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Filed pursuant to Rule 424(b)(3)
PROSPECTUS Registration No. 333-34721
423,280 SHARES OF
COMMON STOCK
OF
INCONTROL, INC.
This Prospectus relates to up to 423,280 shares (the "Shares") of Common
Stock, $.01 par value per share (the "Common Stock"), of InControl, Inc. (the
"Company"). The Shares may be offered by certain stockholders of the Company
(the "Selling Stockholders") from time to time in transactions in the over-the-
counter market through the Nasdaq National Market ("Nasdaq"), or on one or more
other securities markets and exchanges, in privately negotiated transactions,
through the writing of options on the Shares, or otherwise, or through a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they may
sell as principals, or both (which compensation as to a particular broker-dealer
may be in excess of customary commissions). See "Selling Stockholders" and "Plan
of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions and fees and stock transfer taxes) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and any broker-dealers who act in connection with the sale of the
Shares hereunder against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
All of the Shares were "restricted securities" under the Securities Act
prior to their registration hereunder. The Company sold all of the Shares to the
Selling Stockholders in a private transaction on July 29, 1997. The shares of
Common Stock sold in such transaction constitute the Shares being registered
hereunder. This Prospectus has been prepared so that future sales of the Shares
will not be restricted under the Securities Act. In connection with any sales,
the Selling Stockholders and any brokers participating in such sales may be
deemed to be "underwriters" within the meaning of the Securities Act. See
"Selling Stockholders."
The Common Stock is quoted on Nasdaq under the symbol "INCL." On September
12, 1997, the closing sales price for the Common Stock as reported on Nasdaq was
$9.375 per share.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is September 15, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission in Washington, D.C. (450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549) and at the Commission's Regional Offices in New York (7
World Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). The
Company is an electronic filer and the Commission maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the web site is "http://www.sec.gov." The Company's reports, proxy statements
and other information may also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus is part of a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") filed
with the Commission under the Securities Act with respect to the Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted in
accordance with the Commission's rules and regulations. For further information
with respect to the Company and the Shares offered hereby, reference is made to
the Registration Statement and the exhibits thereto. The statements in this
Prospectus are qualified in their entirety by reference to the contents of any
agreement or other document incorporated herein by reference, a copy of which is
filed as an exhibit to either the Registration Statement or other filings by the
Company with the Commission.
FORWARD-LOOKING STATEMENTS
When included in this Prospectus or in documents incorporated herein by
reference, the words "expects," "intends," "anticipates," "plans," "projects"
and "estimates," and analogous or similar expressions, are intended to identify
forward-looking statements. Such statements, which include statements contained
in "Risk Factors," are inherently subject to a variety of risks and
uncertainties that could cause actual results to differ materially from those
reflected in such forward-looking statements. Such risks and uncertainties
include, among others, progress in the Company's clinical trials, the granting
and timing of regulatory approval for the Company's primary product, the METRIX
System, market acceptance of the METRIX System, the status of competitive
treatments and products for the treatment of atrial fibrillation, and the
availability and adequacy of third-party reimbursement for the Company's
products. See "Risk Factors" beginning on page 4.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon such
person's written or oral request, a copy of any and all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests should be directed to InControl,
Inc., 6675 - 185th Avenue N.E., Redmond, Washington 98052, Attention: Secretary,
telephone: (425) 861-9800.
The following documents filed with the Commission by the Company are
incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997;
(3) The Company's Current Report on Form 8-K dated July 29, 1997;
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A as of September 8, 1994, including
any amendment or report filed for the purpose of updating such
description; and
(5) The description of the Company's rights contained in the Company's
Registration Statement on Form 8-A filed with the Commission on March
1, 1996, including any amendment or report filed for the purpose of
updating such description.
All documents filed with the Commission by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed modified, superseded or replaced for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies, supersedes or replaces such statement. Any statement
so modified, superseded or replaced shall not be deemed, except as so modified,
superseded or replaced, to constitute a part of this Prospectus.
------------------------
The Company's principal executive offices are located at 6675 - 185th
Avenue N.E., Redmond, Washington 98052, telephone: (425) 861-9800.
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RISK FACTORS
Prospective purchasers should carefully consider the risk factors set forth
below as well as the other information set forth in this Prospectus before
purchasing the Shares offered hereby. These risk factors could cause the
Company's actual results to differ materially from those expressed in the
Company's forward-looking statements in this Prospectus.
EXTENSIVE GOVERNMENTAL REGULATION AND UNCERTAINTY OF PRODUCT APPROVAL IN THE
UNITED STATES
The manufacture and sale of medical devices intended for human use are
subject to extensive governmental regulation in the United States and in other
countries. In the United States, medical devices such as the METRIX System must
undergo rigorous preclinical studies and clinical testing and an extensive
approval process with the Food and Drug Administration (the "FDA") before they
can be marketed. Similar requirements are imposed by other countries. While the
Company has obtained approval to affix the CE mark to the METRIX System and
commercially market the METRIX System in the European Union, the Company has not
obtained regulatory approval for the METRIX System to be marketed in the United
States. The Company has received permission from the FDA to expand its United
States trials to include additional patients and investigational centers, but
completion of United States clinical trials of the METRIX System may take
several years and will require the expenditure of substantial resources. The
time required for completing clinical trials will depend on a number of factors,
including the performance of the device and the rate at which patients can be
recruited. There can be no assurance that clinical trials in the United States
will demonstrate that the METRIX System is safe and effective. Approval may
never be obtained from the FDA. In addition, delays or rejections may be
encountered based on changes in FDA policy or regulations during the period of
product development and FDA regulatory review of each submitted application.
There can be no assurance that the Company will obtain the required regulatory
approval for the METRIX System in the United States on a timely basis, if at
all. If regulatory approval of a product is granted, such approval may entail
limitations on the indicated uses for which the METRIX System may be marketed,
which may restrict the patient population on which the METRIX System may be
used. Medical devices are also subject to strict regulations regarding
manufacturing, marketing and distribution, including, in the United States,
periodic audits and surveillance by the FDA of the manufacturing facilities of
device manufacturers to determine their compliance with Good Manufacturing
Practice ("GMP") regulations and, in Europe, annual certification of compliance
with the quality systems requirements of the European Union Active Implantable
Device Directive (the "AIMDD"). The failure of the Company to comply with GMP
regulations could result in penalties or enforcement proceedings being imposed
on the Company, including the recall of a product or a "cease distribution"
order requiring the Company to stop distributing products in the United States
and for export from the United States. The loss of the Company's AIMDD quality
systems certifications could prevent the Company from distributing its products
in Europe. The Company also will be required by the FDA to maintain a system for
tracking patients implanted with the METRIX device and transvenous leads to
conduct post-market surveillance and to provide periodic reports containing
safety and effectiveness information. If the FDA believes the Company is not in
compliance with applicable law, the FDA can institute legal proceedings to
detain or seize products, enjoin future violations or access civil and criminal
penalties. Any such action by the FDA could result in disruption of the
Company's operations for an indeterminate time. There can be no assurance that
the Company will be able to attain or maintain compliance with GMP or AIMDD
requirements. Failure to obtain regulatory approvals or to either attain
compliance with GMP requirements or maintain compliance with the requirements of
the various regulatory agencies would have a material adverse effect on the
Company's ability to manufacture, market and distribute its products and
therefore on its business, financial condition and ability to market the METRIX
System as currently contemplated.
MARKET ACCEPTANCE; SUBSTANTIAL DEPENDENCE ON SINGLE PRODUCT
Although the Company has obtained approval to affix the CE mark to the
METRIX System in Europe, and even if regulatory approval to market the METRIX
System in the United States is obtained, there can be no assurance that the
METRIX System will gain market acceptance in either Europe or the United States.
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Currently, there are no implantable devices on the market to treat atrial
fibrillation ("AF"). The METRIX System is a new approach to the treatment of AF
and the timing and rate of adoption of new medical technology cannot be
predicted. Substantial clinical experience with the METRIX System will be
required to address safety, efficacy and patient tolerance concerns such as
ventricular proarrhythmia and potential shock discomfort. There can be no
assurance that these and other concerns will be adequately addressed. Since the
Company anticipates that for the foreseeable future it will be substantially
dependent on the successful development and commercialization of the METRIX
System, failure of the Company to successfully develop and commercialize the
METRIX System would have a material adverse effect on the Company's business,
financial condition and results of operations.
HISTORY OF LOSSES; FUTURE LOSSES AND CAPITAL NEEDS
The Company has not generated significant revenues from product sales since
its incorporation in November 1990. As of June 30, 1997, the Company had an
accumulated deficit of approximately $102.5 million. The Company expects to
incur substantial additional losses, at least until the METRIX System has gained
market acceptance in the United States, attributable primarily to the Company's
clinical trial activities, expansion of European operations, expansion of
manufacturing and marketing capabilities and continuing research and development
activities. The amount and timing of the Company's future revenues and losses
will be affected by, among other things, the progress and costs of preclinical
studies and clinical trials, including the recruitment of suitable patients, the
timing of regulatory approvals, the availability of third-party reimbursement
for the Company's products, the rate of market acceptance and adoption of the
METRIX System, the costs associated with increases in marketing and sales
capabilities in the United States and Europe, the costs associated with the
development of manufacturing capabilities, the costs associated with the
Company's product development efforts and the status of competing products.
There can be no assurance that the Company will ever achieve profitability or
generate significant product revenues sufficient to offset its losses. The
Company will be required to obtain additional funding through public or private
financing, including equity financing, from time to time. Adequate funds may not
be available when needed or may not be available on terms favorable to the
Company. If funding is insufficient, the Company will be required to delay,
scale back or eliminate certain of its research and development, clinical,
marketing and manufacturing programs.
SIGNIFICANT COMPETITION
The METRIX System is a new technology that must compete with the
established treatments for AF, including pharmaceuticals, external electrical
cardioversion, atrioventricular node ablation accompanied by pacemaker
implantation and open-heart surgical ablation. Furthermore, although currently
no implantable device is being marketed to treat AF, certain manufacturers of
implantable ventricular defibrillators and pacemakers are developing
dual-chamber defibrillator systems that will be used to treat patients with both
ventricular and atrial arrhythmias and may be marketed to patients who have only
AF. Some of the Company's competitors are also researching other approaches to
treating AF, including endocardial ablation and preventative pacing techniques.
In addition, other companies and research organizations, academic institutions
and governmental agencies may be pursuing alternative approaches for treating
AF. These entities may market products to treat AF either on their own or
through collaborative efforts. Many of the Company's competitors have
substantially greater financial and other resources, larger research and
development staffs and more experience and capabilities in conducting research
and development activities, testing products in clinical trials, obtaining
regulatory approvals and manufacturing, marketing and distributing products than
the Company. The Company's competitors may develop new technologies and products
that are available for sale prior to the METRIX System or that are more
effective than the METRIX System. In addition, competitive products may be
manufactured and marketed more successfully than the METRIX System. Such
developments could render the METRIX System less competitive or obsolete, and
could have a material adverse effect on the Company's business, financial
condition and ability to market the METRIX System as currently contemplated.
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DEPENDENCE ON REIMBURSEMENT
Successful sales of the METRIX System in the United States and Europe will
depend on the availability of reimbursement from third-party payors such as
government and private insurance plans. There is significant uncertainty
concerning third-party reimbursement of investigational and newly approved
healthcare products, and there can be no assurance that third-party
reimbursement will continue to be available for the METRIX System, or that any
third-party reimbursement that is obtained will be adequate. Government and
other third-party payors are increasingly scrutinizing patient indications for
medical device therapy, and limiting coverage. The United States Health Care
Financial Administration has entered into an interagency agreement with the FDA
pursuant to which the FDA will place all Investigational Device Exemptions that
it approves into one of two categories, "Category A" or "Category B." The METRIX
System has recently been redesignated as a Category B device. Prior to this
redesignation, the METRIX System had been designated as a Category A device.
Category A devices are innovative devices believed to be in class III (the class
of medical devices subject to the most stringent FDA review) for which initial
questions of safety and effectiveness have not been resolved for the device type
and will not be eligible for Medicare reimbursement. Class B devices include
class III devices for which underlying questions of safety and effectiveness of
the device type have been resolved or which are of a device type known to be
capable of being safe and effective and are eligible for Medicare and other
third-party reimbursement. Although the METRIX System has been redesignated as a
Class B device and is therefore eligible for third-party reimbursement, if
adequate coverage and reimbursement levels are not provided by government and
third-party payors for the METRIX System, the Company's business, financial
condition and ability to market the METRIX System as currently contemplated
would be materially adversely affected.
DEPENDENCE ON SOLE SOURCES OF SUPPLY
The Company relies on outside vendors to manufacture certain major
components used in the METRIX System. A number of significant components, such
as hybrid circuits, batteries, integrated circuits, capacitors and transformers,
are supplied by sole source vendors. For certain of these components, there are
relatively few alternative sources of supply, and establishing additional or
replacement suppliers for such components, particularly hybrid circuits and
batteries, cannot be accomplished quickly. In addition, each supplier and each
component must be qualified with the FDA, and the time required for such
qualification may be lengthy. The establishment of additional or replacement
sources of supply would require the Company to certify the new suppliers, which
in the case of certain components would cause a delay in the Company's ability
to manufacture the products. The Company's inability to obtain acceptable
components in a timely manner or find and maintain suitable replacement
suppliers would have a material adverse effect on the Company's ability to
manufacture the METRIX System and therefore on its business, financial condition
and ability to market the METRIX System as currently contemplated.
INDUSTRY HISTORY OF PATENT LITIGATION; DEPENDENCE ON PATENTS AND PROPRIETARY
RIGHTS
The segment of the medical device industry that includes implantable
defibrillator systems has been characterized by extensive litigation regarding
patents and other intellectual property rights. Litigation may be necessary to
enforce patents issued to the Company to protect trade secrets or know-how owned
by the Company or to determine the enforceability, scope and validity of
proprietary rights of others. Such litigation may result in substantial expense
to the Company and significant diversion of effort by the Company's technical
and management personnel. An adverse determination in any such litigation could
subject the Company to significant liability to third parties or require the
Company to seek licenses from third parties. Although patent and intellectual
property disputes in the medical device industry have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include ongoing royalties. Moreover, there can be no
assurance that necessary licenses would be available to the Company on
satisfactory terms, if at all. If such licenses could not be obtained on
acceptable terms, the Company could be prevented from marketing the METRIX
System. Accordingly, an adverse determination in such litigation could have a
material adverse effect on the Company's business, financial condition and
ability to market the METRIX System as currently contemplated. The Company's
success will
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depend in part on its ability to obtain and maintain patent protection for its
technologies. There can be no assurance that issued patents or pending
applications will not be challenged or circumvented by competitors, or that the
rights granted thereunder will provide competitive advantages to the Company.
LIMITED MANUFACTURING AND MARKETING EXPERIENCE
The METRIX System has never been manufactured on a commercial scale and
there can be no assurance that it can be manufactured at a cost or in quantities
necessary to make it commercially viable. There can be no assurance that the
Company's reliance on others for the manufacture of its components will not
result in problems with product supply. Interruptions in the availability of
components would delay or prevent the development and commercial marketing of
the METRIX System. The Company is currently expanding its domestic manufacturing
capacity and its European and domestic marketing and sales capabilities. There
can be no assurance that the Company's expansion efforts will be successful or
that Company will be able to recruit and retain skilled sales, marketing and
manufacturing management, direct salespersons or distributors necessary to
successfully establish its manufacturing, marketing and sales capabilities. In
markets where the Company has entered or enters into distribution arrangements
for the sale of the METRIX System, the Company will be dependent on the efforts
of third parties. There can be no assurance that such third-party efforts will
be successful. The failure to successfully expand its manufacturing, marketing
and sales capabilities and the failure by third parties to successfully
distribute the METRIX System would have a material adverse effect on the
Company's business, financial condition and results of operations.
PRODUCT LIABILITY AND PRODUCT RECALL
The testing, manufacture, marketing and sale of medical devices entail the
inherent risk of liability claims or product recalls. Although the Company
maintains product liability insurance in the United States and in other
countries in which it currently conducts or intends to conduct business,
including clinical trials and product marketing and sales, there can be no
assurance that such coverage is adequate or will continue to be available.
Product liability insurance is expensive and in the future may not be available
on acceptable terms, if at all. In addition, the Company has agreed to indemnify
certain of its component suppliers for certain potential product liability. A
successful product liability claim or product recall could inhibit or prevent
commercialization of the METRIX System, cause a significant financial burden on
the Company, or both, and could have a material adverse effect on the Company's
business, financial condition and ability to market the METRIX System as
currently contemplated.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the principal members of its scientific
and management staff, the loss of whose services might impede the achievement of
its research and development or strategic objectives. Competition among medical
device companies for highly skilled scientific and management personnel is
intense. The Company's anticipated growth and expansion in areas and activities
requiring additional expertise, such as clinical trials, manufacturing,
marketing and sales are expected to place significant increased demands on the
Company's resources. These demands are expected to require the addition of new
management personnel and the development of additional expertise by existing
management personnel. The failure to recruit such personnel, loss of existing
personnel or failure to develop such expertise would have a material adverse
effect on the Company's business, financial condition and ability to market the
METRIX System as currently contemplated.
VOLATILITY OF STOCK PRICE
Since the Company's initial public offering in September 1994, the price of
the Common Stock has ranged from $6.75 to $18.50 per share. Factors such as the
results of clinical trials by the Company or its competitors, the granting and
timing of regulatory approvals, market acceptance of the METRIX System, the
availability of third-party reimbursement for the METRIX System, concern as to
the safety or efficacy of products of the Company or its competitors,
announcements of technological innovations or new products by the Company or its
competitors, governmental regulation, developments in patent or other
proprietary rights of
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the Company or its competitors and fluctuations in the Company's results of
operations will have a significant impact on the future price of the Common
Stock.
CONCENTRATION OF OWNERSHIP
The Company's directors and executive officers and their affiliates
beneficially own an aggregate of approximately 15.5% of the Company's
outstanding shares of Common Stock. As a result, these stockholders, acting
together, will have significant influence over all matters requiring approval by
the stockholders of the Company, including the election of a majority of the
directors.
ANTITAKEOVER CONSIDERATIONS
The Company's Board of Directors (the "Board of Directors") has the
authority, without any action by the stockholders, to issue up to 10,000,000
shares of Preferred Stock and to fix the rights and preferences of any shares of
such Preferred Stock to be issued. In addition, the Company has adopted a
stockholder rights plan providing for the issuance of preferred share purchase
rights, under certain circumstances, designed to cause substantial dilution to a
person or group that attempts to acquire the Company on terms not approved by
the Board of Directors. Certain provisions in the Company's Restated Certificate
of Incorporation, Amended and Restated Bylaws and stockholder rights plan, as
well as Delaware law and the ability of the Board of Directors to issue
Preferred Stock, may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders, may
discourage bids for the Common Stock at a premium over the market price of the
Common Stock and may adversely affect the market price of, and the voting and
other rights of the holders of, Common Stock.
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SELLING STOCKHOLDERS
The following table provides certain information regarding the Selling
Stockholders and the number of Shares being offered by them.
<TABLE>
<CAPTION>
SHARES THAT MAY BE SHARES BENEFICIALLY OWNED
SOLD AFTER OFFERING
---------------------- -------------------------
PERCENTAGE PERCENTAGE
SHARES BENEFICIALLY OF OF
OWNED PRIOR TO COMMON STOCK COMMON STOCK
NAME AND ADDRESS OFFERING AMOUNT OUTSTANDING AMOUNT(1) OUTSTANDING
- -------------------------------------------- ------------------- ------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Warburg, Pincus Institutional Fund, Inc. 1,752,000(2) 105,820 0.6% 1,328,720(3) 7.1%
Small Company Growth Portfolio
c/o Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, NY 10017
Warburg, Pincus Emerging Growth Fund, Inc. 1,752,000(4) 317,460 1.7% 1,328,720(3) 7.1%
c/o Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, NY 10017
</TABLE>
- ---------------
(1) Assumes the sale of all the Shares offered by each of the Selling
Stockholders.
(2) Includes 1,646,180 shares of Common Stock held by Warburg, Pincus
Counsellors, Inc., an affiliate of the Selling Stockholder, and its
affiliates (including the 317,460 Shares held by Warburg, Pincus Emerging
Growth Fund, Inc. offered hereby).
(3) Represents 1,328,720 shares of Common Stock held by Warburg, Pincus
Counsellors, Inc., an affiliate of the Selling Stockholder, and its
affiliates.
(4) Includes 1,434,540 shares of Common Stock held by Warburg, Pincus
Counsellors, Inc., an affiliate of the Selling Stockholder, and its
affiliates (including the 105,820 Shares held by Warburg, Pincus
Institutional Fund, Inc. -- Small Company Growth Portfolio offered hereby).
Neither of the Selling Stockholders has held any position or office or has
had any other material relationship with the Company, or any of its affiliates,
within the past three years.
The Selling Stockholders have represented to the Company that they
purchased the Shares for their own account for investment only and not with a
view towards the public sale or distribution thereof, except pursuant to sales
registered under the Securities Act or exemptions therefrom. In recognition of
the fact that the Selling Stockholders, even though purchasing the Shares for
investment, may wish to be legally permitted to sell their Shares when they deem
appropriate, the Company agreed with the Selling Stockholders to file with the
Commission under the Securities Act the Registration Statement with respect to
the resale of the Shares from time to time in transactions in the
over-the-counter market through Nasdaq, in privately negotiated transactions,
through the writing of options on the Shares, or otherwise, or through a
combination of such methods of sale, and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earlier of July 29, 1998 and
the date on which the Selling Stockholders have sold all the Shares.
PLAN OF DISTRIBUTION
All of the Shares offered hereby may be sold from time to time by the
Selling Stockholders, or by their pledgees, donees, transferees or other
successors-in-interest. The sale of the Shares by the Selling Stockholders may
be effected from time to time in transactions in the over-the-counter market
through Nasdaq, or on one or more other securities markets and exchanges, in
privately negotiated transactions, through the writing of options on the Shares,
or otherwise, or through a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. The Selling
Stockholders may effect the above-mentioned transactions by selling the Shares
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the Selling
Stockholders and/or the purchasers of the Shares for whom such broker-dealers
may act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer may be in excess of customary
commissions). Any broker-dealer may act as a broker-dealer on behalf of the
Selling Stockholders in connection with the offering of certain of
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the Shares by the Selling Stockholders. None of the proceeds from the sale of
the Shares by the Selling Stockholders will be received by the Company. In
addition, any of the Shares that qualify for sale pursuant to Rule 144
promulgated under the Securities Act may be sold in transactions complying with
such Rule, rather than pursuant to this Prospectus.
The Company has the right to suspend use of this Prospectus for a discrete
period of time under certain circumstances.
Any broker-dealers who act in connection with the sale of the Shares
hereunder may be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act, and any commissions received by them and profit on any
resale of the Shares as principal may be deemed to be underwriting discounts and
commissions under the Securities Act. The Company has agreed to bear all
expenses (other than selling commissions and fees and stock transfer taxes) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and broker-dealers who act in connection with the sale of the
Shares hereunder against certain liabilities, including liabilities under the
Securities Act.
There can be no assurance that the Selling Stockholders will sell any or
all of the Shares offered by them hereunder.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Perkins Coie, Seattle, Washington.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1996, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
10
<PAGE> 11
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Forward-Looking Statements............ 2
Incorporation of Certain Documents by
Reference........................... 3
Risk Factors.......................... 4
Selling Stockholders.................. 9
Plan of Distribution.................. 9
Legal Matters......................... 10
Experts............................... 10
</TABLE>
======================================================
======================================================
INCONTROL, INC.
423,280 SHARES OF
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
September 15, 1997
======================================================
