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UNITED STATES
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): June 5, 2009
Endocare, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001-15063
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33-0618093 |
(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
201 Technology Drive
Irvine, California 92618
(Address of principal executive offices)
949-450-5400
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On June 7, 2009, Endocare, Inc. (Endocare) entered into an Agreement and Plan of Merger (the
Merger Agreement) with HealthTronics, Inc. (HealthTronics) and HT Acquisition, Inc., a
wholly-owned subsidiary of HealthTronics (Merger Sub). On the terms and subject to the conditions
of the Merger Agreement, Merger Sub will commence an exchange offer (the Offer) to acquire all of
the outstanding shares of common stock of Endocare (the Shares), in exchange for: (i) $1.35 in
cash, without interest (the Cash Consideration), or (ii) 0.7764 shares of HealthTronics common
stock (the Stock Consideration), in each case, at the election of the holder and subject to
adjustment and proration as set forth in the Merger Agreement. In addition to caps on the
aggregate Stock Consideration, elections of Endocare stockholders will also be subject to proration
such that (1) the maximum amount of cash payable in the Offer is $1.35 multiplied by 50% of the
aggregate Shares tendered in the Offer and (2) the maximum number of shares of HealthTronics common
stock payable in the Offer is 0.7764 multiplied by 75% of the total Shares tendered in the Offer.
In certain circumstances, the Cash Consideration may increase by up to approximately $0.15 per
share and the exchange ratio may increase by an amount that corresponds with such Cash
Consideration increase, along with corresponding increases to the maximum aggregate amounts of cash
and HealthTronics common stock payable in the Offer. The Offer is conditioned upon, among other
things, there being validly tendered and not withdrawn shares constituting at least a majority of
the fully diluted Shares, and certain other offer conditions set forth in Exhibit A to the Merger
Agreement.
Following the consummation of the Offer, the Merger Agreement provides that Endocare will
merge with and into Merger Sub (the Merger), and Shares not acquired in the Offer will be
converted into the right to receive, at the option of the Endocare stockholders, either the Cash
Consideration or the Stock Consideration, subject to the same adjustments and prorations as in the
Offer (other than (i) Shares held by holders who comply with the relevant provisions of Section 262
of the Delaware General Corporation Law regarding the rights of stockholders to demand appraisal of
such shares in connection with the Merger and (ii) Shares held in the treasury of Endocare or owned
by Endocare, any wholly-owned subsidiary of Endocare, HealthTronics, Merger Sub or any other
wholly-owned subsidiary of HealthTronics).
The Merger Agreement includes customary representations, warranties and covenants of the
parties, including covenants that Endocare will run its business in the ordinary course of business
consistent with past practice and will refrain from taking certain actions between the date of the
Merger Agreement and the date of closing of the Merger. The Merger is subject to the successful
completion of the Offer, approval of Endocares stockholders (if required by law), as well as other
customary closing conditions. If, following the consummation of the Offer, HealthTronics or any
wholly owned subsidiary of HealthTronics owns at least 90% of the outstanding Shares, the Merger
Agreement provides that the Merger will be completed without a meeting of Endocares stockholders,
in accordance with Section 253 of the Delaware General Corporation Law.
The Merger Agreement restricts the ability of Endocare to enter into alternative transactions
from the date of the Merger Agreement until the closing of the Merger. Endocare
may, however, on the terms and subject to the conditions set forth in the Merger Agreement,
provide information to, and negotiate with, a third party that makes an unsolicited acquisition
proposal that Endocares board of directors determines constitutes or could reasonably be expected
to lead to a Superior Proposal (as defined in the Merger Agreement). In addition, if Endocares
board of directors determines that its fiduciary duties under Delaware law require it to do so,
Endocares board of directors may withdraw or modify its recommendation that the stockholders of
Endocare tender their Shares into the Offer and vote in favor of the Merger Agreement and the
Merger (if stockholder approval is required to approve the Merger), and may terminate the Merger
Agreement. Pursuant to the terms of the Merger Agreement, effective immediately upon consummation
of the Offer, HealthTronics is entitled to designate appointees to the Endocare board of directors
such that its designees constitute at least a majority of the Endocare board of directors and each
committee thereof.
The Merger Agreement contains certain customary termination rights for both Endocare and
HealthTronics, including by mutual written consent. Pursuant to the Merger Agreement, upon termination
under specified circumstances, Endocare or HealthTronics, as the case may be, is required to pay to
the other party a termination fee of $450,000 plus transaction expenses up to an additional
$150,000. The Merger Agreement terminates pursuant to its terms if the Offer has not been
consummated on or prior to September 30, 2009, unless the parties agree otherwise.
The boards of directors of both Endocare and HealthTronics have unanimously approved the
Offer, the Merger, the Merger Agreement and the related transactions. In addition, Endocares executive
officers and directors have entered in a Tender and Voting Agreement with HealthTronics whereby
they have committed to tender all Shares owned by them into the Offer.
The foregoing description of the Merger Agreement is qualified in its entirety by reference to
the full text of the Merger Agreement, which is attached as Exhibit 2.1 to this Form 8-K and is
incorporated in this Form 8-K by reference. The Merger Agreement is included as an exhibit to this
Current Report on Form 8-K to provide you with information regarding the terms of the transactions
described therein and is not intended to provide any other factual information or disclosure about
Endocare, HealthTronics or Merger Sub. The representations, warranties and covenants contained in
the Merger Agreement were made only for purposes of such agreement and as of a specific date, were
solely for the benefit of the parties to such agreement, may be subject to limitations agreed upon
by the contracting parties, including being qualified by disclosure schedules made for the purposes
of allocating contractual risk between the parties thereto instead of establishing these matters as
facts, and may be subject to standards of materiality applicable to the contracting parties that
differ from those applicable to investors. Moreover, information concerning the subject matter of
the representations and warranties may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in Endocares public disclosures.
Investors are not third-party beneficiaries under the Merger Agreement and, in light of the
foregoing reasons, should not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of facts or condition of Endocare,
HealthTronics or HT Acquisition or any of their respective subsidiaries or affiliates. Information
regarding Endocare is provided in Endocares other SEC filings, which are available at
www.endocare.com and on the SECs website at www.sec.gov.
HealthTronics is a customer of and acquires cryoablation products from Endocare. As
previously reported in Endocares Annual Report on Form 10-K for the year ended December 31, 2008,
HealthTronics (through a wholly-owned subsidiary) accounted for 37.0% and 42.1% of Endocares
revenues for 2008 and 2007, respectively.
Item 1.02 Termination of Material Definitive Agreement.
Agreement and Plan of Merger with Galil Medical Ltd.
On June 5, 2009, Endocare sent notice to Galil terminating its previously announced Agreement
and Plan of Merger, dated November 10, 2008 (as amended, the Galil Merger Agreement), by and
among Endocare, Orange Acquisitions Ltd. (Orange Acquisitions), a wholly owned subsidiary of
Endocare, and Galil Medical Ltd. (Galil), which provided for the merger of Orange Acquisitions
with and into Galil (the Galil Merger) with Galil surviving the Galil Merger and becoming a
wholly-owned subsidiary of Endocare.
Endocare terminated the Galil Merger Agreement as a result of the failure by the United
States Federal Trade Commission to close its investigation into whether the Galil Merger
violated certain U.S. antitrust laws, which caused certain conditions to closing of the Galil
Merger to become incapable of fulfillment. Pursuant to the Galil Merger Agreement, each party had
the unilateral right to terminate the Galil Merger Agreement under such circumstances.
Stock Purchase Agreement
As a result of the termination of the Galil Merger Agreement, that certain Stock Purchase
Agreement, dated as of November 10, 2008, by and among Endocare and certain existing shareholders
of Endocare and Galil, relating to the proposed sale by Endocare of up to 16.25 million shares of
its common stock at a purchase price of $1.00 per share automatically terminated pursuant to its
terms.
Item 7.01 Regulation FD Disclosure.
On June 8, 2009, Endocare and HealthTronics issued a joint press release announcing entry into
the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Forward-Looking Statements
Statements made in this Current Report on Form 8-K that are not strictly historical, including
statements regarding plans, objectives and future financial performance, are forward-looking
statements. Although Endocare believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that the expectations will prove to be
correct. Factors that could cause actual results to differ materially from those expressed or
implied in the forward-looking statements include, among others, the risk that the Offer and the
Merger will not close; the risk that HealthTronics business and/or Endocares business will be
adversely impacted during the pendency of the Offer and the Merger; the risk that the operations of
the two companies will not be integrated successfully; the risk that
HealthTronics expected cost savings and other synergies from the transaction may not be fully
realized, realized at all or take longer to realize than anticipated; the risk that demand for and
acceptance of HealthTronics or Endocares products or services may be reduced; the risk of changes
in governmental regulations; the impact of economic conditions; the impact of competitive and
technological changes and other risk factors relating to our industry, including those detailed
from time to time in Endocares reports filed with the SEC. There can be no assurance that the
proposed Merger will in fact be consummated. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this Current Report on Form 8-K.
Unless required by law, Endocare undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Additional Information
The Offer described herein has not commenced. HealthTronics intends to file a Registration
Statement on Form S-4 (the Form S4) and a Tender Offer Statement on Schedule TO (the Schedule
TO) with the Securities and Exchange Commission (the SEC) containing information about the
transaction and related matters. Endocare intends to file a Solicitation/Recommendation Statement
on Schedule 14D-9 (the Schedule 14D-9). The Form S-4, Schedule TO, the prospectus/offer to
exchange to be included in the Form S-4, and the Schedule 14D-9 have not yet been filed.
STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY ONCE THEY BECOME AVAILABLE, AS THEY WILL
CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD UNDERSTAND BEFORE MAKING A DECISION.
Investors will be able to obtain free copies of the Form S-4, Schedule TO, prospectus/offer to
exchange to be included in the Form S-4 and the Schedule 14D-9, as well as other future filings
containing information about the transaction filed with the SEC by Endocare or HealthTronics
through the web site maintained by the SEC at www.sec.gov. Free copies of the Schedule 14D-9, when
available, and other documents filed by Endocare with the SEC may also be obtained from Endocare by
making a request to Allen & Caron at (949) 474-4300. In addition, investors may access copies of
the documents filed with the SEC by Endocare on Endocares
website at www.endocare.com when they
become available.
Item 9.01 Financial Statements and Exhibits.
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Exhibit No. |
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Description |
2.1
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Agreement and Plan of Merger, dated as of June 7, 2009, by and
among Endocare, Inc., HT Acquisition, Inc. and HealthTronics,
Inc. |
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99.1
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Press release, dated June 8, 2009. |
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.
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ENDOCARE, INC.
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Date: June 8, 2009 |
By: |
/s/
Michael R. Rodriguez
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Michael R. Rodriguez |
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Senior Vice President, Finance and Chief
Financial Officer |
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Exhibit Index
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Exhibit No. |
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Description |
2.1
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Agreement and Plan of Merger, dated as of June 7, 2009, by and
among Endocare, Inc., HT Acquisition, Inc. and HealthTronics,
Inc. |
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99.1
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Press release, dated June 8, 2009. |