock are exchanged, each Unit of Preferred Stock
will be entitled to receive an amount equal to the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights, the value of each Unit
of Preferred Stock purchasable upon exercise of the Rights should approximate the value of one
share of Common Stock.
In the event that, after the Rights become exercisable, the Company is acquired in a merger or
other business combination transaction with an Acquiring Person or an affiliate thereof, or 50% or
more of its consolidated assets or earning power are sold to an Acquiring Person or an affiliate
thereof, proper provision will be made so that each holder of a Right will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of the Rights, that
number of shares of common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Rights.
In the event that any person or group of affiliated or associated persons becomes the
beneficial owner of 20% or more of the outstanding shares of Common Stock (subject to certain
exceptions) proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Common Stock or Units of Preferred
Stock (or cash, other securities or property) having a market value of two times the exercise price
of the Rights.
At any time after the acquisition by a person or group of affiliated or associated persons of
beneficial ownership of 20% or more (subject to certain exceptions) of the outstanding shares of
Common Stock and prior to the acquisition by any person or group of affiliated or associated
persons of 50% or more of the outstanding Common Stock, the Board of Directors of the Company may
exchange all or part of the Rights (other than Rights owned by such person or group which have
become void) for Units of Preferred Stock at an exchange ratio (subject to adjustment) which shall
equal, subject to adjustment to reflect stock splits, stock dividends and similar transactions,
that number obtained by dividing the Purchase Price by the then current per share market price per
Unit of Preferred Stock on the earlier of (i) the date on which any Person becomes an Acquiring
Person and (ii) the date on which a tender or exchange offer is announced by any Person (subject to
certain exceptions), if upon consummation thereof such Person would be the Beneficial Owner of 20%
or more (subject to certain exceptions) of the shares of Company Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock will be issued (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Units of Preferred Stock on the last trading day prior to the date of
exercise.
At any time within ten (10) business days after the date a person or group of affiliated or
associated persons acquires beneficial ownership of 20% or more (subject to certain exceptions) of
the outstanding Common Stock, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.03 per Right (the “Redemption Price”). The redemption of the
rights may be made effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. The Rights are also redeemable under other circumstances as specified
in the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights except that from and after a Distribution Date no such
amendment may adversely affect the interests of the holders of the Rights (other than an Acquiring
Person or its affiliates or associates).
Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a
person or group that attempts to acquire the Company on terms not approved by the Company’s Board
of Directors, except pursuant to an offer conditioned on a substantial number of rights being
acquired. The Rights should not interfere with any merger or other business combination approved by
the Board of Directors because the Rights may be redeemed by the Company at the Redemption Price
prior to the occurrence of a Distribution Date.
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A of the Company. A copy of the Rights Agreement
is available free of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which
is hereby incorporated herein by reference.
