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As filed with the Securities and Exchange Commission on
July 11, 2005
Registration No. 333-123866
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective
Amendment No. 2
to
Form S-2
Registration Statement
under
the Securities Act of 1933
Endocare, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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33-0618093 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
201 Technology Drive
Irvine, California 92618
(949) 450-5400
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrants Principal Executive
Offices)
Michael R. Rodriguez
Senior Vice President, Finance and
Chief Financial Officer
Endocare, Inc.
201 Technology Drive
Irvine, California 92618
(949) 450-5400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
With a Copy to:
Steven G. Rowles, Esq.
Clint B. Davis, Esq.
Morrison & Foerster LLP
3811 Valley Centre Drive, Suite 500
San Diego, California 92130
(858) 720-5100
Approximate date of commencement of proposed sale to the
public: from time to time after the
effectiveness of this Registration Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the
following
box: þ
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1) of this Form, check the following
box: o
If this Form is filed to register additional securities for an
offering pursuant to Rule 464(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following
box: o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
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Proposed Maximum |
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Proposed Maximum |
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Amount of |
Title of Each Class of |
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Amount to be |
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Offering |
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Aggregate |
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Registration |
Securities to be Registered |
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Registered(1) |
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Price per Share(2) |
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Offering Price(2) |
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Fee |
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Common Stock, no par value per share(3)
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9,580,126 shares |
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$3.35 |
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$32,093,422 |
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$3,777(4) |
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(1) |
Includes 5,635,378 shares currently held by selling
securityholders and 3,944,748 shares issuable upon the
exercise of common stock purchase warrants held by selling
securityholders. In accordance with Rule 416 under the
Securities Act of 1933, also includes an indeterminable number
of shares that may become issuable by reason of stock splits,
stock dividends and similar transactions in accordance with the
terms of the common stock purchase warrants. |
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(2) |
Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) based on the average of the
high and low sales prices of the registrants common stock
as reported on the Pink Sheets on April 1, 2005. |
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(3) |
Each share of Common Stock is paired with a stock purchase right
under the Registrants Stockholder Rights Plan. |
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(4) |
Paid previously. |
The information in this prospectus is not
complete and may be changed. The selling securityholders may not
sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED
July 11, 2005
PROSPECTUS
9,580,126 Shares
Endocare, Inc.
Common Stock
THE
SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
SEE RISK FACTORS BEGINNING ON PAGE 2 FOR INFORMATION
THAT YOU SHOULD CONSIDER.
This prospectus is being used in connection with offerings from
time to time by the selling securityholders listed herein or
their transferees. All of the shares of common stock,
$0.001 par value per share, that may be offered under this
prospectus were issued by us in private transactions.
The prices at which the selling securityholders or their
transferees may dispose of their Endocare shares or interests
therein will be determined by the selling securityholders at the
time of sale and may be at fixed prices, the prevailing market
price for the shares, at prices related to such market price, at
varying prices determined at the time of sale or at negotiated
prices. Information regarding the selling securityholders and
the times and manner in which they may offer and sell the shares
or interests therein under this prospectus is provided under
Selling Securityholders and Plan of
Distribution in this prospectus. We will not receive any
of the proceeds from the disposition of the shares offered under
this prospectus. However, certain of the shares of common stock
covered hereby will be issued only upon the exercise of
warrants. Upon exercise of these warrants, we will receive the
proceeds of the exercise prices of such warrants if they are
exercised other than on a net exercise basis.
Our common stock is traded on the Pink Sheets, under the symbol
ENDO.PK. On June 30, 2005, the last sale price
of our common stock reported on the Pink Sheets was
$4.00 per share.
A copy of our annual report on Form 10-K for the year ended
December 31, 2004 and a copy of our quarterly report on
Form 10-Q for the quarter ended March 31, 2005 accompany
this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2005.
TABLE OF CONTENTS
No person has been authorized to give any information or to make
any representations other than those contained in this
prospectus in connection with the offering made hereby, and if
given or made, such information or representations must not be
relied upon as having been authorized by Endocare, any selling
securityholder or by any other person. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is
correct as of any time subsequent to the date hereof. This
prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the
securities covered by this prospectus, nor does it constitute an
offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation may not lawfully be made.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements that
involve risks and uncertainties. Such statements typically
include, but are not limited to, statements containing the words
believes, intends,
anticipates, expects,
estimates, should, could,
may, plans, planned and
words of similar import. Forward-looking statements involve
risks and uncertainties, including those risks and uncertainties
identified in the Risk Factors section of this
prospectus beginning on page 5 and those risks and
uncertainties identified elsewhere in, or incorporated by
reference into, this prospectus. Due to these risks and
uncertainties, the actual results that we achieve may differ
materially from these forward-looking statements. These
forward-looking statements are based on current expectations. In
preparing this prospectus, we have made a number of assumptions
and projections about the future of our business. These
assumptions and projections could be wrong for several reasons
including, but not limited to, those items identified in the
Risk Factors section.
You are urged to carefully review and consider the various
disclosures that we make in this prospectus, any subsequent
prospectus supplements and in our other reports filed with the
Securities and Exchange Commission.
ENDOCARE, INC.
We are a specialty medical device company focused on improving
patients lives through the development, manufacturing and
distribution of health care products related to our core
competencies in the areas of cryoablation and vacuum technology.
Our strategy is to achieve a dominant position in the prostate
and renal cancer markets, further developing and increasing the
acceptance of our technology in the interventional radiology and
oncology markets for treatment of liver and lung cancers and
management of pain from bone metastases, while achieving
penetration across additional markets with our proprietary
cryosurgical technology and maintaining our leading position in
vacuum technology for erectile dysfunction. The term
cryoablation procedures refers to medical procedures
in which ice is used to destroy tissue, such as tumors, for
therapeutic purposes. The term cryosurgical
technologies refers to technologies relating to the use of
ice in surgical procedures, including cryoablation procedures.
Today, our FDA-cleared Cryocare Surgical System occupies a
growing position in the urological market for treatment of
prostate and renal cancer. Because of our initial concentration
on prostate and renal cancer, the majority of our sales and
marketing resources are directed toward the promotion of our
technology to urologists. In addition, we contract directly with
hospitals and other medical facilities to perform cryoablation
procedures using our proprietary device and disposable products
on a fee-for-service basis. We believe our proprietary
cryosurgical technologies have broad applications across a
number of surgical markets, including for the treatment of
tumors in the lung and liver, and the management of bone pain
caused by tumors. To that end, we employ a dedicated sales and
marketing team focused on marketing percutaneous cryoablation
procedures related to kidney, liver, lung and bone cancer to
interventional radiology physicians throughout the United
States. We intend to continue to invest in resources to continue
to penetrate the interventional radiology and oncology markets
and develop new markets for our cryosurgical products and
technologies, particularly in the area of tumor ablation.
Through our Timm Medical subsidiary, we market several products
used in the treatment and diagnosis of erectile dysfunction. We
have a dedicated sales, customer service and marketing team
focused on our ErecAid line of vacuum therapy systems, and are a
leader in non-pharmaceutical treatment devices for erectile
dysfunction. Our ErecAid devices are marketed directly to
consumers as prescription devices, and to durable medical
equipment providers, physicians and pharmacies.
We were incorporated under the laws of the State of Delaware in
May 1994. We maintain our executive offices at 201 Technology
Drive, Irvine, California 92618, and our telephone number at
that address is (949) 450-5400. This prospectus, and any
prospectus supplements issued in relation to it, contain
trademarks of Endocare, Inc. and its affiliates, and may contain
trademarks, trade names and service marks of other parties.
In this prospectus, unless we indicate otherwise, references to
Endocare or to we or us are
to Endocare, Inc. and its subsidiaries. Information contained on
our Internet website is not a part of this prospectus or any
prospectus supplement issued subsequently.
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RISK FACTORS
Any investment in our common stock involves a high degree of
risk. You should consider carefully the following information
about the risks described below, together with the other
information contained in this prospectus, before you decide
whether to buy our common stock. If any of the following risks
actually occur, our business, financial condition, results of
operations and cash flows could be materially and adversely
affected. In those circumstances, the market price of our common
stock could decline, and you may lose all or part of the money
you paid to buy our common stock.
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We face risks related to investigations by the SEC and
DOJ. |
As previously reported, the SEC and the DOJ are conducting
investigations into allegations that we and certain of our
current and former officers and directors issued, or caused to
be issued, false and misleading statements regarding our
financial results for 2001 and 2002 and related matters,
including whether we prematurely recognized revenue from the
sale of Cryocare systems and improperly delayed posting of
expenses. Although we have fully cooperated with these
governmental agencies in these matters and intend to continue to
fully cooperate, these agencies may determine we have violated
federal securities laws. We cannot predict when these
investigations will be completed or their outcomes. If it is
determined that we have violated federal securities laws or
other laws or regulations, we may face sanctions, including, but
not limited to, significant monetary penalties and injunctive
relief. In addition, we are generally obliged, to the extent
permitted by law, to indemnify our directors and officers who
are named defendants in legal proceedings related to their
service.
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Our management members have spent considerable time and
effort dealing with internal and external investigations and
re-auditing of financial statements. |
In addition to the challenges of the SEC investigation, the DOJ
investigation, a shareholder class-action and a derivative
lawsuit and other legal proceedings described in our Annual
Report on Form 10-K filed on March 16, 2005, our
management members have spent considerable time and effort
dealing with internal and external investigations involving our
previous internal controls, accounting policies and procedures,
disclosure controls and procedures and corporate governance
policies and procedures. The significant time and effort spent
has adversely affected our operations and may continue to do so
in the future.
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Our success will depend on our ability to attract and
retain key personnel. |
In order to execute our business plan, we need to attract,
retain and motivate a significant number of highly qualified
managerial, technical, financial and sales personnel. If we fail
to attract and retain skilled scientific and marketing
personnel, our research and development and sales and marketing
efforts will be hindered. Our future success depends to a
significant degree upon the continued services of key management
personnel, including Craig T. Davenport, our Chief Executive
Officer, William J. Nydam, our President and Chief Operating
Officer, and Michael R. Rodriguez, our Senior Vice President,
Finance and Chief Financial Officer. None of our key management
personnel is covered by an insurance policy of which we are the
beneficiary.
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Future sales of shares of our common stock may negatively
affect our stock price. |
Future sales of our common stock, including shares issued upon
the exercise of outstanding options and warrants or hedging or
other derivative transactions with respect to our stock, could
have a significant negative effect on the market price of our
common stock. These sales also might make it more difficult for
us to sell equity securities or equity-related securities in the
future at a time and price that we would deem appropriate. We
had an aggregate of 29,987,756 shares of common stock
outstanding as of March 15, 2005, which included
5,635,378 shares of our common stock that we issued on
March 11, 2005 in connection with the equity financing
described below under Selling Securityholders
March 2005 Equity Financing. Investors in our March 2005
equity financing also received warrants to purchase an aggregate
of 1,972,374 shares of our common stock at an exercise
price of $3.50 per share and 1,972,374 shares of our
common stock at an exercise
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price of $4.00 per share. As described below under
Selling Securityholders March 2005 Equity
Financing, we entered into a registration rights agreement
in connection with our March 2005 equity financing pursuant to
which we agreed to register for resale by the investors the
shares of common stock issued and issuable upon exercise of the
warrants issued in our March 2005 equity financing.
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We have a history of net losses, and we may never reach or
maintain profitability. |
We have incurred annual operating losses each year since our
inception. For the fiscal years ended December 31, 2002,
2003 and 2004, we had losses from operations of approximately
$42.5 million, $34.0 million and $36.6 million,
respectively. As of December 31, 2004, our accumulated
deficit was approximately $152.0 million. It is possible
that we will not generate sufficient revenues from product sales
and service revenues to achieve profitability. Even if we do
achieve significant revenues from our product sales and service
revenues, we expect that increased operating expenses will
result in significant operating losses over the next several
quarters, as we, among other things:
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incur costs related to legal proceedings, including ongoing
government investigations; |
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expand our sales and marketing activities as we attempt to gain
market share for our Cryocare Surgical System; and |
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continue our research and development efforts to improve our
existing products and develop new products. |
We will need to significantly increase the revenues we receive
from sales of our products and services as a result of these
increased operating expenses. We may be unable to do so, and
therefore, may not achieve profitability. Even if we do achieve
profitability, we cannot be certain that we will be able to
sustain or increase profitability on a quarterly or annual basis.
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Our common stock was delisted from the Nasdaq Stock Market
and, as a result, trading of our common stock has become more
difficult. |
Our common stock was delisted from The Nasdaq Stock Market on
January 16, 2003 because of our failure to keep current in
filing our periodic reports with the SEC. Trading is now
conducted in the over-the-counter market in the so-called
Pink Sheets. Consequently, selling our common stock
is more difficult because smaller quantities of shares can be
bought and sold, transactions can be delayed and security
analyst and news media coverage of us may be reduced. These
factors could result in lower prices and larger spreads in the
bid and ask prices for shares of our common stock as well as
lower trading volume. We have been in discussions with the
American Stock Exchange (AMEX) and Nasdaq regarding
the relisting of our common stock. We hope that our common stock
will be relisted with either AMEX, the Nasdaq SmallCap Market or
the Nasdaq National Market System by the end of 2005.
We believe that we currently satisfy all of the objective
criteria for relisting on AMEX, and we believe that we currently
satisfy all of the objective criteria for relisting on the
Nasdaq SmallCap Market and the Nasdaq National Market System,
except for the minimum bid price requirement applicable to the
Nasdaq National Market System. In order to satisfy the minimum
bid price requirements, we may attempt to effectuate a reverse
stock split. Any reverse stock split would require the prior
approval of our stockholders at a stockholders meeting, because
our charter prohibits stockholder action by written consent. We
recently announced a special stockholders meeting to be held on
August 30, 2005 for the purpose of obtaining approval for a
reverse stock split. In many instances historically the markets
have reacted negatively to the effectuation of a reverse stock
split. We cannot assure you that our stock will not be
negatively affected if our board decides to proceed with a
reverse stock split. However, we believe that our circumstances
and rationale for the reverse stock split differentiate us from
many other companies that have effectuated reverse stock splits.
Among other things, we would be effectuating a reverse stock
split to qualify our common stock for listing, whereas many
other companies have effectuated reverse stock splits to avoid
delisting in the face of dire financial or operational
circumstances.
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As a result of the delisting of our common stock from The Nasdaq
Stock Market, our common stock has become subject to the
penny stock regulations, including Rule 15g-9
under the Securities Exchange Act of 1934. That rule imposes
additional sales practice requirements on broker-dealers that
sell low-priced securities to persons other than established
customers and institutional accredited investors. For
transactions covered by this rule, a broker-dealer must make a
special suitability determination for the purchaser and have
received the purchasers written consent to the transaction
prior to sale. Consequently, the rule may affect the ability of
broker-dealers to sell our common stock and affect the ability
of holders to sell their shares of our common stock in the
secondary market. To the extent our common stock remains subject
to the penny stock regulations, the market liquidity for the
shares will be adversely affected.
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Our success is reliant on the acceptance by doctors and
patients of the Cryocare Surgical System as a preferred
treatment for tumor ablation. |
Cryosurgery has existed for many years, but has not been widely
accepted primarily due to concerns regarding safety and efficacy
and widespread use of alternative therapies. Because the
technology previously lacked precise monitoring capabilities,
cryosurgical procedures performed in the 1970s resulted in high
cancer recurrence and negative side effects, such as rectal
fistulae and incontinence, and gave cryosurgical treatment
negative publicity. To overcome these negative side effects, we
have developed ultrasound guidance and temperature sensing to
enable more precise monitoring in our Cryocare Surgical System.
Nevertheless, we will need to overcome the earlier negative
publicity associated with cryosurgery in order to obtain market
acceptance for our products. In addition, use of our Cryocare
Surgical System requires significant physician education and
training. As a result, we may have difficulty obtaining
recommendations and endorsements of physicians and patients for
our Cryocare Surgical System. We may also have difficulty
raising the brand awareness necessary to generate interest in
our Cryocare Surgical System. Any adverse side effects,
including impotence or incontinence, recurrence of cancer or
future reported adverse events or other unfavorable publicity
involving patient outcomes from the use of cryosurgery, whether
from our products or the products of our competitors, could
adversely affect acceptance of cryosurgery. In addition,
emerging new technologies and procedures to treat cancer,
prostate enlargement and other prostate disorders may negatively
affect the market acceptance of cryosurgery. If our Cryocare
Surgical System does not achieve broad market acceptance, we
will likely remain unprofitable.
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If we are unable to continue to develop and enhance our
Cryocare Surgical System, our business will suffer. |
Our growth depends in part on continued ability to successfully
develop enhancements to our Cryocare Surgical System. We may
experience difficulties that could delay or prevent the
successful development and commercialization of these products.
Our products in development may not prove safe and effective in
clinical trials. Clinical trials may identify significant
technical or other obstacles that must be overcome before
obtaining necessary regulatory or reimbursement approvals. In
addition, our competitors may succeed in developing commercially
viable products that render our products obsolete or less
attractive. Failure to successfully develop and commercialize
new products and enhancements would likely have a significant
negative effect on our financial prospects.
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There is uncertainty relating to third-party
reimbursement, which is critical to market acceptance of our
products. |
Hospitals and other health care providers in the United States
generally rely on third-party payors, principally federal
Medicare, state Medicaid and private health insurance plans, to
reimburse all or part of the cost of medical procedures
involving our products. While private health insurers in some
areas of the United States provide reimbursement for procedures
in which our products are used, we can provide no assurance that
private insurance reimbursement will be adopted nationally or by
additional insurers. Furthermore, those private insurance
companies currently paying for procedures in which our products
are used may terminate such coverage. If reimbursement levels
from Medicare, Medicaid, other governmental health care programs
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private insurers are not sufficient, physicians may choose not
to recommend, and patients may not choose, procedures utilizing
our products.
International market acceptance of our products may depend, in
part, upon the availability of reimbursement within prevailing
health care payment systems. Reimbursement and health care
payment systems in international markets vary significantly by
country, and include both government sponsored health care and
private insurance. We may not obtain international reimbursement
approvals in a timely manner, if at all. Our failure to receive
international reimbursement approvals may negatively impact
market acceptance of our products in the international markets
in which those approvals are sought.
From time to time significant attention has been focused on
reforming the health care system in the United States and other
countries. Any changes in Medicare, Medicaid or third-party
medical expense reimbursement, which may arise from health care
reform, may have a material adverse effect on reimbursement for
our products or procedures in which our products are used and
may reduce the price we are able to charge for our products. In
addition, changes to the health care system may also affect the
commercial acceptance of products we are currently developing
and products we may develop in the future. Potential approaches
that have been considered include controls on health care
spending and price controls. Several proposals have been made in
the United States Congress and various state legislatures
recently that, if adopted, would potentially reduce health care
spending, which may result in a material adverse effect on our
business, financial condition, results of operations and cash
flows.
We believe that our current structure and business and our
contemplated future operations comply and will comply with the
federal anti-kickback law. However, certain of our business
practices do not fit or will not fit within a safe
harbor and there is no assurance that if viewed under the
totality of the facts and circumstances, our structure and
business would not be challenged, perhaps even successfully, as
a violation of the anti-kickback law. Mere challenge, even if we
ultimately prevail, could have a material adverse effect on us.
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Introduction of alternative therapies may affect our
revenues. |
We sell medical devices for the treatment of certain urological
disorders. If physicians and patients do not accept our
products, our sales will decline. Patient acceptance of our
products depends on a number of factors, including the failure
of other therapies, the degree of invasiveness involved, the
rate and severity of complications from the procedures, and
other adverse side effects. Patients are more likely first to
consider non-invasive alternatives to treat their urological
disorders. The introduction of new oral medications or other
less-invasive therapies may cause our sales to decline in the
future.
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We could be difficult to acquire due to anti-takeover
provisions in our charter, our stockholders rights plan and
Delaware law. |
Provisions of our certificate of incorporation and bylaws may
have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to
acquire control of our company. In addition, in April 1999, our
Board of Directors adopted a stockholder rights plan in which
preferred stock purchase rights were distributed as a dividend.
These provisions may make it more difficult for stockholders to
take corporate actions and may have the effect of delaying or
preventing a change in control. These provisions also could
deter or prevent transactions that stockholders deem to be in
their interests. In addition, we are subject to the
anti-takeover provisions of Section 203 of the Delaware
General Corporation Law. Subject to specified exceptions, this
section provides that a corporation may not engage in any
business combination with any interested stockholder during the
three-year period following the time that such stockholder
becomes an interested stockholder. This provision could have the
effect of delaying or preventing a change of control of our
company. The foregoing factors could reduce the price that
investors or an acquiror might be willing to pay in the future
for shares of our common stock.
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If we fail to protect our intellectual property rights,
our competitors may take advantage of our ideas and compete
directly against us. |
Our success will depend to a significant degree on our ability
to secure and protect intellectual property rights and to
enforce patent and trademark protections relating to our
technology. From time to time, litigation
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may be advisable to protect our intellectual property position,
however, these legal means afford only limited protection and
may not adequately protect our rights or permit us to gain or
keep any competitive advantage. Any litigation in this regard
could be costly, and it is possible that we will not have
sufficient resources to fully pursue litigation or to protect
our other intellectual property rights. It could result in the
rejection or invalidation of our existing and future patents.
Any adverse outcome in litigation relating to the validity of
our patents, or any failure to pursue litigation or otherwise to
protect our patent position, could have a material adverse
effect on our business, financial condition, results of
operations and cash flows. Also, even if we prevail in
litigation, the litigation would be costly in terms of
management distraction as well as in money. In addition,
confidentiality agreements with our employees, consultants,
customers, and key vendors may not prevent the unauthorized
disclosure or use of our technology. It is possible that these
agreements will be breached or that they will not be enforceable
in every instance, and that we will not have adequate remedies
for any such breach. Enforcement of these agreements may be
costly and time consuming. Furthermore, the laws of foreign
countries may not protect our intellectual property rights to
the same extent as the laws of the United States.
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Because the medical device industry is litigious, we may
be sued for allegedly violating the intellectual property rights
of others. |
The medical technology industry has in the past been
characterized by a substantial amount of litigation and related
administrative proceedings regarding patents and intellectual
property rights. In addition, major medical device companies
have used litigation against emerging growth companies as a
means of gaining or preserving a competitive advantage.
Should third parties file patent applications or be issued
patents claiming technology also claimed by us in pending
applications, we may be required to participate in interference
proceedings in the United States Patent and Trademark Office to
determine the relative priorities of our inventions and the
third parties inventions. We could also be required to
participate in interference proceedings involving our issued
patents and pending applications of another entity. An adverse
outcome in an interference proceeding could require us to cease
using the technology or to license rights from prevailing third
parties.
Third parties may claim we are using their patented inventions
and may go to court to stop us from engaging in our normal
operations and activities. These lawsuits are expensive to
defend and conduct and would also consume and divert the time
and attention of our management. A court may decide that we are
infringing a third partys patents and may order us to
cease the infringing activity. A court could also order us to
pay damages for the infringement. These damages could be
substantial and could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
If we are unable to obtain any necessary license following an
adverse determination in litigation or in interference or other
administrative proceedings, we would have to redesign our
products to avoid infringing a third partys patent and
could temporarily or permanently have to discontinue
manufacturing and selling some of our products. If this were to
occur, it would negatively impact future sales and, in turn, our
business, financial condition, results of operations and cash
flows.
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If we fail to obtain or maintain necessary regulatory
clearances or approvals for products, or if approvals are
delayed or withdrawn, we will be unable to commercially
distribute and market our products or any product
modifications. |
Government regulation has a significant impact on our business.
Government regulation in the United States and other countries
is a significant factor affecting the research and development,
manufacture and marketing of our products. In the United States,
the FDA has broad authority under the federal Food, Drug and
Cosmetic Act to regulate the distribution, manufacture and sale
of medical devices. Foreign sales of drugs and medical devices
are subject to foreign governmental regulation and restrictions,
which vary from country to country. The process of obtaining FDA
and other required regulatory clearances and approvals is
lengthy and expensive. We may not be able to obtain or maintain
necessary approvals for clinical testing or for the
manufacturing or marketing of our products. Failure to comply
with applicable regulatory approvals can, among other things,
result in fines, suspension or withdrawal of regulatory
approvals, product recalls, operating
6
restrictions, and criminal prosecution. In addition,
governmental regulations may be established which could prevent,
delay, modify or rescind regulatory approval of our products.
Any of these actions by the FDA, or change in FDA regulations,
could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Regulatory approvals, if granted, may include significant
limitations on the indicated uses for which our products may be
marketed. In addition, to obtain such approvals, the FDA and
foreign regulatory authorities may impose numerous other
requirements on us. FDA enforcement policy prohibits the
marketing of approved medical devices for unapproved uses. In
addition, product approvals can be withdrawn for failure to
comply with regulatory standards or unforeseen problems
following initial marketing. We may not be able to obtain or
maintain regulatory approvals for our products on a timely
basis, or at all, and delays in receipt of or failure to receive
such approvals, the loss of previously obtained approvals, or
failure to comply with existing or future regulatory
requirements could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
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We face risks relating to compliance with new federal
requirements regarding the transmission and retention of health
information. |
We and the health care providers that we interact with face new
federal requirements that mandate major changes in the
transmission and retention of health information. HIPAA and
related regulations impose expanded protection of the privacy
and security of personal medical data, including standards for
the exchange of electronic health information. The term
HIPAA refers to the Health Insurance Portability and
Accountability Act of 1996, a federal statute that, among other
things, regulates the transmission and retention of health
information. There are many uncertainties remaining about how
HIPAA applies to the medical device industry, and no assurance
can be made that HIPAA will not be interpreted in a manner that
will hamper our ability to conduct medical research and receive
medical information for other purposes as well. In addition,
because Timm Medical is a covered entity for HIPAA purposes,
failure of Timm Medical to comply with HIPAA could result in
civil and criminal fines and penalties that could have a
material adverse effect on our business, financial condition,
results of operations and cash flows.
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Our products may be subject to product recalls even after
receiving FDA clearance or approval, which would harm our
reputation and our business. |
The FDA and similar governmental authorities in other countries
have the authority to request and, in some cases, require the
recall of our products in the event of material deficiencies or
defects in design or manufacture. A governmental mandated or
voluntary recall by us could occur as a result of component
failures, manufacturing errors or design defects. Any recall of
product would divert managerial and financial resources and harm
our reputation with customers and our business.
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We could be negatively impacted by future interpretation
or implementation of the federal Stark law and other federal and
state anti-referral laws. |
The federal Stark law prohibits a physician from referring
medical patients for certain services to an entity with which
the physician has a financial relationship. A financial
relationship includes both investment interests in an entity and
compensation arrangements with an entity. Many states have
similar and often broader laws prohibiting referrals by any
licensed health care provider to entities with which they have a
financial relationship. These state laws generally apply to
services reimbursed by both governmental and private payors.
Violation of these federal and state laws may result in
prohibition of payment for services rendered, loss of licenses,
fines, criminal penalties and exclusion from governmental and
private payor programs, among other things. We have financial
relationships with physicians and physician-owned entities,
which in turn have financial relationships with hospitals and
other providers of designated health services. Although we
believe that our financial relationships with physicians and
physician-owned entities, as well as the relationships between
physician-owned entities that purchase or lease our products and
hospitals, are not in violation of applicable laws and
regulations, governmental authorities might take a contrary
position. If our financial relationships with physicians or
physician-owned entities or the relationships between those
entities
7
and hospitals were found to be illegal, we and/or the affected
physicians and hospitals could be subject to civil and criminal
penalties, including fines, exclusion from participation in
government and private payor programs and requirements to refund
amounts previously received from government and private payors.
In addition, expansion of our operations to new jurisdictions,
or new interpretations of laws in our existing jurisdictions,
could require structural and organizational modifications of our
relationships with physicians, physician-owned entities and
others to comply with that jurisdictions laws.
We believe that the arrangements we have established with
physician-owned entities and hospitals comply with applicable
Stark law exceptions. However, if any of the relationships
between physicians and hospitals involving our services, or, in
the case of Timm Medical, any of our financial relationships
with referring physicians, do not meet a Stark law exception,
neither the hospital nor we would be able to bill for any
procedure resulting from a referral that violated the Stark law.
Although, in most cases we are not the direct provider and do
not bill Medicare for the designated health services, any Stark
law problem with our business arrangements with physicians and
hospitals would adversely affect us as well as the referring
physician and the hospital receiving the referral.
Many states also have patient referral laws, some of which are
more restrictive than the Stark law and regulate referrals by
all licensed health care practitioners for any health care
service to an entity with which the licensee has a financial
relationship unless an exception applies. Such laws in
particular states may prohibit us from entering into
relationships with physicians and physician-owned entities,
which may limit business development.
We believe that our business practices comply with the Stark law
and applicable state referral laws. No assurance can be made,
however, that these practices would not be successfully
challenged and penalties, such as civil money penalties and
exclusion from Medicare and Medicaid, and/or state penalties,
imposed. And again, mere challenge, even if we ultimately
prevail, could have a material adverse effect on us.
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If we become subject to product liability claims, we may
be required to pay damages that exceed our insurance
coverage. |
Our business exposes us to potential product liability claims
that are inherent in the testing, production, marketing and sale
of medical devices. While we believe that we are reasonably
insured against these risks, we may not be able to maintain
insurance in amounts or scope sufficient to provide us with
adequate coverage. A claim in excess of our insurance coverage
would have to be paid out of cash reserves, which could have a
material adverse effect on our business, financial condition,
results of operations and cash flows. In addition, any product
liability claim likely would harm our reputation in the industry
and our business.
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We are faced with intense competition and rapid
technological and industry change, which may make it more
difficult for us to achieve significant market
penetration. |
The medical device industry generally, and the urological
disease treatment market in particular, are characterized by
rapid technological change, changing customer needs, and
frequent new product introductions. If our competitors
existing products or new products are more effective than or
considered superior to our products, the commercial opportunity
for our products will be reduced or eliminated. We face intense
competition from companies in the cryosurgical marketplace as
well as companies offering other treatment options, including
radical prostatectomy, radiation therapy and hormone therapy. If
we are successful in penetrating the market for treatment of
prostate cancer with our cryosurgical treatment, other medical
device companies may be attracted to the marketplace. Many of
our potential competitors are significantly larger than we are
and have greater financial, technical, research, marketing,
sales, distribution and other resources than we do. We believe
there will be intense price competition for products developed
in our markets. Our competitors may develop or market
technologies and products, including drug-based treatments, that
are more effective or commercially attractive than any that we
are developing or marketing. Our competitors may obtain
regulatory approval, and introduce and commercialize products
before we do. These developments could have a material adverse
effect on our business, financial condition, results of
operations and cash flows. Even if we are able to compete
successfully, we may not be able to do so in a profitable manner.
8
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Fluctuations in our future operating results may
negatively impact the market price of our common stock. |
Our operating results have fluctuated in the past and can be
expected to fluctuate from time to time in the future. Some of
the factors that may cause these fluctuations include the
following:
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market acceptance of our existing products, as well as products
in development; |
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timing of payments received and the recognition of such payments
as revenue under collaborative arrangements and strategic
alliances; |
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ability to manufacture products efficiently; |
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timing of our research and development expenditures; |
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timing of customer orders; |
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changes in reimbursement rates for our products and procedures
by Medicare and other third-party payors; |
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timing of regulatory approvals for new products; |
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outcomes of clinical studies by us or our competitors; |
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competition from other treatment modalities; |
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physician and patient acceptance of cryosurgery; and |
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ability to obtain reimbursement for procedures in lung and liver
cancer, and pain related to bone metasteses. |
If our operating results are below the expectations of
securities analysts or investors, the market price of our common
stock may fall abruptly and significantly.
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|
Our stock price may be volatile and your investment could
decline in value. |
Our stock price has fluctuated significantly in the past and is
likely to continue to fluctuate significantly, making it
difficult to resell shares when investors want to at prices they
find attractive. The market prices for securities of emerging
companies have historically been highly volatile. Future events
concerning us or our competitors could cause such volatility
including:
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actual or anticipated variations in our operating results; |
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|
developments regarding government and third-party reimbursement; |
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|
changes in government regulation of our products and business
practices; |
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developments concerning government investigations of us; |
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developments concerning proprietary rights; |
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|
developments concerning litigation or public concern as to the
safety of our products or our competitors products; |
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technological innovations or introduction of new products by us
or our competitors; |
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investor and analyst perception of us and our industry; |
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introduction of new competing technologies; |
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general economic and market conditions; and |
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physician and patient acceptance of cryosurgery. |
9
In addition, the stock market is subject to price and volume
fluctuations that affect the market prices for companies in
general, and small-capitalization, high technology companies in
particular, which are often unrelated to the operating
performance of these companies.
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Our intangible assets and goodwill could become
impaired. |
Intangible assets acquired in a purchase, such as intellectual
property or developed technology, are generally amortized over
various periods depending on their anticipated economic benefits
or useful lives. Long-lived assets, including amortizable
intangibles, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount
of an asset to future net cash flows expected to be generated by
the asset. Following a review, if such assets are considered to
be impaired, the impairment to be recognized is measured by the
amount by which the carrying value of the assets exceeds the
fair value of the assets.
We had no reported goodwill prior to January 1, 2002. With
the adoption of Statement of Financial Accounting Standards
No. 142 Goodwill and Intangible Assets,
goodwill can no longer be amortized against earnings. Goodwill
balances are subject to an impairment review on an annual basis
or sooner if indicators of potential impairment exist. The test
for impairment requires us to first compare the fair value of
the net assets of each reporting unit to their carrying value,
including goodwill. Our management is primarily responsible for
estimating fair value for impairment purposes. Management may
consider a number of factors, including valuations or
appraisals, when estimating fair value. If the fair value of the
reporting unit is less than the carrying value, goodwill of the
reporting unit is potentially impaired and we next calculate the
implied fair value of goodwill by deducting the fair value of
all tangible and intangible net assets of the reporting unit
from the fair value of the reporting unit. If the implied fair
value of goodwill is less then the carrying amount of goodwill,
an impairment loss is recognized equal to the difference. We
completed our annual goodwill impairment test as of
October 1, 2002, 2003 and 2004 for all of our reporting
units. Based on our evaluation we recognized an impairment
charge of $18.0 million in the fourth quarter of 2002 to
reduce the carrying value of the goodwill acquired in the Timm
Medical acquisition. We determined that a charge for goodwill
impairment was not required in 2003. For 2004, we recorded an
additional $15.8 million impairment charge related to Timm
Medical to further reduce the carrying value of the goodwill and
intangibles acquired in the purchase of Timm Medical, and to
write-off goodwill and intangibles related to our ownership
interests in certain mobile prostate treatment businesses. The
impairment charge related to Timm Medical in 2004 arose due to
declining revenues, turnover in sales force and below average
growth as compared to general industry trends.
Significant estimates, including assumptions regarding future
events and circumstances that cannot be easily predicted are
required to perform an analysis of the value of goodwill and
intangible assets. These estimates and assumptions may differ
materially from actual outcomes and occurrences. Furthermore, no
assurance can be given that we will not have further impairment
charges related to Timm Medical or other acquisitions.
In the fourth quarter of 2002, we also recorded a
$2.3 million other-than-temporary loss in the value of our
investment in U.S. Medical Development, Inc. acquired in
June 2001. The loss was based on our assessment that the
investee is unable to sustain an earnings capacity sufficient to
justify the carrying amount of the investment. We can give no
assurance that we will not incur further impairment charges
related to our goodwill or other intangible assets.
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Our facilities and systems are vulnerable to natural
disasters or other catastrophic events. |
Our headquarters, cryosurgical products manufacturing
facilities, research facilities and much of our infrastructure,
including computer servers, are located in California, an area
that is susceptible to earthquakes and other natural disasters.
Our erectile dysfunction products are assembled, packaged and
shipped in our Minneapolis facility. A natural disaster or other
catastrophic event, such as an earthquake, fire, flood, severe
storm, break-in, terrorist attack or other comparable problems
could cause interruptions or delays in our business and loss of
data or render us unable to accept and fulfill customer orders
in a timely manner, or at all.
10
In addition, as our Minneapolis facility is located in an area
that is susceptible to harsh weather, a major storm, heavy
snowfall or other similar event could prevent us from delivering
products in a timely manner. We have no formal disaster recovery
plan and our business interruption insurance may not adequately
compensate us for losses that may occur. In the event that an
earthquake, natural disaster or other catastrophic event were to
destroy any part of our facilities or interrupt our operations
for any extended period of time, or if harsh weather conditions
prevent us from delivering products in a timely manner, our
business, financial condition and operating results would be
seriously harmed.
USE OF PROCEEDS
All net proceeds from the disposition of the common shares
covered by this prospectus or interests therein will go to the
selling securityholders. We will not receive any proceeds from
the disposition of the common stock or interests therein by the
selling securityholders. However, certain of the shares of
common stock covered hereby will be issued only upon the
exercise of warrants issued in connection with our March 2005
equity financing described below. Upon exercise of these
warrants, we will receive the proceeds of the exercise prices of
such warrants if they are exercised other than on a net exercise
basis. To the extent we receive cash upon any exercise of the
warrants, we intend to use that cash for general corporate
purposes.
SELLING SECURITYHOLDERS
The following table sets forth, as of March 15, 2005, the
names of the selling securityholders, the number of shares of
our common stock beneficially owned by each selling
securityholder before and after this offering and the number of
shares that may be offered pursuant to this prospectus. This
information is based on information provided by or on behalf of
the selling securityholders and, with regard to the beneficial
holdings of the selling securityholders, is accurate only to the
extent beneficial holdings information was disclosed to us by or
on behalf of the selling securityholders. The selling
securityholders and holders listed in any supplement to this
prospectus, and any transferors, pledgees, donees or successors
to these persons, may from time to time offer and sell, pursuant
to this prospectus and any subsequent prospectus supplement, any
and all of these shares or interests therein. Any supplement to
this prospectus may contain additional or varied information
about the selling securityholders and/or additional holders, and
any of their transferors, pledgees, donees or successors, the
names of natural persons with voting or investment control over
the shares covered hereby, and the aggregate amount of the
shares offered that is beneficially owned by each person. This
information will be obtained from the selling securityholders
and/or additional holders.
As of March 15, 2005, 29,987,756 shares of our common
stock were outstanding. The 9,580,126 shares of our common
stock registered for public resale pursuant to the registration
statement of which this prospectus is a part and listed under
the column Shares Offered by this Prospectus include
5,635,378 shares of our common stock issued to the selling
securityholders in our March 2005 equity financing described
below and 3,944,748 shares of our common stock that may be
issued upon the exercise of warrants issued to the selling
securityholders in our March 2005 equity financing.
Shares listed under the column Shares Offered by this
Prospectus represent the number of shares that may be sold
by each selling securityholder pursuant to this prospectus.
Pursuant to Rule 416 of the Securities Act of 1933, the
registration statement of which this prospectus is a part also
covers any additional shares of our common stock which become
issuable in connection with such shares resulting from stock
splits, stock dividends or similar transactions.
The information under the heading Shares Beneficially
Owned After the Offering assumes each selling
securityholder sells all of its shares covered hereby to
unaffiliated third parties, that the selling securityholders
will acquire no additional Endocare common stock prior to the
completion of this offering, and that any other shares of our
common stock beneficially owned by the selling securityholders
will continue to be beneficially owned. Each selling stockholder
may dispose of all, part or none of its shares.
For purposes of the table below, beneficial ownership is
determined in accordance with the rules of the SEC, and includes
voting and investment power with respect to shares. Shares of
common stock subject to options, warrants or issuable upon
conversion of convertible securities currently exercisable or
exercisable within 60 days from March 15, 2005 are
deemed outstanding for computing the percentage ownership of the
11
person holding the options, warrants or convertible securities,
but are not deemed outstanding for computing the percentage of
any other person. Warrants issued in our March 2005 equity
financing are currently exercisable, and therefore the shares
underlying those warrants are included for purposes of
determining beneficial ownership.
The selling securityholders identified below may have sold,
transferred or otherwise disposed of all or a portion of their
shares of common stock in transactions exempt from the
registration requirements of the Securities Act of 1933 since
the date on which they provided to us the information regarding
their shares of common stock.
Except as indicated below, none of the selling securityholders
has held any position or office or had any other material
relationship with us or any of our predecessors or affiliates
within the past three years other than as a result of the
ownership of our securities. We may amend or supplement this
prospectus from time to time to update the disclosure set forth
in it.
Each of the selling securityholders that is affiliated with a
registered broker-dealer has represented to us that it purchased
the shares offered by this prospectus in the ordinary course of
business and, at the time of purchase of those shares, did not
have any plans to dispose of those shares.
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Shares Beneficially | |
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Shares Beneficially | |
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Owned Prior to | |
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Owned After the | |
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the Offering | |
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Offering(2) | |
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| |
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Shares Offered by | |
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Selling Securityholders(1) |
|
Number | |
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Percent(3) | |
|
this Prospectus | |
|
Number | |
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Percent(4) | |
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Arbor Partners, L.P.(5)
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179,990 |
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* |
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176,290 |
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3,700 |
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* |
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Bregman, Lior(6)
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306,857 |
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1.02 |
% |
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306,857 |
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220,300 |
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* |
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Cimarron Overseas Equity Master Fund LP(7)
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245,487 |
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* |
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245,487 |
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None |
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None |
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City of Milford Pension & Retirement Fund(8)
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276,116 |
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* |
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276,116 |
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None |
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None |
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City of Stamford Firemens Pension Fund(9)
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122,740 |
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* |
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122,740 |
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None |
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None |
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Daniels, John and Daniels, AnnaMarie, as Trustees of The Daniels
Family Trust UTA 1993(10)
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194,115 |
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* |
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184,115 |
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10,000 |
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* |
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Davenport, Craig T. and Peggy L. Davenport, as trustees of The
Davenport Family Trust UTA dated 12/3/86(11)
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432,287 |
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1.44 |
% |
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113,537 |
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318,750 |
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1.06 |
% |
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(1) |
The names of the selling securityholders and the numbers of
securities held by the selling securityholders may be amended
subsequent to the date of this prospectus pursuant to
Rule 424(b)(3) of the Securities Act of 1933. |
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(2) |
Assumes the sale of all shares offered in this prospectus and no
other purchases or sales of our common stock. |
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(3) |
Percentage ownership is based on 29,987,756 shares of our
common stock outstanding as of March 15, 2005. |
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(4) |
Percentage ownership is based on 29,987,756 shares of our
common stock outstanding as of March 15, 2005. |
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(5) |
Richard Shuster has dispositive and voting power over the shares
held by Arbor Partners, L.P. |
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(6) |
Shares Beneficially Owned Prior to the Offering and
Shares Beneficially Owned After the Offering include
200,000 shares held by Erella Bregman & Lior
Bregman JT/ WROS, with respect to which Lior Bregman has
dispositive and voting power, and 20,300 shares held by
Lior Bregman IRA R/ O, with respect to which Mr. Bregman
has dispositive and voting power. |
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(7) |
J.H. Cullum Clark has dispositive and voting power over the
shares held by Cimarron Overseas Equity Master Fund LP. |
12
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(8) |
The Managing Directors of Zesiger Capital Group LLP have
dispositive and voting power over the shares held by City of
Milford Pension & Retirement Fund. The Managing
Directors of Zesiger Capital Group LLP currently are Albert L.
Zesiger, Barrie R. Zesiger, Donald Devivo, James F. Cleary, John
Kayola and Robert K. Winters. |
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(9) |
The Managing Directors of Zesiger Capital Group LLP have
dispositive and voting power over the shares held by City of
Stamford Firemens Pension Fund. The Managing Directors of
Zesiger Capital Group LLP currently are Albert L. Zesiger,
Barrie R. Zesiger, Donald Devivo, James F. Cleary, John Kayola
and Robert K. Winters. |
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(10) |
John R. Daniels and AnnaMarie Daniels have dispositive and
voting power over the shares held by the Daniels Family
Trust UTA 1993. Shares Beneficially Owned Prior to
the Offering and Shares Beneficially Owned After the
Offering include 10,000 shares underlying options
that are held by Dr. Daniels and exercisable within
60 days of March 15, 2005. |
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(11) |
Craig T. Davenport and Peggy L. Davenport have dispositive and
voting power over the shares held by the Davenport Family
Trust UTA 12/3/86. Shares Beneficially Owned Prior to
the Offering and Shares Beneficially Owned After the
Offering include 318,750 shares underlying options
that are held by Mr. Davenport and exercisable within
60 days of March 15, 2005. |
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|
Shares Beneficially | |
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|
Shares Beneficially | |
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|
Owned Prior to | |
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|
Owned After the | |
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the Offering | |
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|
|
Offering(2) | |
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| |
|
Shares Offered by | |
|
| |
Selling Securityholders(1) |
|
Number | |
|
Percent(3) | |
|
this Prospectus | |
|
Number | |
|
Percent(4) | |
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| |
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| |
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| |
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Fleming, Hayden R. and Fleming, LaDonna M., as Trustees of the
Hayden R. Fleming Revocable Trust dated as of July 19,
1995(12)
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458,707 |
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1.52 |
% |
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306,857 |
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151,850 |
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* |
|
GW2001 Fund, L.P.(13)
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67,327 |
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|
* |
|
|
|
67,327 |
|
|
|
None |
|
|
|
None |
|
Haimovitch, Larry as trustee of the Larry Haimovitch 2000
Separate Property Revocable Trust(14)
|
|
|
15,341 |
|
|
|
* |
|
|
|
15,341 |
|
|
|
None |
|
|
|
None |
|
JP Morgan Trust Co. (Bahamas) Limited as Trustee U/ A/ D
11/3/93(15)
|
|
|
104,380 |
|
|
|
* |
|
|
|
104,380 |
|
|
|
None |
|
|
|
None |
|
Kotler, Kevin(16)
|
|
|
97,171 |
|
|
|
* |
|
|
|
61,371 |
|
|
|
35,800 |
|
|
|
* |
|
Midwood Capital Partners QP, L.P.(17)
|
|
|
181,069 |
|
|
|
* |
|
|
|
98,187 |
|
|
|
82,882 |
|
|
|
* |
|
Midwood Capital Partners, L.P.(18)
|
|
|
425,796 |
|
|
|
1.42 |
% |
|
|
208,670 |
|
|
|
217,126 |
|
|
|
* |
|
Norwalk Employees Pension Plan(19)
|
|
|
107,440 |
|
|
|
* |
|
|
|
107,440 |
|
|
|
None |
|
|
|
None |
|
Nydam, William J.(20)
|
|
|
702,690 |
|
|
|
2.33 |
% |
|
|
306,857 |
|
|
|
395,833 |
|
|
|
1.32 |
% |
|
|
(12) |
Shares Beneficially Owned Prior to the Offering and
Shares Beneficially Owned After the Offering include
151,850 shares held by the Hayden R. Fleming Revocable
Trust dated as of July 19, 1995. Hayden R. Fleming and
LaDonna M. Fleming have dispositive and voting power over the
shares held by the Hayden R. Fleming Revocable Trust dated as of
July 19, 1995. |
|
(13) |
Eugene M. Weber has dispositive and voting power over the shares
held by GW2001 Fund, L.P. |
|
(14) |
Larry Haimovitch has dispositive and voting power over the
shares held by the Larry Haimovitch 2000 Separate Property
Revocable Trust. |
|
(15) |
The Managing Directors of Zesiger Capital Group LLP have
dispositive and voting power over the shares held by JP Morgan
Trust Co. (Bahamas) Limited as Trustee U/ A/ D 11/3/93. The
Managing Directors of Zesiger Capital Group LLP currently are
Albert L. Zesiger, Barrie R. Zesiger, Donald Devivo, James F.
Cleary, John Kayola and Robert K. Winters. |
|
(16) |
Shares Beneficially Owned Prior to the Offering and
Shares Beneficially Owned After the Offering include
30,750 shares held by Galleon Healthcare Offshore Ltd.,
with respect to which Kevin Kotler has |
13
|
|
|
dispositive and voting power, and 5,050 shares held by
Galleon Healthcare Partners LP, with respect to which Kevin
Kotler has dispositive and voting power. |
|
(17) |
Ross DeMont and David Cohen have dispositive and voting power
for the shares held by Midwood Capital Partners QP, L.P. |
|
(18) |
Ross DeMont and David Cohen have dispositive and voting power
for the shares held by Midwood Capital Partners, L.P. |
|
(19) |
The Managing Directors of Zesiger Capital Group LLP have
dispositive and voting power over the shares held by Norwalk
Employees Pension Plan. The Managing Directors of Zesiger
Capital Group LLP currently are Albert L. Zesiger, Barrie R.
Zesiger, Donald Devivo, James F. Cleary, John Kayola and Robert
K. Winters. |
|
(20) |
Shares Beneficially Owned Prior to the Offering and
Shares Beneficially Owned After the Offering include
395,833 shares underlying options that are exercisable
within 60 days of March 15, 2005. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially | |
|
|
|
Shares Beneficially | |
|
|
Owned Prior to | |
|
|
|
Owned After the | |
|
|
the Offering | |
|
|
|
Offering(2) | |
|
|
| |
|
Shares Offered by | |
|
| |
Selling Securityholders(1) |
|
Number | |
|
Percent(3) | |
|
this Prospectus | |
|
Number | |
|
Percent(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Paragon Associates J.V.(21)
|
|
|
1,227,436 |
|
|
|
4.03 |
% |
|
|
1,227,436 |
|
|
|
None |
|
|
|
None |
|
Prothro Family Limited Partnership LP(22)
|
|
|
184,115 |
|
|
|
* |
|
|
|
184,115 |
|
|
|
None |
|
|
|
None |
|
Public Employee Retirement System of Idaho(23)
|
|
|
613,700 |
|
|
|
2.03 |
% |
|
|
613,700 |
|
|
|
None |
|
|
|
None |
|
SRB Greenway Capital (QP), L.P.(24)
|
|
|
823,412 |
|
|
|
2.72 |
% |
|
|
746,712 |
|
|
|
76,700 |
|
|
|
* |
|
SRB Greenway Capital, L.P.(25)
|
|
|
115,223 |
|
|
|
* |
|
|
|
104,823 |
|
|
|
10,400 |
|
|
|
* |
|
SRB Greenway Offshore Operating Fund, L.P.(26)
|
|
|
76,944 |
|
|
|
* |
|
|
|
69,044 |
|
|
|
7,900 |
|
|
|
* |
|
Walker Smith Capital (QP), L.P.(27)
|
|
|
708,539 |
|
|
|
2.34 |
% |
|
|
708,539 |
|
|
|
None |
|
|
|
None |
|
Walker Smith Capital, L.P.(28)
|
|
|
149,931 |
|
|
|
* |
|
|
|
149,931 |
|
|
|
None |
|
|
|
None |
|
Walker Smith International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21) |
Bradbury Dyer III has dispositive and voting power over the
shares held by Paragon Associates J.V. |
|
(22) |
J.H. Cullum Clark has dispositive and voting power over the
shares held by Prothro Family Limited Partnership LP. |
|
(23) |
The Managing Directors of Zesiger Capital Group LLP have
dispositive and voting power over the shares held by Public
Employee Retirement System of Idaho. The Managing Directors of
Zesiger Capital Group LLP currently are Albert L. Zesiger,
Barrie R. Zesiger, Donald Devivo, James F. Cleary, John Kayola
and Robert K. Winters. |
|
(24) |
WS Capital, L.L.C. (WS Capital) is the general
partner of WS Capital Management, L.P. (WSC
Management). WSC Management is the general partner of
Walker Smith Capital, L.P. (WSC) and Walker Smith
Capital (Q.P.), L.P. (WSCQP) and is the agent and
attorney-in-fact for Walker Smith International Fund, Ltd., a
British Virgin Islands exempted company (WS
International). WSV Management, L.L.C. (WSV)
is the general partner of WS Ventures Management, L.P.
(WSVM). WSVM is the general partner of WS
Opportunity Fund, L.P. (WSO) and WS Opportunity Fund
(Q.P.), L.P. (WSOQP) and is the agent and
attorney-in-fact for WS Opportunity Fund International,
Ltd. (WSO International). BC Advisors, LLC
(BCA) is the general partner of SRB Management, L.P.
(SRB Management). SRB Management is the general
partner of SRB Greenway Capital, L.P. (SRBGC), SRB
Greenway Capital (Q.P.), L.P. (SRBQP) and SRB
Greenway Offshore Operating Fund, L.P. (SRB
Offshore). Reid S. Walker and G. Stacy Smith are
principals of WS Capital and WSV, and Patrick P. Walker is a
principal of WSV. Through their control of WS Capital,
Messrs. R. Walker and Smith share voting and investment
control over the portfolio securities of each of WSC, WSCQP and
WS International. Through their control of WSV, Messrs. R. |
14
|
|
|
Walker, Smith and P. Walker share voting and investment control
over the portfolio securities of each of WSO, WSOQP and WSO
International. Steven R. Becker is the sole principal of BCA.
Through his control of BCA, Mr. Becker possesses sole
voting and investment control over the portfolio securities of
each of SRBGC, SRBQP and SRB Offshore. Pursuant to a letter
agreement, Steven R. Becker may collaborate with Reid S. Walker,
G. Stacy Smith and Patrick P. Walker on investment strategies
from time to time. |
|
(25) |
See footnote 24 above. |
|
(26) |
See footnote 24 above. |
|
(27) |
See footnote 24 above. |
|
(28) |
See footnote 24 above. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially | |
|
|
|
Shares Beneficially | |
|
|
Owned Prior to | |
|
|
|
Owned After the | |
|
|
the Offering | |
|
|
|
Offering(2) | |
|
|
| |
|
Shares Offered by | |
|
| |
Selling Securityholders(1) |
|
Number | |
|
Percent(3) | |
|
this Prospectus | |
|
Number | |
|
Percent(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Fund, Ltd.(29)
|
|
|
1,089,900 |
|
|
|
3.58 |
% |
|
|
1,089,900 |
|
|
|
None |
|
|
|
None |
|
Weber Capital Partners, L.P.(30)
|
|
|
239,530 |
|
|
|
* |
|
|
|
239,530 |
|
|
|
None |
|
|
|
None |
|
Winters, Robert K
|
|
|
3,060 |
|
|
|
* |
|
|
|
3,060 |
|
|
|
None |
|
|
|
None |
|
WPG Opportunistic Value Fund, L.P.(31)
|
|
|
695,811 |
|
|
|
2.30 |
% |
|
|
681,911 |
|
|
|
13,900 |
|
|
|
* |
|
WPG Opportunistic Value Overseas, L.P.(32)
|
|
|
563,950 |
|
|
|
1.87 |
% |
|
|
553,350 |
|
|
|
10,600 |
|
|
|
* |
|
WS Opportunity Fund (QP), L.P.(33)
|
|
|
155,210 |
|
|
|
* |
|
|
|
155,210 |
|
|
|
None |
|
|
|
None |
|
WS Opportunity Fund International, Ltd.(34)
|
|
|
207,007 |
|
|
|
* |
|
|
|
207,007 |
|
|
|
None |
|
|
|
None |
|
WS Opportunity Fund, L.P.(35)
|
|
|
144,286 |
|
|
|
* |
|
|
|
144,286 |
|
|
|
None |
|
|
|
None |
|
|
Total
|
|
|
10,915,567 |
(36) |
|
|
31.50 |
% |
|
|
9,580,126 |
|
|
|
1,555,741 |
(37) |
|
|
5.07 |
% |
|
|
(29) |
See footnote 24 above. |
|
(30) |
Eugene M. Weber has dispositive and voting power for the shares
held by Weber Capital Partners, L.P. |
|
(31) |
Richard Shuster and Daniel Vandivent have dispositive and voting
power for the shares held by WPG Opportunistic Value Fund, L.P. |
|
(32) |
Richard Shuster and Daniel Vandivent have dispositive and voting
power for the shares held by WPG Opportunistic Value Overseas,
L.P. |
|
(33) |
See footnote 24 above. |
|
(34) |
See footnote 24 above. |
|
(35) |
See footnote 24 above. |
|
(36) |
Includes 724,583 shares underlying options that are
exercisable within 60 days of March 15, 2005. |
|
(37) |
Includes 724,583 shares underlying options that are
exercisable within 60 days of March 15, 2005. |
March 2005 Equity Financing
On March 10, 2005, we entered into a Purchase Agreement and
a Registration Rights Agreement in connection with a private
placement of our securities to the selling securityholders for
aggregate gross proceeds of $15.6 million. Pursuant to the
terms of the Purchase Agreement, we sold a total of
(i) 5,635,378 shares of our common stock (the
Shares), and (ii) warrants (the
Warrants) to purchase an aggregate of
3,944,748 shares of our common stock (Warrant
Shares).
Pursuant to the Purchase Agreement, each of Endocare, on the one
hand, and the selling securityholders, on the other hand, made
representations and warranties regarding matters that are
customarily included in
15
financings of this nature. The Purchase Agreement also contained
certain conditions to closing, which were satisfied prior to the
closing, which occurred on March 11, 2005.
The securities sold pursuant to the Purchase Agreement have not
yet been registered under the Securities Act of 1933 and may not
be offered or sold in the United States in the absence of an
effective registration statement or exemption from applicable
registration requirements. Pursuant to the Registration Rights
Agreement, we are required to file a registration statement on
Form S-2 within 30 days following the closing for
purposes of registering the resale of the Shares and the Warrant
Shares. The Registration Rights Agreement provides that if the
registration statement is not filed with the SEC within
30 days after the closing, then we are required to make
pro-rata payments to each of the selling securityholders in an
amount equal to 1% of the aggregate purchase price paid by each
selling securityholders for the Shares for each 30-day period
following the filing deadline. In addition, we have agreed to
make similar payments to the selling securityholders if the
registration statement is not declared effective by the SEC
prior to the earlier of: (i) if the SEC informs Endocare
that no review of the registration statement will be made, then
five business days after the later of (A) the date on which
the SEC shall have informed Endocare that no review of the
registration statement will be made, or (B) the date on
which we shall have filed our internal control report pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002; or
(ii) the ninetieth day after the closing date.
Pursuant to the Registration Rights Agreement, each of Endocare,
on the one hand, and the selling securityholders, on the other
hand, have agreed to indemnify the other party and certain
affiliates against certain liabilities related to the
registration statement.
Pursuant to the terms of the Purchase Agreement, each of the
selling securityholders was issued a Series A Warrant to
purchase shares of common stock at an exercise price of
$3.50 per share and a Series B Warrant to purchase
shares of common stock at an exercise price of $4.00 per
share. The number of shares underlying each Series A
Warrant is equal to 35% of the number of shares sold to the
respective selling securityholder in the transaction. Similarly,
the number of shares underlying each Series B Warrant is
equal to 35% of the number of shares sold to the respective
selling securityholder in the transaction. For a detailed
description of the Warrants, see the section of this prospectus
entitled Description of Capital Stock
Warrants.
In the Purchase Agreement, each of the selling securityholders
agreed that, prior to the earliest to occur of (i) the
termination of the Purchase Agreement, (ii) the effective
date of the registration statement covering the Shares and the
Warrant Shares or (iii) the effectiveness deadline
described above, such selling securityholder will not, and will
cause its trading affiliates not to, engage, directly or
indirectly, in effecting or agreeing to effect any short sale,
whether or not against the box, establish any put
equivalent position (as defined in Rule 16a-1(h)
under the Securities Exchange Act of 1934) with respect to our
common stock, grant any other right (including, without
limitation, any put or call option) with respect to our common
stock or with respect to any security that includes, relates to
or derives any significant part of its value from our common
stock or otherwise seek to hedge its position in the Shares and
the Warrant Shares. Each of the selling securityholders also
agreed not to sell, contract to sell, grant any option to
purchase, transfer the economic risk of ownership in, make any
short sale of, pledge or otherwise transfer or dispose of any
interest in any of the Shares or Warrant Shares until after the
date of our conference call regarding our financial results for
the quarter ending March 31, 2005, but in any event no
later that June 20, 2005.
Two members of our management team, Chairman and Chief Executive
Officer Craig T. Davenport and President and Chief Operating
Officer William J. Nydam, made personal investments in the
transaction in the amounts of $184,999.99 and $499,998.85,
respectively. In addition, a member of our board of directors,
John R. Daniels, M.D., invested $299,999.31 in the
transaction.
In January 2005, our board of directors approved a
recommendation from our management to instruct our investment
bank, Seven Hills Partners, to evaluate the potential for
completing an equity round of financing. With that decision, our
management and several board members expressed interest in
participating in the round if such was executed. In order to
ensure a conflict of interest was avoided, our board established
a Special Committee to manage and negotiate the terms for the
round without Messrs. Davenport and Nydam and any
participating board member being involved in the negotiations.
The Special Committee negotiated the
16
terms of this transaction with participating investors.
Messrs. Davenport and Nydam and the board members who were
not on the Special Committee were given the opportunity to
participate at the terms agreed upon by the Special Committee
and the investors.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue 51,000,000 shares of capital
stock, consisting of 50,000,000 shares of common stock,
$0.001 par value per share, and 1,000,000 shares of
preferred stock, $0.001 par value per share, of which
250,000 shares have been designated Series A Junior
Participating Preferred Stock.
The following is a summary of the material terms of our capital
stock. You should refer to our Restated Certificate of
Incorporation, as amended, and Amended and Restated Bylaws and
the agreements described below for more detailed information.
Common Stock
As of March 15, 2005, 29,987,756 shares of our common
stock were issued and outstanding. Holders of our common stock
are entitled to one vote per share on all matters to be voted
upon by the stockholders. Subject to limitations under Delaware
law and preferences that may apply to any outstanding shares of
preferred stock, holders of our common stock are entitled to
receive ratably such dividends or other distribution, if any, as
may be declared by our board of directors out of funds legally
available therefor. In the event of our liquidation, dissolution
or winding up, holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities,
subject to the liquidation preference of any outstanding
preferred stock. The common stock has no preemptive, conversion
or other rights to subscribe for additional securities. There
are no redemption or sinking fund provisions applicable to our
common stock. The rights, preferences and privileges of holders
of common stock are subject to, and may be adversely affected
by, the rights of the holders of shares of any series of
preferred stock that we may designate and issue in the future.
All outstanding shares of our common stock are, and all shares
of common stock to be outstanding upon completion of the
offering will be, validly issued, fully paid and nonassessable.
Preferred Stock
There are no shares of our preferred stock currently issued and
outstanding. We may issue preferred stock from time to time in
one or more series. Our board of directors is authorized to
determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued
series of preferred stock, and, within the limitations or
restrictions stated in any resolution or resolutions of the
board originally fixing the number of shares constituting any
series, to increase or decrease, not below the number of shares
of any series then outstanding, the number of shares of any
series subsequent to the issuance of shares of that series, to
determine the designation and par value of any series of
preferred stock and to fix the number of shares of any series.
Our board may authorize and issue preferred stock with voting or
conversion rights that could adversely affect the voting power
or other rights of the holders of our common stock. In addition,
the issuance of our preferred stock may have the effect of
delaying, deferring or preventing a change in control. In
connection with our adoption of the stockholder rights plan
described below, our board of directors designated
250,000 shares of our preferred stock as Series A
Junior Participating Preferred Stock.
Stockholder Rights Plan
In April 1999, we adopted a stockholder rights plan in which
rights to purchase shares of Series A Junior Participating
Preferred Stock (Series A Preferred Stock) were
distributed as a dividend at the rate of one right for each
share of common stock held as of the close of business on
April 15, 1999. The rights are designed to guard against
partial tender offers and other abusive and coercive tactics
that might be used in an attempt to gain control of Endocare or
to deprive our stockholders of their interest in the long-term
value of Endocare. These rights seek to achieve these goals by
forcing a potential acquirer to negotiate with our board of
directors (or go to court to try to force the board of directors
to redeem the rights), because only the board of directors can
redeem the rights and allow the potential acquirer to acquire
our shares without suffering very
17
significant dilution. However, these rights also could deter or
prevent transactions that stockholders deem to be in their
interests, and could reduce the price that investors or an
acquirer might be willing to pay in the future for shares of our
common stock, as noted above under Risk Factors.
Each right entitles the registered holder to purchase one
one-thousandth of a share (a Unit) of our
Series A Preferred Stock at a price of $25.00 per
Unit, subject to adjustment. Units of Series A Preferred
Stock purchasable upon exercise of the rights will not be
redeemable. Each Unit of Series A Preferred Stock will be
entitled to an aggregate dividend of 1,000 times the dividend
declared per share of common stock. In the event of liquidation,
the holders of the Units of Series A Preferred Stock will
be entitled to an aggregate payment of 1,000 times the payment
made per share of common stock. Each Unit of Series A
Preferred Stock will have 1,000 votes, 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 Series A Preferred Stock will be
entitled to receive 1,000 times the amount received per share of
common stock. These rights are protected by customary
anti-dilution provisions.
The rights will be exercisable only if a person or group
acquires 15 percent or more of our common stock (subject to
certain exceptions stated in the plan) or announces a tender
offer the consummation of which would result in ownership by a
person or group of 15 percent or more of our common stock.
At any time within ten business days after the date of a public
announcement that a person or group has acquired 15% or more of
our common stock (subject to certain exceptions), our board of
directors may redeem the rights at a price of one cent per
right. The rights will expire at the close of business on
April 15, 2009, unless the expiration date is extended or
unless the rights are earlier redeemed or exchanged by Endocare.
Series A Warrants and Series B Warrants
1,972,374 of the shares of common stock offered by the selling
securityholders in this prospectus are issuable upon the
exercise of Series A Warrants that we issued to the selling
securityholders in our March 2005 equity financing. An
additional 1,972,374 of the shares of common stock offered by
the selling securityholders in this prospectus are issuable upon
the exercise of Series B Warrants that we issued to the
selling securityholders in our March 2005 equity financing. The
initial exercise price of the Series A warrants is
$3.50 per share and the initial exercise price of the
Series B warrants is $4.00 per share. The warrants
expire on March 11, 2010. The warrants are exercisable
solely for cash, except in limited circumstances after the first
anniversary of the closing date if there is not an effective
registration statement covering the resale of the shares
underlying the warrants.
The warrants provide for adjustment of the number and kind of
securities purchasable upon exercise of the warrants, as well as
for adjustment of the per share exercise price, upon the
occurrence of certain specified events. These specified events
include, without limitation, the payment by Endocare of a
dividend or a distribution on our common stock in shares of
common stock, the consolidation or merger of Endocare with
another entity in which Endocare is not the surviving entity,
and the recapitalization, reclassification or reorganization of
our capital stock. The warrants also contain a weighted-average
anti-dilution adjustment provision which provides for an
adjustment to the per share exercise price in the event that we
issue shares of our common stock for per share consideration
that is less than the exercise price then in effect, subject to
customary exceptions.
Each warrant is callable by Endocare at a price of
$0.01 per share underlying such warrant if shares of our
common stock trade above certain dollar thresholds ($6.50 for
the Series A Warrants and $7.50 for the Series B
Warrants) for 20 consecutive trading days commencing on any date
after the effectiveness of the registration statement required
by the Registration Rights Agreement described above under
Selling Securityholders March 2005 Equity
Financing.
Transfer Agent and Registrar; Market
The transfer agent and registrar for our common stock is
U.S. Stock Transfer Corporation. Our common stock is traded
on the Pink Sheets, under the symbol ENDO.PK.
18
PLAN OF DISTRIBUTION
The selling securityholders, which as used herein includes
donees, pledgees, transferees or other successors-in-interest
selling shares of common stock or interests in shares of common
stock received after the date of this prospectus from a selling
securityholder as a gift, pledge, partnership distribution or
other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock
or interests in shares of common stock on any stock exchange,
market or trading facility on which the shares are traded or in
private transactions. These dispositions may be at fixed prices,
at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.
The selling securityholders may use any one or more of the
following methods when disposing of shares or interests therein:
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ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and resale by the
broker-dealer for its account; |
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an exchange distribution in accordance with the rules of the
applicable exchange; |
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privately negotiated transactions; |
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short sales effected after the date the registration statement
of which this Prospectus is a part is declared effective by the
SEC; |
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through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; |
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broker-dealers may agree with the selling securityholders to
sell a specified number of such shares at a stipulated price per
share; |
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a combination of any such methods of sale; and |
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any other method permitted pursuant to applicable law. |
The selling securityholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common
stock owned by them and, if they default in the performance of
their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock, from time to time,
under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling securityholders to
include the pledgee, transferee or other successors in interest
as selling securityholders under this prospectus. The selling
securityholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or
other successors in interest will be the selling beneficial
owners for purposes of this prospectus.
In connection with the sale of our common stock or interests
therein, the selling securityholders may enter into hedging
transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume.
The selling securityholders may also sell shares of our common
stock short and deliver these securities to close out their
short positions, or loan or pledge the common stock to
broker-dealers that in turn may sell these securities. The
selling securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which
require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares
such broker-dealer or other financial institution may resell
pursuant to this prospectus (as supplemented or amended to
reflect such transaction).
The aggregate proceeds to the selling securityholders from the
sale of the common stock offered by them will be the purchase
price of the common stock less discounts or commissions, if any.
Each of the selling
19
securityholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part,
any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from
this offering. Upon any exercise of the warrants by payment of
cash, however, we will receive the exercise price of the
warrants.
The selling securityholders also may resell all or a portion of
the shares in open market transactions in reliance upon
Rule 144 under the Securities Act of 1933, provided that
they meet the criteria and conform to the requirements of that
rule.
The selling securityholders and any underwriters, broker-dealers
or agents that participate in the sale of the common stock or
interests therein may be underwriters within the
meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any
resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling securityholders
who are underwriters within the meaning of
Section 2(11) of the Securities Act will be subject to the
prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be
sold, the names of the selling securityholders, the respective
purchase prices and public offering prices, the names of any
agents, dealer or underwriter, any applicable commissions or
discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that
includes this prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions
only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless
it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and
is complied with.
We have advised the selling securityholders that the
anti-manipulation rules of Regulation M under the Exchange
Act may apply to sales of shares in the market and to the
activities of the selling securityholders and their affiliates.
In addition, we will make copies of this prospectus (as it may
be supplemented or amended from time to time) available to the
selling securityholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The
selling securityholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under
the Securities Act.
We have agreed to indemnify the selling securityholders against
liabilities, including liabilities under the Securities Act and
state securities laws, relating to the registration of the
shares offered by this prospectus.
We have agreed with the selling securityholders to keep the
registration statement of which this prospectus constitutes a
part effective until the earlier of (1) such time as all of
the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or
(2) the date on which the shares may be sold pursuant to
Rule 144(k) of the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the
issuance of the common stock offered hereby will be passed upon
by Morrison & Foerster LLP, San Diego, California.
EXPERTS
Ernst & Young LLP, independent registered public accounting
firm, has audited our consolidated financial statements and
schedule included in our Annual Report on Form 10-K for the
year ended December 31, 2004, and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2004 included in
Form 10-K/ A, as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in
the registration statement. Our financial
20
statements and schedule and managements assessment are
incorporated by reference in reliance on Ernst & Young
LLPs reports, given on their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form S-2, including exhibits and schedules, and a
post-effective amendment to the registration statement, in
connection with the common stock to be sold in this offering.
This prospectus is part of the registration statement and does
not contain all the information included in the registration
statement. For further information about us and the common stock
to be sold in this offering, please refer to the registration
statement. When a reference is made in this prospectus to any
contract, agreement or other document, the reference may not be
complete and you should refer to the copy of that contract,
agreement or other document filed as an exhibit to the
registration statement on to one of our previous SEC filings.
We also file annual, quarterly and special reports, proxy
statements, and other information with the SEC. You may read and
copy the registration statement on any other document we file
with the SEC at the SECs public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois.
You can request copies of these documents by writing to the SEC
and paying a fee for the copying cost. Please call the SEC at
l-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public from the
SECs web site at http://www.sec.gov.
The SEC allows us to incorporate by reference into
this prospectus certain information that we file with it. This
means that we can disclose important information to you by
referring you to another document that we filed separately with
the SEC. The information incorporated by reference is deemed to
be part of this prospectus, except for any information
superseded by information in this prospectus. You should read
the information incorporated by reference because it is an
important part of this prospectus.
We incorporate by reference the following documents that we
previously filed with the SEC pursuant to the Securities
Exchange Act of 1934:
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1. Our annual report on Form 10-K for the fiscal year
ended December 31, 2004 filed with the SEC on
March 16, 2005; |
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2. The description of our common stock contained in the
Registration Statement on Form 10-SB filed under
Section 12(g) of the Exchange Act filed with the SEC on
November 14, 1995, including any subsequent amendment or
report filed for the purpose of amending such description; |
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3. Our current report on Form 8-K filed with the SEC
on March 16, 2005; |
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4. Our annual report amendment on Form 10-K/ A filed
with the SEC on May 2, 2005; |
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5. Our current report on Form 8-K filed with the SEC
on May 3, 2005; |
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6. Our quarterly report on Form 10-Q filed with the
SEC on May 10, 2005; |
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7. Our revised definitive proxy statement filed with the
SEC on May 27, 2005; |
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8. Our current report on Form 8-K filed with the SEC
on June 28, 2005; and |
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9. The description of the stock purchase rights under our
stockholder rights plan contained in the Registration Statement
on Form 8-A filed under Section 12(g) of the Exchange
Act filed with the SEC on June 28, 2005, including any
subsequent amendment or report filed for the purpose of amending
such description. |
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Any document, and any statement contained in a document,
incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is
incorporated on deemed to be incorporated by reference herein,
modifies on supersedes such document or statement. Any such
21
document or statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a
part of this prospectus.
A copy of our annual report on Form 10-K for the fiscal
year ended December 31, 2004 and a copy of our quarterly
report on Form 10-Q for the quarter ended March 31, 2005
are delivered with this prospectus at no cost. The documents
incorporated by reference in this prospectus that are not
delivered with this prospectus may be obtained from us at no
cost. You may obtain a copy of the documents by submitting a
written request to Endocares Corporate Secretary at 201
Technology Drive, Irvine, California 92618 or by calling
Endocare at (949) 450-5300. Additional information about us
is available at our web site located at
http://www.endocare.com. Information contained in our web
site is not a part of this prospectus.
22
9,580,126 Shares
Endocare, Inc.
Common Stock
PROSPECTUS
,
2005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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Item 14. |
Other Expenses of Issuance and Distribution. |
The following is an estimate, subject to future contingencies,
of the expenses to be incurred by us in connection with the
issuance and distribution of the securities being registered.
None of the following expenses will be borne by the selling
securityholders.
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Registration Fee
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$ |
3,530 |
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Legal Fees and Expenses
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100,000 |
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Accounting Fees and Expenses
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50,000 |
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Printing and Engraving Fees
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Listing Fees
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Transfer Agents Fees
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700 |
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Miscellaneous
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Total
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$ |
154,230 |
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Item 15. |
Indemnification of Directors and Officers. |
Section 145 of the Delaware Corporation Law provides that a
Delaware corporation may indemnify any person against expenses,
judgments, fines and settlements actually and reasonably
incurred by any such person in connection with a threatened,
pending or completed action, suit or proceeding in which he is
involved by reason of the fact that he is or was a director,
officer, employee or agent of such corporation, provided that
(i) he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the
corporation, and (ii) with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct
was unlawful. If the action or suit is by or in the name of the
corporation, the corporation may indemnify such person against
expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation,
except that no indemnification may be made in respect to any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation for negligence or
misconduct in the performance of his duty to the corporation,
unless and only to the extent that the Delaware Court of
Chancery or the court in which the action or suit is brought
determines upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
As permitted by Section 102 of the Delaware General
Corporation Law, the Company has adopted provisions in its
restated certificate of incorporation and amended and restated
bylaws that limit or eliminate the personal liability of its
directors for a breach of their fiduciary duty of care as a
director. The duty of care generally requires that, when acting
on behalf of the Company, directors exercise an informed
business judgment based on all material information reasonably
available to them. Consequently, a director will not be
personally liable to the Company or its stockholders for
monetary damages or breach of fiduciary duty as a director,
except for liability for:
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any breach of the directors duty of loyalty to the Company
or its stockholders; |
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any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law; |
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any act related to unlawful stock repurchases, redemptions or
other distributions or payment of dividends; or |
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any transaction from which the director derived an improper
personal benefit. |
II-1
These limitations of liability do not affect the availability of
equitable remedies such as injunctive relief or rescission.
As permitted by Section 145 of the Delaware General
Corporation Law, the Companys amended and restated bylaws
provide that:
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the Company may indemnify its directors, officers and employees
to the fullest extent permitted by the Delaware General
Corporation Law, subject to limited exceptions; |
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the Company may advance expenses to its directors, officers and
employees in connection with a legal proceeding to the fullest
extent permitted by the Delaware General Corporation Law,
subject to limited exceptions; and |
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the rights provided in its amended and restated bylaws are not
exclusive. |
We have entered into indemnification agreements with each of our
directors and executive officers, as well as with certain
employees and consultants. These indemnification agreements
provide that we hold harmless and indemnify each such director,
officer, employee and consultant to the fullest extent
authorized or permitted by law. In addition, subject to certain
conditions, these indemnification agreements provide for payment
of expenses (including attorneys fees) actually and
reasonably incurred in connection with any threatened, pending
or completed proceeding to which the indemnified director,
officer or employee is, was or at any time becomes a party, or
is threatened to be made a party, by reason of the fact that he
or she is, was or at any time becomes a director, officer,
employee or agent of us, or is or was serving or at any time
serves at the request of us as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise. In addition, we have
purchased policies of directors and officers
liability insurance, which insure our directors and officers
against the cost of defense, settlement or payment of a judgment
in some circumstances.
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Exhibit No. | |
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Description |
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2 |
.1(1) |
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Agreement and Plan of Reorganization, dated February 21,
2002 by and among the Company, Timm Medical Technologies, Inc.,
TMT Acquisition Corporation and certain stockholders of Timm
Medical Technologies, Inc. Certain schedules and other
attachments to this exhibit were omitted. We agree to furnish
supplementally a copy of any omitted schedules or attachments to
the Commission upon request. |
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2 |
.2(2) |
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Agreement and Plan of Merger, dated June 30, 1999, by and
among the Company, Advanced Medical Procedures, Inc., Advanced
Medical Procedures, LLC, Gary M. Onik, M.D., Robert F.
Byrnes and Jerry Anderson. Schedules and other attachments to
this exhibit were omitted. We agree to furnish supplementally a
copy of any omitted schedules or attachments to the Commission
upon request. |
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2 |
.3(3) |
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Asset Purchase Agreement, dated February 6, 2002, by and
between the Company and Gary M. Onik, M.D. Certain
schedules and other attachments to this exhibit were omitted. We
agree to furnish supplementally a copy of any omitted schedules
or attachments to the Commission upon request. |
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2 |
.4(3) |
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Asset Purchase Agreement, dated May 28, 2002, by and among
the Company and Cryomedical Sciences, Inc. Certain schedules and
other attachments to this exhibit were omitted. We agree to
furnish supplementally a copy of any omitted schedules or
attachments to the Commission upon request. |
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2 |
.5(4) |
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Partnership and Limited Liability Company Membership Interest
Purchase Agreement, dated as of August 12, 2002, by and
among the Company and U.S. Medical Development, Inc.,
U.S.M.D., Ltd. and U.S.M.D. I, L.L.C. Certain schedules and
other attachments to this exhibit were omitted. We agree to
furnish supplementally a copy of any omitted schedules or
attachments to the Commission upon request. |
II-2
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Exhibit No. | |
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Description |
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2 |
.6(5) |
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Amendment No. 1 to Partnership and Limited Liability
Company Membership Interest Purchase Agreement, dated as of
September 30, 2002, by and among the Company, Inc. and
U.S. Medical Development, Inc., U.S.M.D., Ltd. and
U.S.M.D. I, L.L.C. |
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2 |
.7(6) |
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Agreement of Purchase and Sale, dated as of April 7, 2003,
by and among American Medical Systems, Inc., the Company and
Timm Medical Technologies, Inc. Certain schedules and other
attachments to this exhibit were omitted. We agree to furnish
supplementally a copy of any omitted schedules or attachments to
the Commission upon request. |
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2 |
.8(7)* |
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Asset Purchase and Technology License Agreement, dated as of
April 14, 2003, by and between the Company and CryoCath
Technologies Inc. |
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2 |
.9(8) |
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Agreement of Purchase and Sale, dated as of October 15,
2003, by and between SRS Medical Corp. and Timm Medical
Technologies, Inc. Certain schedules and other attachments to
this exhibit were omitted. We agree to furnish supplementally a
copy of any omitted schedules or attachments to the Commission
upon request. |
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2 |
.10(9) |
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Amendment No. 2 to Partnership and Limited Liability
Company Membership Interest Purchase Agreement, dated as of
February 27, 2004, by and among the Company and
U.S. Medical Development, Inc., U.S.M.D., Ltd. and
U.S.M.D. I, L.L.C |
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2 |
.11(9) |
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Service Fee Agreement, dated as of February 26, 2004, by
and among the Company and the Limited Partners of Mid-America
Cryotherapy, L.P. |
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2 |
.12(9) |
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First Amendment to Agreement of Purchase and Sale, dated as of
March 25, 2004, by and between SRS Medical Corp. and Timm
Medical Technologies, Inc. |
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2 |
.13(10) |
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First Amendment to Asset Purchase Agreement, dated as of
August 18, 2004, by and between the Company and Gary
Onik, M.D. |
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3 |
.1(2) |
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Certificate of Amendment of Restated Certificate of
Incorporation of the Company. |
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3 |
.2(2) |
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Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company. |
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3 |
.3(2) |
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Restated Certificate of Incorporation. |
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3 |
.4(11) |
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Amended and Restated Bylaws of the Company. |
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4 |
.1(28) |
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Form of Stock Certificate. |
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4 |
.2(27) |
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Form of Series A Warrant. |
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4 |
.3(27) |
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Form of Series B Warrant. |
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4 |
.4(30) |
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Rights Agreement, dated as of March 31, 1999, between the
Company and U.S. Stock Transfer Corporation, which includes the
form of Certificate of Designation for the Series A Junior
Participating Preferred Stock as Exhibit A, the form of
Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Series A Preferred Shares as Exhibit C. |
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4 |
.5(31) |
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Amendment No. 1 to Rights Agreement, dated as of
June 24, 2005, between the Company and U.S. Stock Transfer
Corporation. |
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5 |
.1(29) |
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Opinion of Morrison & Foerster LLP |
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10 |
.1(12) |
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Lease Agreement, dated November 26, 2001 by and between the
Company and the Irvine Company. |
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10 |
.2(12) |
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Form of Indemnification Agreement by and between the Company and
its directors. |
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10 |
.3(12) |
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Form of Indemnification Agreement by and between the Company and
its executive officers. |
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10 |
.4(13) |
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1995 Director Option Plan (as amended and restated through
March 2, 1999). |
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10 |
.5(14) |
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1995 Stock Plan (as amended and restated through
December 30, 2003). |
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10 |
.6(15) |
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2002 Supplemental Stock Plan |
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10 |
.7(4) |
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Promissory Note, dated July 15, 2002, issued by
U.S. Medical Development, Inc. to the Company. |
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10 |
.8(5) |
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First Amended and Restated Promissory Note, dated
September 30, 2002, issued by U.S. Medical
Development, Inc. to the Company. |
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10 |
.9(16) |
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Registration Rights Agreement, dated as of February 21,
2002, by and among the Company and the parties listed on
Schedule A thereto. |
II-3
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Exhibit No. | |
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Description |
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10 |
.10(15) |
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Registration Rights Agreement, dated as of June 24, 2002,
by and between the Company and Cryomedical Sciences, Inc. |
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10 |
.11(15) |
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Letter Agreement, dated June 11, 1999, by and between the
Company and Jerry Anderson. |
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10 |
.13(15) |
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2002 Executive Separation Benefits Plan. |
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10 |
.14(17) |
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Employment Agreement, dated as of March 3, 2003, by and
between the Company and William J. Nydam. |
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10 |
.15(17) |
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Employment Agreement, dated as of March 25, 2003, by and
between the Company and Katherine Greenberg. |
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10 |
.16(11) |
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Employment Agreement, dated as of March 25, 2003, by and
between the Company and Kevin Quilty. |
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10 |
.17(11) |
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First Amendment to Employment Agreement, dated as of
September 14, 2003, by and between the Company and
Katherine Greenberg. |
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10 |
.18(11) |
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Consulting Agreement, dated as of August 27, 2003, by and
between the Company and Craig T. Davenport. |
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10 |
.19(18) |
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Employment Agreement, dated as of December 15, 2003, by and
between the Company and Craig T. Davenport. |
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10 |
.20(19) |
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Letter Agreement, dated as of June 9, 2004, by and between
the Company and Katherine Greenberg. |
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10 |
.21(20) |
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Employment Agreement, dated as of August 11, 2004, by and
between the Company and Michael R. Rodriguez. |
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10 |
.22(21) |
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General Release of All Claims, dated as of August 10, 2004,
by and between the Company and Katherine Greenberg. |
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10 |
.23(22) |
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2004 Stock Incentive Plan. |
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10 |
.24(23) |
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2004 Non-Employee Director Option Program under 2004 Stock
Incentive Plan. |
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10 |
.25(23) |
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Form of Award Agreement Under 2004 Stock Incentive Plan. |
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10 |
.26(23) |
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Stipulation of Settlement, dated as of November 1, 2004,
relating to securities class action lawsuit. |
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10 |
.27(23) |
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Description of Craig Davenport salary adjustment, effective
December 2004. |
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10 |
.28(23) |
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Confidential Settlement Agreement and Release, dated as of
December 14, 2004, by and between the Company and certain
Underwriters at Lloyds, London. |
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10 |
.29(23) |
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Release and Settlement Agreement, dated as of December 16,
2004, by and between the Company and National Union Fire
Insurance Company. |
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10 |
.30(24) |
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Partnership Interest Purchase Agreement, dated as of
December 30, 2004, by and between the Company and Advanced
Medical Partners, Inc. |
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10 |
.31(25) |
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Confidential Settlement Agreement and Release, dated as of
February 11, 2005, by and between the Company and Great
American E&S Insurance Company. |
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10 |
.32(26) |
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2005 Management Incentive Compensation Program. |
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10 |
.33(27) |
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Purchase Agreement, dated as of March 10, 2005, by and
between Endocare and the Investors (as defined therein). |
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10 |
.34(27) |
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Registration Rights Agreement, dated as of March 10, 2005,
by and between Endocare and the Investors (as defined therein). |
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10 |
.35(25) |
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Description of William J. Nydam salary adjustment, effective
February 2005. |
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10 |
.36(25) |
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Description of Michael R. Rodriguez salary adjustment, effective
February 2005. |
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23 |
.1 |
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Consent of Independent Registered Public Accounting Firm. |
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23 |
.2(29) |
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Consent of Morrison & Foerster LLP (contained in
Exhibit 5.1) |
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24 |
.1(29) |
|
Power of Attorney. |
II-4
|
|
|
|
|
Management contract or compensatory plan or arrangement |
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|
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|
* |
Certain confidential portions of this exhibit were omitted and
provided separately to the SEC pursuant to a request for
confidential treatment. |
|
|
|
|
(1) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 5, 2002. |
|
|
(2) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-3 filed on
September 20, 2001. |
|
|
(3) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on August 14, 2002. |
|
|
(4) |
Previously filed as an exhibit to the Companys
Form 8-K filed on August 16, 2002. |
|
|
(5) |
Previously filed as an exhibit to the Companys
Form 8-K filed on October 15, 2002. |
|
|
(6) |
Previously filed as an exhibit to the Companys
Form 8-K filed on April 22, 2003. |
|
|
(7) |
Previously filed as an exhibit to the Companys
Form 8-K filed on April 29, 2003. |
|
|
(8) |
Previously filed as an exhibit to the Companys
Form 8-K filed on October 20, 2003. |
|
|
(9) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on May 10, 2004. |
|
|
(10) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on November 9, 2004. |
|
(11) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 15, 2004. |
|
(12) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 29, 2002. |
|
(13) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-8 filed on June 2,
1999. |
|
(14) |
Previously filed as an appendix to the Companys Definitive
Proxy Statement filed on December 3, 2003. |
|
(15) |
Previously filed as an exhibit to the Companys
Form 10-K filed on December 3, 2003. |
|
(16) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-3 filed on May 15,
2002. |
|
(17) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 27, 2003. |
|
(18) |
Previously filed as an exhibit to the Companys
Form 8-K filed on December 16, 2003. |
|
(19) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on August 9, 2004. |
|
(20) |
Previously filed as an exhibit to the Companys
Form 8-K filed on August 12, 2004. |
|
(21) |
Previously filed as an exhibit to the Companys
Form 8-K filed on September 1, 2004. |
|
(22) |
Previously filed as an appendix to the Companys Definitive
Proxy Statement filed on August 6, 2004. |
|
(23) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 16, 2005. |
|
(24) |
Previously filed as an exhibit to the Companys
Form 8-K filed on January 6, 2005. |
|
(25) |
Previously filed as an exhibit to the Companys Form 10-Q
filed on May 10, 2005. |
|
(26) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 1, 2005. |
|
(27) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 16, 2005. |
|
(28) |
Previously filed as an exhibit to the Companys
Form 10-K for the year ended December 31, 1995. |
|
(29) |
Previously filed as an exhibit to the Companys Form S-2
filed on April 4, 2005. |
|
|
(30) |
Previously filed as an exhibit to the Companys
Form 8-K filed on June 3, 1999. |
|
|
|
(31) |
Previously filed as an exhibit to the Companys
Form 8-K filed on June 28, 2005. |
|
II-5
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
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(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement: |
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(A) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; |
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(B) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement; |
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(C) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement. |
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(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. |
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|
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering. |
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(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the
registrants annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
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(5) To deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and,
where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person
to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the
prospectus to provide such interim financial information. |
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(6) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue. |
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-2 and has duly caused this pre-effective amendment
no. 2 to registration statement (no. 333-123866) to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
city of Irvine, State of California, on July 11, 2005.
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By: |
/s/ Craig T. Davenport |
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Craig T. Davenport |
|
Chairman and Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this
pre-effective amendment no. 2 to registration statement (no.
333-123866) has been signed by the following persons in the
capacities and on the dates indicated:
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Signature |
|
Title |
|
Date |
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|
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/s/ CRAIG T. DAVENPORT
Craig
T. Davenport |
|
Chairman and Chief Executive
Officer (principal executive officer) |
|
July 11, 2005 |
|
/s/ MICHAEL R. RODRIGUEZ
Michael
R. Rodriguez |
|
Senior Vice President, Finance and
Chief Financial Officer
(principal financial and accounting officer) |
|
July 11, 2005 |
|
*
John
R. Daniels, M.D. |
|
Director |
|
July 11, 2005 |
|
David
L. Goldsmith |
|
Director |
|
July 11, 2005 |
|
*
Eric
S. Kentor |
|
Director |
|
July 11, 2005 |
|
*
Terrence
A. Noonan |
|
Director |
|
July 11, 2005 |
|
*
Michael
J. Strauss, M.D. |
|
Director |
|
July 11, 2005 |
|
*
Thomas
R. Testman |
|
Director |
|
July 11, 2005 |
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*By: |
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/s/ MICHAEL R. RODRIGUEZ
Michael
R. Rodriguez
Attorney-in-Fact |
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II-7
EXHIBIT INDEX
|
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|
|
|
Exhibit No. | |
|
Description |
| |
|
|
|
2 |
.1(1) |
|
Agreement and Plan of Reorganization, dated February 21,
2002 by and among the Company, Timm Medical Technologies, Inc.,
TMT Acquisition Corporation and certain stockholders of Timm
Medical Technologies, Inc. Certain schedules and other
attachments to this exhibit were omitted. We agree to furnish
supplementally a copy of any omitted schedules or attachments to
the Commission upon request. |
|
|
2 |
.2(2) |
|
Agreement and Plan of Merger, dated June 30, 1999, by and
among the Company, Advanced Medical Procedures, Inc., Advanced
Medical Procedures, LLC, Gary M. Onik, M.D., Robert F.
Byrnes and Jerry Anderson. Schedules and other attachments to
this exhibit were omitted. We agree to furnish supplementally a
copy of any omitted schedules or attachments to the Commission
upon request. |
|
|
2 |
.3(3) |
|
Asset Purchase Agreement, dated February 6, 2002, by and
between the Company and Gary M. Onik, M.D. Certain
schedules and other attachments to this exhibit were omitted. We
agree to furnish supplementally a copy of any omitted schedules
or attachments to the Commission upon request. |
|
|
2 |
.4(3) |
|
Asset Purchase Agreement, dated May 28, 2002, by and among
the Company and Cryomedical Sciences, Inc. Certain schedules and
other attachments to this exhibit were omitted. We agree to
furnish supplementally a copy of any omitted schedules or
attachments to the Commission upon request. |
|
|
2 |
.5(4) |
|
Partnership and Limited Liability Company Membership Interest
Purchase Agreement, dated as of August 12, 2002, by and
among the Company and U.S. Medical Development, Inc.,
U.S.M.D., Ltd. and U.S.M.D. I, L.L.C. Certain schedules and
other attachments to this exhibit were omitted. We agree to
furnish supplementally a copy of any omitted schedules or
attachments to the Commission upon request. |
|
|
2 |
.6(5) |
|
Amendment No. 1 to Partnership and Limited Liability
Company Membership Interest Purchase Agreement, dated as of
September 30, 2002, by and among the Company, Inc. and
U.S. Medical Development, Inc., U.S.M.D., Ltd. and
U.S.M.D. I, L.L.C. |
|
|
2 |
.7(6) |
|
Agreement of Purchase and Sale, dated as of April 7, 2003,
by and among American Medical Systems, Inc., the Company and
Timm Medical Technologies, Inc. Certain schedules and other
attachments to this exhibit were omitted. We agree to furnish
supplementally a copy of any omitted schedules or attachments to
the Commission upon request. |
|
|
2 |
.8(7)* |
|
Asset Purchase and Technology License Agreement, dated as of
April 14, 2003, by and between the Company and CryoCath
Technologies Inc. |
|
|
2 |
.9(8) |
|
Agreement of Purchase and Sale, dated as of October 15,
2003, by and between SRS Medical Corp. and Timm Medical
Technologies, Inc. Certain schedules and other attachments to
this exhibit were omitted. We agree to furnish supplementally a
copy of any omitted schedules or attachments to the Commission
upon request. |
|
|
2 |
.10(9) |
|
Amendment No. 2 to Partnership and Limited Liability
Company Membership Interest Purchase Agreement, dated as of
February 27, 2004, by and among the Company and
U.S. Medical Development, Inc., U.S.M.D., Ltd. and
U.S.M.D. I, L.L.C |
|
|
2 |
.11(9) |
|
Service Fee Agreement, dated as of February 26, 2004, by
and among the Company and the Limited Partners of Mid-America
Cryotherapy, L.P. |
|
|
2 |
.12(9) |
|
First Amendment to Agreement of Purchase and Sale, dated as of
March 25, 2004, by and between SRS Medical Corp. and Timm
Medical Technologies, Inc. |
|
|
2 |
.13(10) |
|
First Amendment to Asset Purchase Agreement, dated as of
August 18, 2004, by and between the Company and Gary
Onik, M.D. |
|
|
3 |
.1(2) |
|
Certificate of Amendment of Restated Certificate of
Incorporation of the Company. |
|
|
3 |
.2(2) |
|
Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company. |
|
|
3 |
.3(2) |
|
Restated Certificate of Incorporation. |
|
|
3 |
.4(11) |
|
Amended and Restated Bylaws of the Company. |
|
|
4 |
.1(28) |
|
Form of Stock Certificate. |
|
|
4 |
.2(27) |
|
Form of Series A Warrant. |
|
|
|
|
|
Exhibit No. | |
|
Description |
| |
|
|
|
|
4 |
.3(27) |
|
Form of Series B Warrant. |
|
|
4 |
.4(30) |
|
Rights Agreement, dated as of March 31, 1999, between the
Company and U.S. Stock Transfer Corporation, which includes the
form of Certificate of Designation for the Series A Junior
Participating Preferred Stock as Exhibit A, the form of
Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Series A Preferred Shares as Exhibit C. |
|
|
4 |
.5(31) |
|
Amendment No. 1 to Rights Agreement, dated as of
June 24, 2005, between the Company and U.S. Stock Transfer
Corporation. |
|
|
5 |
.1(29) |
|
Opinion of Morrison & Foerster LLP |
|
|
10 |
.1(12) |
|
Lease Agreement, dated November 26, 2001 by and between the
Company and the Irvine Company. |
|
|
10 |
.2(12) |
|
Form of Indemnification Agreement by and between the Company and
its directors. |
|
|
10 |
.3(12) |
|
Form of Indemnification Agreement by and between the Company and
its executive officers. |
|
|
10 |
.4(13) |
|
1995 Director Option Plan (as amended and restated through
March 2, 1999). |
|
|
10 |
.5(14) |
|
1995 Stock Plan (as amended and restated through
December 30, 2003). |
|
|
10 |
.6(15) |
|
2002 Supplemental Stock Plan |
|
|
10 |
.7(4) |
|
Promissory Note, dated July 15, 2002, issued by
U.S. Medical Development, Inc. to the Company. |
|
|
10 |
.8(5) |
|
First Amended and Restated Promissory Note, dated
September 30, 2002, issued by U.S. Medical
Development, Inc. to the Company. |
|
|
10 |
.9(16) |
|
Registration Rights Agreement, dated as of February 21,
2002, by and among the Company and the parties listed on
Schedule A thereto. |
|
|
10 |
.10(15) |
|
Registration Rights Agreement, dated as of June 24, 2002,
by and between the Company and Cryomedical Sciences, Inc. |
|
|
10 |
.11(15) |
|
Letter Agreement, dated June 11, 1999, by and between the
Company and Jerry Anderson. |
|
|
10 |
.13(15) |
|
2002 Executive Separation Benefits Plan. |
|
|
10 |
.14(17) |
|
Employment Agreement, dated as of March 3, 2003, by and
between the Company and William J. Nydam. |
|
|
10 |
.15(17) |
|
Employment Agreement, dated as of March 25, 2003, by and
between the Company and Katherine Greenberg. |
|
|
10 |
.16(11) |
|
Employment Agreement, dated as of March 25, 2003, by and
between the Company and Kevin Quilty. |
|
|
10 |
.17(11) |
|
First Amendment to Employment Agreement, dated as of
September 14, 2003, by and between the Company and
Katherine Greenberg. |
|
|
10 |
.18(11) |
|
Consulting Agreement, dated as of August 27, 2003, by and
between the Company and Craig T. Davenport. |
|
|
10 |
.19(18) |
|
Employment Agreement, dated as of December 15, 2003, by and
between the Company and Craig T. Davenport. |
|
|
10 |
.20(19) |
|
Letter Agreement, dated as of June 9, 2004, by and between
the Company and Katherine Greenberg. |
|
|
10 |
.21(20) |
|
Employment Agreement, dated as of August 11, 2004, by and
between the Company and Michael R. Rodriguez. |
|
|
10 |
.22(21) |
|
General Release of All Claims, dated as of August 10, 2004,
by and between the Company and Katherine Greenberg. |
|
|
10 |
.23(22) |
|
2004 Stock Incentive Plan. |
|
|
10 |
.24(23) |
|
2004 Non-Employee Director Option Program under 2004 Stock
Incentive Plan. |
|
|
10 |
.25(23) |
|
Form of Award Agreement Under 2004 Stock Incentive Plan. |
|
|
10 |
.26(23) |
|
Stipulation of Settlement, dated as of November 1, 2004,
relating to securities class action lawsuit. |
|
|
10 |
.27(23) |
|
Description of Craig Davenport salary adjustment, effective
December 2004. |
|
|
|
|
|
Exhibit No. | |
|
Description |
| |
|
|
|
|
10 |
.28(23) |
|
Confidential Settlement Agreement and Release, dated as of
December 14, 2004, by and between the Company and certain
Underwriters at Lloyds, London. |
|
|
10 |
.29(23) |
|
Release and Settlement Agreement, dated as of December 16,
2004, by and between the Company and National Union Fire
Insurance Company. |
|
|
10 |
.30(24) |
|
Partnership Interest Purchase Agreement, dated as of
December 30, 2004, by and between the Company and Advanced
Medical Partners, Inc. |
|
|
10 |
.31(25) |
|
Confidential Settlement Agreement and Release, dated as of
February 11, 2005, by and between the Company and Great
American E&S Insurance Company. |
|
|
10 |
.32(26) |
|
2005 Management Incentive Compensation Program. |
|
|
10 |
.33(27) |
|
Purchase Agreement, dated as of March 10, 2005, by and
between Endocare and the Investors (as defined therein). |
|
|
10 |
.34(27) |
|
Registration Rights Agreement, dated as of March 10, 2005,
by and between Endocare and the Investors (as defined therein). |
|
|
10 |
.35(25) |
|
Description of William J. Nydam salary adjustment, effective
February 2005. |
|
|
10 |
.36(25) |
|
Description of Michael R. Rodriguez salary adjustment, effective
February 2005. |
|
|
23 |
.1 |
|
Consent of Independent Registered Public Accounting Firm. |
|
|
23 |
.2(29) |
|
Consent of Morrison & Foerster LLP (contained in
Exhibit 5.1) |
|
|
24 |
.1(29) |
|
Power of Attorney. |
|
|
|
|
|
Management contract or compensatory plan or arrangement |
|
|
|
|
* |
Certain confidential portions of this exhibit were omitted and
provided separately to the SEC pursuant to a request for
confidential treatment. |
|
|
|
|
(1) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 5, 2002. |
|
|
(2) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-3 filed on
September 20, 2001. |
|
|
(3) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on August 14, 2002. |
|
|
(4) |
Previously filed as an exhibit to the Companys
Form 8-K filed on August 16, 2002. |
|
|
(5) |
Previously filed as an exhibit to the Companys
Form 8-K filed on October 15, 2002. |
|
|
(6) |
Previously filed as an exhibit to the Companys
Form 8-K filed on April 22, 2003. |
|
|
(7) |
Previously filed as an exhibit to the Companys
Form 8-K filed on April 29, 2003. |
|
|
(8) |
Previously filed as an exhibit to the Companys
Form 8-K filed on October 20, 2003. |
|
|
(9) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on May 10, 2004. |
|
|
(10) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on November 9, 2004. |
|
(11) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 15, 2004. |
|
(12) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 29, 2002. |
|
(13) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-8 filed on June 2,
1999. |
|
(14) |
Previously filed as an appendix to the Companys Definitive
Proxy Statement filed on December 3, 2003. |
|
(15) |
Previously filed as an exhibit to the Companys
Form 10-K filed on December 3, 2003. |
|
(16) |
Previously filed as an exhibit to the Companys
Registration Statement on Form S-3 filed on May 15,
2002. |
|
(17) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 27, 2003. |
|
(18) |
Previously filed as an exhibit to the Companys
Form 8-K filed on December 16, 2003. |
|
(19) |
Previously filed as an exhibit to the Companys
Form 10-Q filed on August 9, 2004. |
|
(20) |
Previously filed as an exhibit to the Companys
Form 8-K filed on August 12, 2004. |
|
(21) |
Previously filed as an exhibit to the Companys
Form 8-K filed on September 1, 2004. |
|
|
(22) |
Previously filed as an appendix to the Companys Definitive
Proxy Statement filed on August 6, 2004. |
|
(23) |
Previously filed as an exhibit to the Companys
Form 10-K filed on March 16, 2005. |
|
(24) |
Previously filed as an exhibit to the Companys
Form 8-K filed on January 6, 2005. |
|
(25) |
Previously filed as an exhibit to the Companys Form 10-Q
filed on May 10, 2005. |
|
(26) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 1, 2005. |
|
(27) |
Previously filed as an exhibit to the Companys
Form 8-K filed on March 16, 2005. |
|
(28) |
Previously filed as an exhibit to the Companys
Form 10-K for the year ended December 31, 1995. |
|
(29) |
Previously filed as an exhibit to the Companys Form S-2
filed on April 4, 2005. |
|
|
(30) |
Previously filed as an exhibit to the Companys
Form 8-K filed on June 3, 1999. |
|
|
|
(31) |
Previously filed as an exhibit to the Companys
Form 8-K filed on June 28, 2005. |
|