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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 27, 1997
ENDOCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27212 33-0618093
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
18 Technology Drive, Suite 134, Irvine, California 92618
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 450-1410
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Endocare, Inc., a Delaware corporation (the "Company"), has sold
2,218,714 shares of its Common Stock in a private placement which closed January
27, 1997 for aggregate gross proceeds of $7,765,499, less placement agent fees
of $543,584.93 and other offering expenses. The price per share was $3.50.
Oppenheimer & Co., Inc. acted as placement agent for the offering. The Company
has agreed to use its best efforts to register the shares of Common Stock for
resale under the Securities Act of 1933, as amended, within 15 business days
from the closing date of the private placement. A copy of the Purchase Agreement
dated January 21, 1997 by and among the Company and each of the purchasers
listed on Exhibit A, the Schedule of Investors, is attached as Exhibit 10.11 and
is incorporated herein by reference.
In addition, on January 27, 1997, at the request of the holders, the
Company converted an aggregate principal amount of $750,000 of the Company's
Convertible Secured Promissory Notes due August 26, 1998 (the "Notes"), plus
accrued interest thereon, into 332,000 shares of Common Stock. The Notes were
issued on August 26, 1996 in a private placement to four limited partnerships
managed by Technology Funding, Ltd. The remaining $750,000 may be borrowed by
the Company under the Notes at any time prior to their maturity on August 26,
1998 if the Company meets certain financial requirements set forth in the Notes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description
- ----------- -----------
10.11 Purchase Agreement
2.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 28, 1997 ENDOCARE, INC.,
a Delaware corporation
By: /s/ Paul W. Mikus
----------------------------------
Paul W. Mikus
President and Chief Executive Officer
3.
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ENDOCARE, INC. 8-K
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
10.11 Purchase Agreement
4.
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EXHIBIT 10.11
ENDOCARE, INC.
COMMON STOCK PURCHASE AGREEMENT
JANUARY 21, 1997
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TABLE OF CONTENTS
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SECTION 1. AUTHORIZATION AND SALE OF COMMON STOCK......................... 1
1.1 Authorization.................................................. 1
1.2 Sale of Common................................................. 1
SECTION 2. CLOSING DATE; DELIVERY......................................... 1
2.1 Closing Date................................................... 1
2.2 Delivery....................................................... 1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 1
3.1 Organization and Standing...................................... 1
3.2 Corporate Power; Authorization................................. 2
3.3 Issuance and Delivery of the Shares............................ 2
3.4 Confidential Offering Memorandum; SEC Documents; Financial
Statement...................................................... 2
3.5 Intellectual Property.......................................... 3
3.6 Capitalization................................................. 3
3.7 Litigation..................................................... 3
3.8 Governmental Consents.......................................... 3
3.9 No Material Adverse Change..................................... 4
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASERS..................................................... 4
4.1 Authorization.................................................. 4
4.2 Investment Experience.......................................... 4
4.3 Investment Intent.............................................. 4
4.4 Registration or Exemption Requirements......................... 5
4.5 Restriction on Short Sales..................................... 5
4.6 No Legal, Tax or Investment Advice............................. 5
SECTION 5. CONDITIONS TO CLOSING OF PURCHASERS............................ 5
5.1 Representations and Warranties................................. 5
5.2 Legal Opinion.................................................. 6
5.3 Officers' Certificate.......................................... 6
5.4 Covenants...................................................... 6
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 6. CONDITIONS TO CLOSING OF COMPANY............................... 6
6.1 Representations and Warranties................................. 6
6.2 Covenants...................................................... 6
SECTION 7. AFFIRMATIVE COVENANTS OF THE COMPANY........................... 6
7.1 Financial Information.......................................... 6
7.2 Registration Requirements...................................... 6
7.3 Indemnification and Contribution............................... 9
SECTION 8. RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH
SECURITIES ACT................................................. 11
8.1 Restrictions on Transferability................................ 11
8.2 Restrictive Legend............................................. 11
8.3 Transfer of Shares after Registration.......................... 12
8.4 Purchaser Information.......................................... 12
SECTION 9. MISCELLANEOUS.................................................. 12
9.1 Waivers and Amendments......................................... 12
9.2 Broker's Fee................................................... 12
9.3 Governing Law.................................................. 12
9.4 Survival....................................................... 13
9.5 Successors and Assigns......................................... 13
9.6 Entire Agreement............................................... 13
9.7 Notices, etc................................................... 13
9.8 Severability of this Agreement................................. 13
9.9 Counterparts................................................... 13
9.10 Further Assurances............................................. 13
9.11 Expenses....................................................... 13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Exhibit A Schedule of Investors
Exhibit B Instruction Sheet for Purchaser
Exhibit C Purchaser's Certificate of Subsequent Sale
Exhibit D Form of Legal Opinion
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ENDOCARE, INC.
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made
January 21, 1997, by and among ENDOCARE, INC., a Delaware corporation (the
"Company") with its principal office at 18 Technology Drive, Suite 134, Irvine,
California 92618, and the persons listed on the Schedule of Investors attached
hereto as Exhibit A (the "Purchasers").
SECTION 1. AUTHORIZATION AND SALE OF COMMON STOCK
1.1 AUTHORIZATION. The Company has authorized the sale and issuance
of up to 2,300,000 shares of its Common Stock pursuant to this Agreement (the
"Common Stock").
1.2 SALE OF COMMON. Subject to the terms and conditions of this
Agreement, the Company agrees to issue and sell to each Purchaser and each
Purchaser severally agrees to purchase from the Company the number of shares of
Common Stock set forth opposite each Purchaser's name on Exhibit A for $3.50 per
share (collectively, the "Shares").
SECTION 2. CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of Riordan & McKinzie,
695 Town Center Drive, Suite 1500, Costa Mesa, California at 9:00 a.m., on
January 27, 1997 or at such other time and place upon which the Company and the
Purchasers purchasing the majority of the Shares shall agree. The date of the
Closing is hereinafter referred to as the "Closing Date".
2.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser a certificate, registered in the Purchaser's name as shown on Exhibit
A, representing the number of shares of Common Stock to be purchased by the
Purchaser. Such delivery shall be against payment of the purchase price therefor
by wire transfer to the Company's bank account in the amount set forth on
Exhibit A.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as of the
Closing Date as follows:
3.1 ORGANIZATION AND STANDING. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has full corporate power and
authority to own or lease its properties and conduct its business presently
conducted and as described in the Confidential Offering Memorandum, dated
December 4, 1996, as supplemented by the supplement dated January 21, 1997 (the
"Memorandum"), and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business
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transacted by it makes qualification necessary (except where the failure to be
so qualified would not have a material adverse effect on the business,
properties, financial condition or results or operations of the Company). The
Company has no subsidiaries or equity interest in any other entity.
3.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
corporate power to, and has taken all requisite corporate action to, execute and
deliver this Agreement, to sell and issue the Shares and to carry out and
perform all of its obligations under this Agreement. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally and (iii) as to those provisions of Section 7.3 relating to
indemnity or contribution. The execution and delivery of this Agreement does
not, and the performance of this Agreement and the compliance with the
provisions hereof and the issuance, sale and delivery of the Shares by the
Company will not materially conflict with, or result in a material breach or
violation of the terms, conditions or provisions of, or constitute a material
default under, or result in the creation or imposition of any material lien
pursuant to the terms of, the Certificate of Incorporation or Bylaws of the
Company or any statute, law, rule applicable to the Company or regulation or any
state or federal order, judgment or decree applicable to the Company or any
indenture, mortgage, lease or other material agreement or instrument to which
the Company or any of its properties is subject.
3.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued and
paid for in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable. The issuance and delivery of the Shares is
not subject to preemptive, co-sale, right of first refusal or any other similar
rights of the stockholders of the Company or any liens or encumbrances. The
Company has not granted any registration rights with respect to its securities
other than the registration rights set forth herein and to Oppenheimer & Co.,
Inc., Technology Funding Partners III, L.P., Technology Funding Venture Partners
IV, an Aggressive Growth Fund, L.P., Technology Funding Venture Partners V, an
Aggressive Growth Fund, L.P., and Technology Funding Medical Partners I, L.P.
The Company's Common Stock is quoted on the Nasdaq Electronic Bulletin Board.
3.4 CONFIDENTIAL OFFERING MEMORANDUM; SEC DOCUMENTS; FINANCIAL
STATEMENT. Each complete or partial statement, report, or proxy statement
included as an Exhibit to the Memorandum is a true and complete copy of or
excerpt from such document as filed by the Company with the Securities and
Exchange Commission (the "SEC"). The Company has filed in a timely manner all
documents that the Company was required to file with the SEC under Sections 13,
14(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), during the twelve (12) months preceding the date of this
Agreement. As of their respective filing dates, all documents filed by the
Company with the SEC (the "SEC Documents") complied in all material respects
with the requirements of the Exchange Act. Neither the Memorandum nor any of the
SEC Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents and the Memorandum (the "Financial
Statements") comply as to form in
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all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the financial position of the
Company at the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, recurring adjustments).
3.5 INTELLECTUAL PROPERTY. Except as set forth in the Memorandum,
the Company owns or possesses adequate rights to use all material patents,
patent rights, inventions, trade secrets and know-how described or referred to
in the Memorandum as owned or used by it or that are necessary for the conduct
of its business as presently conducted as described in the Memorandum. Except as
set forth in the Memorandum, the Company has not received any notice of, nor has
any knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patent, patent right, invention, trade secret or know-how
that, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
business, properties, financial condition or results or operations of the
Company.
3.6 CAPITALIZATION. All of the Company's outstanding shares of
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable, have been issued in compliance with all Federal and state
securities laws, and were not issued in violation of or subject to any
preemptive right or other rights to subscribe for or purchase securities, except
as set forth in Schedule 3.6 hereof. Except for issuances set forth in Schedule
3.6 hereto, the actual authorized and outstanding capital stock of the Company
as of the date hereof is and as of the Closing Date will be as set forth in the
Memorandum under the caption "Capitalization," assuming 2,218,714 shares are
issued in the Offering. Except as set forth in the Memorandum, there are no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell shares of the Company's capital
stock or any such options, rights, convertible securities or obligations.
3.7 LITIGATION. Except as set forth in the Memorandum, there is no
pending or, to the Company's knowledge, threatened action, suit or other
proceeding before any court, governmental body or authority, or arbitrator to
which the Company is a party or to which its property or assets are subject.
3.8 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Federal, state, or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement except for (a) compliance with the securities and
blue sky laws in the states and other jurisdictions in which shares of Common
Stock are offered and/or sold, which compliance will be effected in accordance
with such laws, and (b) the filing of a registration statement and all
amendments thereto with the SEC as contemplated by Section 7.2 of this
Agreement.
3.9 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein
or in the Memorandum, since September 30, 1996, there have not been any changes
in the assets, liabilities, financial condition or operations of the Company
from that reflected in the Financial
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Statements except changes in the ordinary course of business or which have not
been, either individually or in the aggregate, materially adverse.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the
Company, effective as of the Closing Date, as follows:
4.1 AUTHORIZATION. Purchaser represents and warrants to the Company
that: (i) Purchaser has all requisite legal and corporate or other power and
capacity and has taken all requisite corporate or other action to execute and
deliver this Agreement, to purchase the Shares to be purchased by it and to
carry out and perform all of its obligations under this Agreement; and (ii) this
Agreement constitutes the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights generally and (b) as limited by equitable
principles generally.
4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser is aware of the Company's business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Purchaser has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with
the purchase of the Shares.
4.3 INVESTMENT INTENT. Purchaser is purchasing the Shares for its
own account as principal, for investment purposes only, and not with a view to,
or for, resale, distribution or fractionalization thereof, in whole or in part,
within the meaning of the Securities Act. Purchaser understands that its
acquisition of the Shares has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of Purchaser's investment intent as expressed herein. Purchaser
has completed or caused to be completed the Purchaser Questionnaire attached
hereto as Exhibit B for use in preparation of the Registration Statement (as
defined below), will deliver the Purchaser Questionnaire to the Company on or
prior to the Closing Date, and the responses provided therein shall be true and
correct as of the Closing Date and will be true and correct as of the effective
date of the Registration Statement. Purchaser has, in connection with its
decision to purchase the number of shares set forth in Exhibit A hereto, relied
solely upon the Memorandum and the documents attached as appendices thereto and
the representations and warranties of the Company contained herein.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS.
(a) Purchaser further acknowledges and understands that the
Shares must be held indefinitely, and they may not be resold or otherwise
transferred except in a transaction registered under the Securities Act or an
exemption from such registration is available. Purchaser understands that the
certificate(s) evidencing the Shares will be imprinted with a legend that
prohibits the transfer of the Shares unless (i) they are registered or such
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registration is not required, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the Securities Act and, if
the Company shall so request in writing, an opinion of counsel satisfactory to
the Company is obtained to the effect that the transaction is so exempt and in
compliance with applicable state law.
(b) Purchaser further acknowledges that because the Company's
Common Stock is not listed on the Nasdaq NMS or a national securities exchange,
resale of the Shares may be limited by applicable state law, even where a
registration statement covering resale of the Shares has been declared effective
under the Securities Act. For example, certain states may limit resale of the
Shares to qualified institutions or in unsolicited qualified broker transactions
in the absence of qualification or another exemption in such state.
4.5 RESTRICTION ON SHORT SALES. Purchaser represents and warrants to
and covenants with the Company that Purchaser has not engaged and will not
engage in any short sales of the Company's Common Stock prior to the
effectiveness of the Registration Statement, except to the extent that any such
short sale is fully covered by shares of Common Stock of the Company other than
the Shares.
4.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in the Memorandum, this Agreement or any other materials presented to
Purchaser in connection with the purchase and sale of the Shares constitutes
legal, tax or investment advice and that no independent legal counsel has
reviewed these documents and materials on Purchaser's behalf. Purchaser has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of the
Shares.
SECTION 5. CONDITIONS TO CLOSING OF PURCHASERS
Each Purchaser's obligation to purchase the Shares at the Closing
is, at the option of such Purchaser, subject to the fulfillment or waiver as of
the Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.
5.2 LEGAL OPINION. The Company shall have delivered a legal opinion
from Riordan & McKinzie, counsel to the Company, addressed to each of the
Purchasers in the form attached hereto as Exhibit D with respect to the sale of
the Shares by the Company hereunder.
5.3 OFFICERS' CERTIFICATE. The Company shall deliver to the
Purchasers a certificate, dated as of the Closing Date, signed by the President
and Chief Financial Officer of the Company, stating that the signer of said
certificate has carefully examined the Memorandum and the SEC Documents and that
the representations and warranties set forth in Section 3 are true as of and all
of the closing conditions set forth in Section 5 have been satisfied on the
Closing Date.
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5.4 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
SECTION 6. CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, subject to the fulfillment or waiver of the
following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations made by the
Purchasers in Section 4 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of such date.
6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
SECTION 7. AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 FINANCIAL INFORMATION. The Company will mail the following
reports to each Purchaser until such Purchaser transfers, assigns or sells more
than fifty percent (50%) of the Shares purchased by such Purchaser pursuant to
this Agreement:
(a) Within one hundred (100) days after the end of each fiscal
year, a copy of its Annual Report on Form 10-K.
(b) Within fifty-five (55) days after the end of the first,
second and third quarterly accounting periods of each fiscal year of the
Company, a copy of its Quarterly Report on Form 10-Q.
7.2 REGISTRATION REQUIREMENTS
(a) The Company shall use its best efforts to prepare and file
a registration statement with the SEC under the Securities Act to register the
resale of the Shares by the Purchasers (the "Registration Statement") within
fifteen (15) business days of the Closing Date. The Company acknowledges that it
has received all information from the Purchasers necessary to register any
Shares. Each Purchaser agrees to furnish promptly to the Company in writing all
information required from time to time to be disclosed in order to make the
information previously furnished to the Company by such holder not misleading.
(b) The Company shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the Shares
resold by such Purchaser. "Registration Expenses" shall mean all expenses,
except for Selling Expenses, incurred by the Company in complying
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with the registration provisions herein described, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses and the expense of any special audits incident to or required by
any such registration. "Selling Expenses" shall mean selling commissions,
underwriting fees and stock transfer taxes applicable to the Shares and all fees
and disbursements of counsel for any Purchaser.
(c) In the case of the registration effected by the Company
pursuant to these registration provisions, the Company will use its best efforts
to: (i) keep such registration effective until the earlier of (A) the third
anniversary of the Closing Date, (B) such date as all of the Shares have been
resold or (C) such time as all of the Shares held by the Purchasers can be sold
within a given three-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144; provided, however, for
the 180 day period beginning on the day that the Registration Statement is
declared effective, the Company shall use its best efforts to keep such
Registration Statement effective, and thereafter until the earlier to occur of
the times specified in clause (A), (B) or (C), if the Company is unable to use a
Registration Statement on Form S-3 after such 180 days, the Company shall, upon
15 business days written notice from any Purchaser, use its best efforts to
supplement or amend such Registration Statement, if necessary to bring current
the information contained in such Registration Statement to the extent necessary
that such Registration Statement is available for resales of Common Stock by
such Purchaser during the applicable time period. Notwithstanding the foregoing,
the Company shall send written notice to the Purchaser at such time after the
180 days if the Company does not qualify for Form S-3 and if sales are no longer
being permitted by the Company under the registration statement on Form S-1;
(ii) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement; (iii) furnish such number of prospectuses and other
documents incident thereto, including any amendment of or supplement to the
prospectus, as a Purchaser from time to time may reasonably request; (iv) cause
all Shares registered as described herein to be listed on each securities
exchange and quoted on each quotation service on which similar securities issued
by the Company are then listed or quoted; (v) provide a transfer agent and
registrar for all Shares registered pursuant to the Registration Statement and a
CUSIP number for all such Shares; (vi) otherwise use its best efforts promptly
to comply with all applicable rules and regulations of the SEC; (vii) file the
documents required of the Company and otherwise use its best efforts promptly to
obtain, if applicable, and maintain requisite blue sky clearance in (A) all
jurisdictions in which any of the Shares are originally sold and (B) all other
states specified in writing by a Purchaser, provided as to clause (B), however,
that the Company shall not be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or has not
so consented, and (viii) with respect to the initial filing of the Registration
Statement, as of the date of declaration of effectiveness, and each post
effective amendment thereto, (A) obtain opinions of counsel to the Company in
the form of opinion attached hereto as Exhibit D, and (B) obtain a "cold
comfort" letter from the Company's independent certified public accountants,
addressed to each of the Purchasers selling registrable securities pursuant to
the Registration Statement. The Company shall use its best efforts to qualify
for use of Form S-3 under the Securities Act to register the resale of the
Shares and to maintain such qualification during the periods described in
paragraph (i).
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(d) The Company shall furnish to each Purchaser upon request a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary in order to facilitate the public sale or other
disposition of all or any of the Shares held by the Purchaser.
(e) With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit a Purchaser to
sell Shares to the public without registration or pursuant to registration, the
Company covenants and agrees to: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the earlier of (A)
the third anniversary of the Closing Date or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Exchange Act; and (iii)
furnish to any Purchaser upon request, as long as the Purchaser owns any Shares,
(A) a written statement by the Company that it has complied with the reporting
requirements of the Exchange Act, (B) a copy of the most recent annual or
quarterly report of the Company, and (C) such other information as may be
reasonably requested in order to avail any Purchaser of any rule or regulation
of the SEC that permits the selling of any such Shares without registration.
(f) At any time the Company may refuse to permit a Purchaser
to resell any Shares pursuant to the Registration Statement; provided, however,
that in order to exercise this right at any time other than as specified in
Section 7.2(c)(i) in the event the Company does not qualify for Form S-3, the
Company must deliver a certificate in writing to the Purchasers and the
Placement Agent (as defined in the Memorandum) to the effect that suspension of
the sale of shares under the Registration Statement, until such time as the
Company can make an appropriate filing with the SEC, is necessary because a sale
pursuant to the Registration Statement, in its then-current form, could
constitute a violation of the Federal securities laws. In such an event, the
Company shall use its best efforts to amend the Registration Statement if
necessary and take all other actions necessary to allow such sale under the
Federal securities laws, and shall notify the Purchasers and the Placement Agent
promptly after it has determined that such sale has become permissible under the
federal securities laws. Notwithstanding the foregoing, the Company shall not
under any circumstances be entitled to exercise its right to suspend sales under
the registration statement more than two (2) times in any twelve (12) month
period, and the period during which such Registration Statement may be withdrawn
shall not exceed thirty (30) days; provided, however, that if the Company is
required to amend the Registration Statement and the Company does not qualify
for Form S-3, the period during which such Registration Statement may be
withdrawn shall be increased to fifty (50) days if upon filing such amendment
the SEC advised the Company that it intends to review the amendment. Each
Purchaser hereby covenants and agrees that it will not sell any Shares pursuant
to the Registration Statement during the periods the Registration Statement is
suspended or withdrawn as set forth in this Section .
7.3 INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Purchaser from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in
8
<PAGE> 13
respect thereof) arise out of, or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Company to fulfill any undertaking
included in the Registration Statement, and the Company will, as incurred,
reimburse such Purchaser for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon (i) an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser specifically for use in preparation of
the Registration Statement, (ii) the failure of such Purchaser to comply with
the covenants and agreements contained in Section 7.2 or 8.3 hereof, or (iii)
any untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser. The Company will reimburse the Purchasers for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this section and the possibility that such payments might later be held to
be improper, provided, that (i) to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them and (ii) such persons shall provide to the Company, upon request,
reasonable assurances of their ability to effect any refund, when and if due.
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, provided,
however, that no Purchaser shall be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by such Purchaser and delivered to the Company before the sale from
which such loss occurred, (ii) the failure of such Purchaser to comply with the
covenants and agreements contained in Section 7.2 or 8.3 hereof, or (iii) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser. The Purchaser will reimburse the Company for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this section and the possibility that such payments might later be held to
be improper, provided, that (i) to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them and (ii) such persons shall provide to the Purchaser, upon request,
reasonable assurances of their ability to effect any refund, when and if due.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
9
<PAGE> 14
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof; provided,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the indemnified person for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person.
(d) If the indemnification provided for in this Section 7.3 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the amount received by the Purchaser from the sale
of the Shares to which such loss relates exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective sales
of Shares to which such loss relates and not joint.
(e) The obligations of the Company and the Purchasers under
this Section 7.3 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Company or any
Purchaser within the meaning of the Act.
10
<PAGE> 15
SECTION 8. RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH
SECURITIES ACT
8.1 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. The Company shall be entitled to give stop transfer instructions to
its transfer agent with respect to the Shares in order to enforce the foregoing
restrictions.
8.2 RESTRICTIVE LEGEND. Each certificate representing Shares shall
bear substantially the following legends (in addition to any legends required
under applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE SHARES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.
ADDITIONALLY, THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN THE
COMMON STOCK PURCHASE AGREEMENT DATED JANUARY 27, 1997 BETWEEN THE
COMPANY AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF SHARES SHALL
BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH RESTRICTIONS. ALL
SUBSEQUENT HOLDERS OF THIS CERTIFICATE WILL HAVE AGREED TO BE BOUND
BY CERTAIN OF THE TERMS OF THE AGREEMENT, INCLUDING SECTIONS 7.2 AND
8.3 OF THE AGREEMENT. COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE REGISTERED HOLDER OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY.
8.3 TRANSFER OF SHARES AFTER REGISTRATION. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares except either (i)
in accordance with the Registration Statement, in which case Purchaser covenants
to comply with the requirement of delivering a current prospectus, or (ii) in
accordance with Rule 144, in which case Purchaser covenants to comply with Rule
144. Purchaser further acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the certificate submitted to the
Company's transfer agent evidencing such Shares is accompanied by a separate
certificate executed by an officer of, or other person duly authorized by, the
Purchaser in the form attached hereto as Exhibit C.
8.4 PURCHASER INFORMATION. Each Purchaser covenants that it will
promptly notify the Company in writing of any changes in the information set
forth in the Registration Statement regarding such Purchaser or such Purchaser's
"Plan of Distribution."
11
<PAGE> 16
SECTION 9. MISCELLANEOUS
9.1 WAIVERS AND AMENDMENTS. With the exception of Section 7 hereof,
the terms of this Agreement may be waived or amended with the written consent of
the Company and each Purchaser. With respect to Section 7 hereof, with the
written consent of the Company and the record holders of more than fifty percent
(50%) of the Shares then outstanding and held by Purchasers, the terms of the
Agreement may be waived or amended and any such amendment or waiver shall be
binding upon the Company and all holders of Shares.
9.2 BROKER'S FEE. Each Purchaser acknowledges that the Company
intends to pay a fee to Oppenheimer & Co., Inc. in respect of the sale of the
Shares to the Purchaser. Each of the parties hereto hereby represents that, on
the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchasers.
9.3 GOVERNING LAW. This Agreement shall be governed in all respects
by and construed in accordance with the laws of the State of California without
any regard to conflicts of laws principles.
9.4 SURVIVAL. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchasers and the Closing.
9.5 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
no Purchaser shall assign this Agreement without the prior written consent of
the Company.
9.6 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
9.7 NOTICES, ETC. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or the
Purchasers, as the case may be, at their respective addresses set forth at the
beginning of this Agreement or on Exhibit A, or at such other address as the
Company or the Purchasers shall have furnished to the other party in writing
with a copy to Michael Fekete, Oppenheimer & Co., Inc., 10880 Wilshire
Boulevard, Los Angeles, California 90024. All notices and other communications
shall be effective upon the earlier of actual receipt thereof by the person to
whom notice is directed or (i) in the case of notices and communications sent by
personal delivery or telecopy, one business day after such notice or
communication arrives at the applicable address or was successfully sent to the
applicable telecopy number, (B) in the case of notices and communications sent
by overnight delivery service, at noon (local time) on the second business day
following the day such notice or communication was sent, and (c) in the case of
notices and communications sent by United States mail, seven days after such
notice or communication shall have been deposited in the United States mail.
12
<PAGE> 17
9.8 SEVERABILITY OF THIS AGREEMENT. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 FURTHER ASSURANCES. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.11 EXPENSES. The Company and each such Purchaser shall bear its
own expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
13
<PAGE> 18
The foregoing agreement is hereby executed as of the date first
above written.
"COMPANY"
ENDOCARE, INC.
a Delaware corporation
By: /s/ Paul W. Mikus
-------------------------------------------
Paul W. Mikus
Title: Chief Executive Officer, President and
Chief Financial Officer
----------------------------------------
"PURCHASERS"
Name:_________________________________________
By:___________________________________________
Title:________________________________________
Name:_________________________________________
By:___________________________________________
Title:________________________________________
Name:_________________________________________
By:___________________________________________
Title:________________________________________
Name:_________________________________________
By:___________________________________________
Title:________________________________________
14
<PAGE> 19
EXHIBIT A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
INVESTOR NAME SHARES PURCHASED
<S> <C>
Pharmaceutical Medical Technology Fund, L.P. 85,714
Essex Special Growth Opportunities Fund, L.P. 55,000
Harris & Harris Group, Inc. 150,000
Health Reform Opportunities, L.P. 30,000
The Kaufman Fund, Inc. 1,000,000
Par Investment Partners, L.P. 275,000
Porter Partners, L.P. 145,000
EDJ Limited 25,000
Technology Funding Partners III, L.P. 105,000
Technology Funding Venture Partners IV, an Aggressive Growth Fund, L.P. 3,500
Technology Funding Venture Partners V, an Aggressive Growth Fund, L.P. 3,500
Technology Funding Medical Partners I, L.P. 28,000
Opco Senior Executive Investment Partnership, L.P. 43,000
Westfield Performance Fund, L.P. 70,000
Educational Employees Supplementary Retirement System of Fairfax County 56,450
NCR Pension Trust 15,450
Newell Pension Investment Committee 54,600
Robinson Companies Profit Sharing Trust 4,900
AT&T Investment Management Corp. 34,700
Local 25 S.E.I.U. Pension Plan 5,350
Sisters of St. Joseph of Carondelet 11,700
Tracor, Inc. 16,850
---------
2,218,714
</TABLE>
<PAGE> 20
EXHIBIT B
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Common Stock Purchase Agreement)
A. Complete the following items in the Common Stock Purchase Agreement:
1. Provide the information regarding the Purchaser requested on
the signature page. The Agreement must be executed by an
individual authorized to bind the Purchaser.
2. Exhibit B-1 - Stock Certificate Questionnaire: Provide the
information requested by the Stock Certificate Questionnaire;
3. Exhibit B-2 - Registration Statement Questionnaire: Provide
the information requested by the Registration Statement
Questionnaire.
4. Exhibit B-3 - Purchaser Certificate:
Provide the information requested by the Certificate for
Individual Purchasers or the Certificate for Corporate,
Partnership, Trust, Foundation and Joint Purchasers, as
applicable.
5. Return the signed Purchase Agreement including the properly
completed Exhibit B to:
Oppenheimer & Co., Inc.
10880 Wilshire Boulevard
Los Angeles, California 90024
Attn: Michael Fekete
B. Instructions regarding the transfer of funds for the purchase of
Shares will be telecopied to the Purchaser by the Placement Agent at
a later date.
C. Upon the resale of the Shares by the Purchaser after the
Registration Statement covering the Shares is effective, as
described in the Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus, and annual and
quarterly reports of the Company to the buyer
(prospectuses, and annual and quarterly reports may be
obtained from the Company at the Purchaser's request);
and
(ii) must send a letter in the form of Exhibit C to the
Company so that the Shares may be properly transferred.
<PAGE> 21
EXHIBIT B-1
ENDOCARE, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us with the
following information:
1. The exact name that the
Shares are to be registered in
(this is the name that will
appear on the stock
certificate(s)). You may use
a nominee name if ______________________________
appropriate:
2. The relationship between the
Purchaser of the Shares and
the Registered Holder listed
in response to item 1 above:
______________________________
3. The mailing address of the
Registered Holder listed in
response to item 1 above: ______________________________
______________________________
______________________________
______________________________
______________________________
4. The Tax Identification
Number of the Registered
Holder listed in response to
item 1
above: ______________________________
<PAGE> 22
EXHIBIT B-2
ENDOCARE, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear
in the Registration Statement:
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company?
____ Yes ____ No
If yes, please indicate the nature of any such relationships below:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 23
EXHIBIT B-3
ENDOCARE, INC.
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Shares in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category applicable
to you as an investor in the Company.
_______ (1) A natural person whose net worth, either
individually or jointly with such person's spouse exceeds $1,000,000;
_______ (2) A natural person who had an income in excess of
$200,000, or joint income with that person's spouse in excess of $300,000
in 1995 and 1996, and reasonably expects to have individual income reaching the
same level in 1997;
_______ (3) An executive officer or director of the Company.
_______ (4) My principal residence is in the state of _______
__________.
Dated:______________ _____________________________________________
Name(s) of Purchaser
_____________________________________________
Signature
_____________________________________________
Signature
<PAGE> 24
EXHIBIT B-3
ENDOCARE, INC.
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses
below are true and accurate:
(a) The investor has been duly formed and is validly existing and
has full power and authority to invest in the Company. The person signing on
behalf of the undersigned has the authority to execute and deliver the Common
Stock Purchase Agreement on behalf of the Purchaser and to take other actions
with respect thereto.
(b) Indicate the form of entity of the undersigned:
_______ Limited Partnership
_______ General Partnership
_______ Corporation
_______ Revocable Trust (identify each grantor and
indicate under what circumstances the trust is
revocable by the grantor):
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________.
(Continue on a separate piece of paper, if
necessary.)
1
<PAGE> 25
_______ Other Type of Trust (indicate type of trust and,
for trusts other than pension trusts, name the
grantors and beneficiaries):
(Continue on a separate piece of paper, if
necessary.)
_______ Other form of organization (indicate form of
organization):___________________________________
___________________________________________.
(c) Indicate the date the undersigned entity was formed: ________.
(d) In order for the Company to offer and sell the Shares in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status. Please initial each category
applicable to you as an investor in the Company.
_______ 1. A bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act whether acting in its individual or fiduciary capacity;
_______ 2. A broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934;
_______3. An insurance company as defined in Section 2(13) of
the securities Act;
_______4. An investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act;
_______5. A Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958;
_______6. A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000;
_______7. An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan
2
<PAGE> 26
has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by
persons that are accredited investors;
_______8. A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
_______9. An organization described in Section 501(c)(3) of
the Internal Revenue Code, a corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purpose of acquiring the Shares, with total assets in
excess of $5,000,000;
_______10. A trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Shares,
whose purchase is directed by a sophisticated person who has
such knowledge and experience in financial and business
matters that such person is capable of evaluating the merits
and risks of investing in the Company;
_______11. An entity in which all of the equity owners qualify
under any of the above subparagraphs. If the undersigned
belongs to this investor category only, list the equity owners
of the undersigned, and the investor category which each such
equity owner satisfies:
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
(Continue on a separate piece of paper, if necessary.)
(e) The state of incorporation or formation of the investor is __
_____________ and the investor's principal office is located in the state of __
_____________.
Dated:_________,19__
___________________________________
Name of investor
___________________________________
Signature and title of authorized
officer, partner or trustee
3
<PAGE> 27
EXHIBIT C
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: Paul W. Mikus
ENDOcare Inc.
18 Technology Drive, Suite 134
Irvine, CA 92618
The undersigned, the Purchaser or an officer of, or other person
duly authorized by the Purchaser, hereby certifies that ________________________
________________________________________ institution was the Purchaser of the
shares evidenced by the attached certificate, and as such, proposes to transfer
such shares on or about ______ either (check the applicable box) / / (i) in
accordance with the registration statement, file number ___ in which case the
Purchaser certifies that the requirement of delivering a current prospectus has
been complied with or will be complied with in connection with such sale, or / /
(ii) in accordance with Rule 144 under the Securities Act of 1933 ("Rule 144"),
in which case the Purchaser certifies that it has complied with or will comply
with the requirements of Rule 144.
Print or type:
Name of Purchaser:_________________________________________________
Name of Individual
representing Purchaser
(if an Institution):_______________________________________________
Title of Individual
representing Purchaser
(if an Institution):_______________________________________________
Signature by:
Purchaser or
Individual representing
Purchaser:_________________________________________________________
<PAGE> 28
EXHIBIT D
FORM OF LEGAL OPINION
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware. The
Company has the requisite corporate power to own or lease its property and
assets and to conduct its business as currently conducted as described in
the Memorandum or Registration Statement, as the case may be. The Company
is qualified as a foreign corporation to do business and in good standing
in each jurisdiction in which the ownership of its property or the conduct
of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the assets,
financial condition or operations of the Company.
2. The Purchase Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally and (iii) as to those provisions of Section 7.3
relating to indemnity or contribution.
3. The actual authorized and outstanding capital stock of the Company as of
the date specified therein is as set forth in the Memorandum or
Registration Statement, as the case may be, under the heading
"Capitalization." To our knowledge, except as set forth in the Memorandum
or Registration Statement, there are no outstanding options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts or
commitments to issue or sell shares of the Company's capital stock or any
such options, rights convertible securities or obligations. To our
knowledge, the Company has not granted any registration rights except to
Oppenheimer & Co., Inc., Technology Funding Partners III, L.P., Technology
Funding Venture Partners IV, an Aggressive Growth Fund, L.P., Technology
Funding Venture Partners V, an Aggressive Growth Fund, L.P., and
Technology Funding Medical Partners, I, L.P.
4. The Shares when issued and paid for in compliance with this Agreement,
will be duly authorized, fully paid, validly issued and nonassessable.
5. The execution and delivery of the Agreement and the consummation of the
initial sale of the Shares by the Company as contemplated therein do not
violate any provisions of the Company's Articles or Bylaws, and do not
constitute a material default under the provisions of any material
agreement known to such counsel to which the Company is a party or by
which it is bound, and do not violate or contravene (a) any governmental
statute, rule or regulation applicable to the Company and known to such
counsel or (b) any order, writ, judgment, injunction, decree,
determination or award applicable to the Company and known to such
counsel.
<PAGE> 29
6. Except as set forth in the Memorandum, to our knowledge there is no action
proceeding or investigation pending or, to our knowledge, threatened
against the Company which could reasonably be anticipated to result,
either individually or in the aggregate, in any material adverse change in
the assets, financial condition or operations of the Company.
7. The offer and sale of the Shares is exempt from the registration
requirements of the Securities Act of 1933, as amended, or, in case of
resale pursuant to the Registration Statement, the Registration Statement
has been declared effective by the Securities and Exchange Commission,
and, to such counsel's knowledge, no stop order has been issued or similar
proceeding commenced by the Securities and Exchange Commission or any
state securities authority.
8. The Registration Statement and the Prospectus as of their effective dates
(except no opinion is expressed with respect to any financial statements,
schedules, pro forma and other financial and statistical data or with
respect to any exhibits thereto) comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder, and such counsel does not know of any franchises,
contracts, leases, documents or legal proceedings, pending or threatened,
which are of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement, which are not described or filed as required.
9. No consents, approvals, authorizations or orders of and filings,
registrations and qualifications with any regulatory authority or
governmental body in the United States are required for the issuance of
the Shares by the Company under the Agreement, except for compliance with
the securities and blue sky laws in the states and other jurisdictions in
which shares of Common Stock are offered and/or sold.
[10. No consents, approvals, authorizations or orders of and filings,
registrations and qualifications with any regulatory authority or
governmental body in the United States are required for the resale of the
Shares pursuant to the Registration Statement, except for compliance with
the securities and blue sky laws in the states and other jurisdictions in
which shares of Common Stock are offered and/or sold.]
In addition, counsel shall represent with respect to the Registration Statement
that they have participated in conferences with representatives of the Company
and its accountants concerning the Registration Statement, and the statements
contained therein, and although such counsel has not independently verified the
accuracy, completeness or fairness of such statements, based upon and subject to
the foregoing, no facts have come to such counsel's attention that leads them to
believe that the Registration Statement and Prospectus, as of the date declared
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except no opinion or
<PAGE> 30
belief shall be expressed with respect to any financial statements, schedules,
pro forma and other financial and statistical data or with respect to any
exhibits thereto.
