EXHIBIT 4.2
AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
DATED AS OF JUNE 24, 2005
BETWEEN
ENDOCARE, INC.
AND
U.S. STOCK TRANSFER CORPORATION
AS RIGHTS AGENT
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment"), dated as of
June 24, 2005, between Endocare Inc., a Delaware corporation (the "Company"),
and 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 (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. 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 of Section 27 thereof and the
Company desires and directs the Rights Agent to so amend the Rights Agreement.
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 good and other valuable consideration the receipt and
sufficiency of which the parties expressly acknowledge, the parties hereto agree
as follows:
1. Amendment to Section 1. Section 1 of the Rights Agreement shall be
amended by deleting the definition of "Acquiring Person" in its entirety and
replacing it with the following:
""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 15% 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,
(2) The Xxxxxxxx Fund, Inc. ("Xxxxxxxx"), or any of its Affiliates or Associates
(collectively with Xxxxxxxx, the "Xxxxxxxx Investor Group"), (3) Pequot Private
Equity Fund, L.P. and Pequot Offshore Private Equity Fund, Inc. (together,
"Pequot"), or any of their Affiliates or Associates (collectively with Pequot,
the "Pequot Investor Group"), (4) Technology Funding Venture Partners IV, an
Aggressive Growth Fund, L.P., Technology Funding Venture Partners V, an
Aggressive Growth Fund, L.P. and Technology Funding Partners III, L.P.
(collectively, "Tech Funding"), or any of their Affiliates or Associates
(collectively with Tech Funding, the "Tech Funding Investor Group") or (5) any
Person who becomes the Beneficial Owner of 15% or more of the then-outstanding
shares of Company Common Stock as a result of the acquisition of shares of
Company Common Stock directly from the Company in one or more transactions
approved by a majority of the Board of Directors. Notwithstanding the foregoing:
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(i) no Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% 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 15% or more of the shares of
Common Stock of the Company then outstanding by reason of share purchases
by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional shares of Common Stock of
the Company, then such Person shall be deemed to be an "Acquiring Person"
hereunder; and
(ii) 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 paragraph (a), has
become such inadvertently, 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 (a)), then such Person shall
not be deemed to be an "Acquiring Person" for any purpose of this
Agreement."
2. Amendment to Section 3(a). Section 3(a) of the Rights Agreement is
hereby amended by deleting Section 3(a) in its entirety and replacing it with
the following:
"(a) Until the earlier of (i) the Close of Business on the tenth Business
Day after the Shares Acquisition Date and (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the
Company's Board of Directors prior to such time as any Person becomes an
Acquiring Person and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
shares of Common Stock for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act Regulations or any successor rule or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding shares of Common Stock for or pursuant to the terms of any
such plan) to commence a tender or exchange offer, if upon consummation thereof
such Person would be the Beneficial Owner of 15% or more of the shares of
Company Common Stock then outstanding (the earlier of (i) and (ii) above being
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for shares of Common
Stock registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common Stock. As
soon as practicable after the Distribution Date, the Company will notify the
Rights Agent thereof and the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of shares of Common Stock as of the Close of Business on
the
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Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each share of Common Stock so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates."
3. Amendment to Section 23(a). Section 23(a) of the Rights Agreement is
hereby amended by deleting Section 23(a) in its entirety and replacing it with
the following:
"(a) The Company may, at its option, upon approval by the Board of
Directors, at any time on or prior to the close of business (or such later date
as may be determined by the Board of Directors) on the earlier of (i) the Close
of Business on the tenth Business Day following the Shares Acquisition Date or
(ii) the Final Expiration Date redeem all but not less than all the then
outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), and the Company may, at its option, pay
the Redemption Price either in cash, shares of Common Stock (based on the
current per share market price thereof (as determined pursuant to Section 11(d)
hereof) at the time of redemption), or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights by the Board
of Directors 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."
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 all 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 or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, 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, shares
of Common Stock).
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.
8. Governing Law. This Amendment to the Rights Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware.
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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 or convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
[Signature Page to Follow]
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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/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President, Finance, Chief Title: Chairman and Chief
Financial Officer and Secretary Executive Officer
ATTEST: U.S. STOCK TRANSFER CORPORATION
By:/s/ XXXX CAND By: /s/ XXXXXXX XXXXXX
----------------------------------------- ------------------------------
Name: XXXX CAND Name: XXXXXXX XXXXXX
Title: Senior Vice President Title: Assistant Vice President
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO RIGHTS AGREEMENT]
EXHIBIT A
AMENDED SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
ENDOCARE, INC.
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 entitles 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 a price of $25.00 per Unit (the "Purchase Price"), subject to
adjustment. 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 (the "Rights
Agreement") between the Company and U.S. STOCK TRANSFER CORPORATION, as Rights
Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the tenth
business date after a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired beneficial ownership
of 15% or more of the outstanding Common Stock (subject to certain exceptions as
provided in the Rights Agreement) and (ii) 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 15% or more of such outstanding Common Stock (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, outstanding as of the Record 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 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 April 15, 2009 (the "Final Expiration
Date"), unless the Final Expiration
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Date is extended 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 15% 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
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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 15% or more (subject to certain
exceptions) of the outstanding shares of Common Stock and prior to the
acquisition by such person or group 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 occurring after the date hereof, 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, if upon consummation thereof such Person would be the
Beneficial Owner of 15% 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 15% 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 $.01 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
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.
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
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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. 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.
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