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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): May 18, 2006
ENDOCARE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or Other Jurisdiction of
Incorporation)
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001-15063
(Commission
File Number)
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33-0618093
(I.R.S. Employer
Identification Number) |
201 Technology Drive
Irvine, California 92618
(Address of Principal Executive Offices, including zip code)
(949) 450-5400
(Registrants telephone number, including area code)
N/A
(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 (see General Instruction
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Lease Amendment
On May 18, 2006, we entered into a First Amendment to Lease (the Amendment) with The Irvine
Company LLC relating to our principal executive offices at 201 Technology Drive, Irvine,
California, which consist of approximately 28,000 square feet. Our current lease expires on March
31, 2007. The Amendment extends the term of the lease to March 31, 2010. In addition, among other
things, the Amendment reduces the price per square foot from the current monthly charge of $1.45
per square foot to $1.20 per square foot in the first year of the extension period, $1.25 per
square foot in the second year of the extension period and $1.30 per square foot in the third year
of the extension period.
Employee Deferred Stock Unit Program
On May 18, 2006, our Board of Directors adopted an Employee Deferred Stock Unit Program. The
purposes of the Program are to: (i) enable us to conserve cash that otherwise would be used to make
payments under our Management Incentive Compensation Program (MICP); and (ii) enable eligible
employees to obtain equity on a tax-deferred basis, with the benefit of a possible additional
premium percentage, as described below.
Elections to participate in the Program will be made on an annual basis. A participating employee
will receive a percentage (minimum of 25% and maximum of 100%) of the
employees MICP award for
the relevant year in the form of deferred stock units (DSUs). Participating employees will select
the percentage at the time of electing to participate in the Program for the relevant MICP year.
For 2006, the election deadline is June 17, 2006. In each future year, our Compensation Committee
or Board of Directors will determine the election deadline applicable to such year.
Each DSU represents the right to receive one share of our common stock in the future on the DSU
payout date, subject to vesting requirements, as described below.
Our Compensation Committee or Board of Directors will grant DSUs to participating employees after
the end of the applicable election period. Based on the closing stock price on the date that the
DSUs are granted, each participating employee will be granted DSUs
equal in value to the portion of
the employees MICP target amount that the employee has elected to receive in the form of DSUs, plus an
additional premium percentage intended to encourage participation in the Program. Our
Compensation Committee or Board of Directors will determine the premium percentage (if any)
annually. For 2006, our Board of Directors has approved a premium percentage of 20%.
All or a portion of the DSUs granted to a participating employee will vest based on the employees
percentage achievement under the MICP for the applicable year, as determined by the Compensation
Committee in the first quarter of the following year. We may permit the employees share of any
taxes resulting from vesting to be paid by reducing the number of vested DSUs.
Ultimately, each employees vested DSUs will be paid out to the employee through the issuance to
the employee of a corresponding number of shares of our common stock. At the time of making an
annual election to participate in the Program, the employee selects as the payout date one of the
following three options: (i) a predetermined date at least two years after the applicable election
deadline (the date would be specified by the employee in the employees election form); (ii) the
termination of the employees employment; or (iii) the earlier of (i) or (ii); provided, however,
that if the termination of the employees employment occurs earlier than two years after the
applicable election deadline, then any issuance of shares that would otherwise be triggered by such
termination will be deferred until the date that is two years after the applicable election
deadline. In any event, the payout date would be accelerated in the case of a change of control
of the company or the employees death. We may permit the employees share of any taxes resulting
from the share issuance to be paid by reducing the number of shares issued.
The foregoing description of the Employee Deferred Stock Unit Program is qualified in its entirety
by the full text of such document, which is filed as Exhibit 10.1 to this report and is hereby
incorporated by reference herein.
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Non-Employee Director Deferred Stock Unit Program
On May 18, 2006, our Board of Directors adopted a Non-Employee Director Deferred Stock Unit
Program. The purposes of the Program are to: (i) enable us to conserve cash that otherwise would
be used to pay retainers and meeting fees to our non-employee directors; and (ii) enable
non-employee directors to obtain equity on a tax-deferred basis.
Elections to participate in the Program will be made on an annual basis. A participating director
will receive a percentage (minimum of 25% and maximum of 100%) of the directors retainers and
meeting fees for the relevant year in the form of DSUs. Participating directors will select the
percentage at the time of electing to participate in the Program for the relevant year. For 2006,
the election deadline is June 17, 2006. Elections made for 2006 will apply to retainers and
meeting fees earned in the final two quarters of 2006. The election deadline applicable to future
years will be December 31 of the immediately preceding year.
Each DSU represents the right to receive one share of our common stock in the future on the DSU
payout date, as described below.
On the fifth trading day of each calendar quarter, each participating director will be granted
fully vested DSUs equal in value to the amount of retainers and meeting fees earned for the
immediately preceding quarter, based on the closing stock price on the date of grant.
Ultimately, each directors DSUs will be paid out to the director through the issuance to the
director of a corresponding number of shares of our common stock. At the time of making an annual
election to participate in the Program, the director selects as the payout date one of the
following three options: (i) a predetermined date at least two years after the applicable election
deadline (the date would be specified by the director in the directors election form); (ii) the
termination of the directors service; or (iii) the earlier of (i) or (ii); provided, however, that
if the termination of the directors service occurs earlier than two years after the applicable
election deadline, then any issuance of shares that would otherwise be triggered by such
termination will be deferred until the date that is two years after the applicable election
deadline. In any event, the payout date would be accelerated in the case of a change of control
of the company or the directors death. The director may elect to have a portion (up to 50%) of
his DSUs settled in cash (rather than stock) to enable the director to pay taxes resulting from the
share issuance.
The foregoing description of the Non-Employee Director Deferred Stock Unit Program is qualified in
its entirety by the full text of such document, which is filed as
Exhibit 10.2 to this report and
is hereby incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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10.1
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Employee Deferred Stock Unit Program, effective as of May 18, 2006. |
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10.2
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Non-Employee Director Deferred Stock Unit Program, effective as of May 18, 2006. |
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SIGNATURES
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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May 22, 2006 |
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 |
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Number |
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Description |
10.1
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Employee Deferred Stock Unit Program, effective as of May 18, 2006. |
10.2
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Non-Employee Director Deferred Stock Unit Program, effective as of May 18, 2006. |
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