AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PLC SYSTEMS INC.
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA 04-3153858
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
WILLIAM C. DOW, PRESIDENT
PLC SYSTEMS INC.
10 FORGE PARK
FRANKLIN, MASSACHUSETTS 02038
(508) 541-8800
(Address, including zip code, and telephone, including area code, of
registrant's principal executive offices)
COPY TO:
NEIL H. ARONSON, ESQUIRE
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
One Financial Center
Boston, MA 02111
(617) 542-6000
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of each offering aggregate Amount of
class of securities Amount to be price per offering registration
to be registered registered share price fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par 3,165,000 $12.75(1) $40,353,750(1) $12,228.41
value per share
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. Pursuant to Rule 457(c) of the Securities Act, as
amended, the proposed maximum offering price has been calculated based
upon the average of the high and low sale prices of the Company's
Common Stock as reported by the American Stock Exchange on August 21,
1997.
Approximate date of commencement of proposed sale to public: as soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earliest
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
-----------
PROSPECTUS
PLC SYSTEMS INC.
3,165,000 SHARES OF COMMON STOCK,
NO PAR VALUE PER SHARE
The 3,165,000 shares of Common Stock of PLC Systems Inc., a British
Columbia corporation (the "Company"), offered hereby are being sold by the
selling stockholders identified herein (the "Selling Stockholders"). Such offers
and sales may be made on one or more exchanges, in the over-the-counter market,
or otherwise, at prices and on terms then prevailing, or at prices related to
the then-current market price, or in negotiated transactions, or by underwriters
pursuant to underwriting agreements in customary form, or in a combination of
any such methods of sale. The Selling Stockholders may also sell such shares in
accordance with Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). The Selling Stockholders are identified and certain
information with respect to them is provided under the caption "Selling
Stockholders" herein, to which reference is made. The expenses of the
registration of the securities offered hereby, including fees of counsel for the
Company, will be paid by the Company. The following expenses will be borne by
the Selling Stockholders: underwriting discounts and selling commissions, if
any, and the fees of legal counsel, if any, for the Selling Stockholders. The
filing by the Company of this Prospectus in accordance with the requirements of
Form S-3 is not an admission that any person whose shares are included herein is
an "affiliate" of the Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing sell orders on behalf of any
Selling Stockholder may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act. The Company will
not receive any of the proceeds from the sale of the securities offered hereby.
The Common Stock is listed on the American Stock Exchange ("AMEX") under the
symbol "PLC". On August 22, 1997, the Closing Sale Price of the Common Stock, as
Reported by AMEX, was $12.875 Per Share.
---------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS.
---------------------
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.
---------------------
No person is authorized in connection with any offering made hereby to
give any information or to make any representations other than as contained in
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus is
not an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
THE DATE OF THIS PROSPECTUS IS ____, 1997.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). These reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 of the Commission's office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at its regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such reports, proxy statements and other information can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. 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 Commission's Web site is http://www.sec.gov.
Additional updating information with respect to the securities covered herein
may be provided in the future to purchasers by means of appendices to this
Prospectus.
The Company's Common Stock is listed for trading on AMEX. Reports and
other information concerning the Company can be inspected at the offices of AMEX
located at 86 Trinity Place, New York, New York 10006-1881.
The Company has filed with the Commission in Washington, D.C. a
registration statement (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act, as
amended, with respect to the securities offered or to be offered hereby. This
Prospectus does not contain all of the information included in the Registration
Statement, certain items of which are omitted in accordance with the rules and
regulations of the Commission. For further information about the Company and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto. Although statements contained herein concerning the
provisions of any documents are true and correct in all material respects, any
such statements are not necessarily complete, and, in each instance, such
statements are qualified in their entirety by reference to such document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any document incorporated herein by reference, excluding exhibits. Requests
should be made to PLC Systems Inc., 10 Forge Park, Franklin, Massachusetts
02038, or by telephone at (508) 541-8800 and directed to Patricia L. Murphy,
Chief Financial Officer.
THE COMPANY
PLC Systems Inc. (the "Company") has developed a patented high-powered
carbon dioxide ("CO2") laser system known as The Heart Laser(TM) (the "Heart
Laser") for broad application in the treatment of coronary artery disease with a
surgical laser procedure developed by the Company and its clinical investigators
known as transmyocardial revascularization ("TMR"). The Company believes that
TMR using the Heart Laser may provide an alternative or adjunct therapy to
conventional revascularization treatments, such as coronary bypass surgery and
balloon angioplasty, which are currently used to bypass or reduce the blockage
in coronary arteries afflicted with coronary artery disease. Well over 3,000
patients have been treated with TMR using the Heart Laser in the United States
and overseas. The Heart Laser has been shipped to 23 sites in the United States
and as of August 1, 1997, the Company had sold or placed 62 Heart Lasers
overseas. A number of studies and scientific conferences have been held
favorably reporting on the use of TMR using the Heart Laser as an adjunct or
alternative to bypass and angioplasty procedures. On July 28, 1997, the
Circulatory Advisory Systems Panel of the U.S. Food and Drug Administration, by
a vote of 9 to 2, voted non-approval at this time of the Company's Pre-Market
Application for the Heart Laser System.
-2-
The Company was incorporated pursuant to the Company Act of British
Columbia, Canada on March 3, 1987. The Company's principal offices are located
at 10 Forge Park, Franklin, Massachusetts 02038, and its telephone number is
(508) 541-8800.
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RISK FACTORS
An investment in the Common Stock being offered by this Prospectus
involves a high degree of risk. The following factors, in addition to those
discussed elsewhere in the Prospectus or incorporated herein by reference,
should be carefully considered in evaluating the Company and its business
prospects before purchasing shares offered by this Prospectus. This Prospectus
contains and incorporates by reference forward-looking statements within the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, which can be identified by the use of forward-looking terminology such as
"may," "will," "would," "could," "intend," "plan," "expect," "anticipate,"
"estimate," or "continue" or the negative thereof or other variations thereon or
comparable terminology. Reference is made in particular to the discussion set
forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (the "Form 10-K"), the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997 and under
"Business" in the Form 10-K, incorporated in this Prospectus by reference. Such
statements are based on current expectations that involve a number of
uncertainties including those set forth in the risk factors below. Actual
results could differ materially from those projected in the forward-looking
statements.
PRELIMINARY DENIAL OF PRE-MARKET APPROVAL BY FDA ADVISORY PANEL;
UNCERTAINTIES REGARDING FDA APPROVAL; GOVERNMENT REGULATIONS. The Company must
obtain Pre-Market Approval ("PMA") by the FDA before the Company's sole product,
the Heart Laser, may be marketed in the United States. On July 28, 1997, an
advisory panel (the "FDA Advisory Panel") of the U.S. Food and Drug
Administration (the "FDA"), by a vote of 9 to 2, voted against recommending PMA
for TMR using the Heart Laser at this time, citing lack of 12-month follow-up
data on all patents in the Phase III randomized study and other concerns. The
Company hopes to submit such follow-up data to the FDA by the end of 1997. There
can be no assurance that these clinical trials will be accepted and approved by
the FDA or the FDA Advisory Panel or, if approved, will be approved in a timely
manner or for desirable claims. The Company's products and its manufacturing
activities are subject to extensive and rigorous federal and state regulation in
the United States and to various regulatory requirements in other countries,
including Japan, Australia and certain countries in Southeast Asia. Regulatory
approvals, if granted, may include significant limitations on the indicated uses
for which a product may be marketed. In addition, the process of obtaining and
maintaining required approvals can be lengthy, expensive and uncertain.
Current FDA enforcement policy strictly prohibits the marketing of
approved medical devices for unapproved uses. In addition, product approvals
could be withdrawn for failure to comply with regulatory standards or the
occurrence of unforeseen problems following initial marketing. The Company is
required for its existing products, and will be required for its Heart Laser, to
adhere to applicable regulations setting forth current Good Manufacturing
Practices ("GMP") requirements, which include testing, control and documentation
requirements. Failure to comply with applicable GMP or other regulatory
requirements can result in, among other sanctions, fines, delays or suspensions
of approvals, injunctions against further distribution, seizures or recalls of
products, adverse publicity, operating restrictions and criminal prosecutions.
Furthermore, changes in existing regulations or adoption of new regulations
could prevent the Company from obtaining, or affect the timing of, future
regulatory approvals and could adversely affect the continued marketing of the
Company's existing products. No assurance can be given that the Company will be
able to obtain necessary regulatory approvals on a timely basis or at all, and
delays in receipt of a failure to receive such approvals, the loss of previously
received approvals, or failure to comply with regulatory requirements would have
a material adverse effect on the Company's business, financial condition and
results of operations.
UNCERTAINTY OF CLINICAL AND MARKETING ACCEPTANCE; TECHNOLOGY
UNCERTAINTY. Use of TMR with the Heart Laser without arresting and cooling the
heart and in lieu of a heart-lung machine is new and only now becoming widely
known. Market acceptance of the Heart Laser will depend in large part on the
Company's ability to demonstrate to the medical community in general, and to
cardiac surgeons and cardiologists in particular, the efficacy, relative safety
and cost effectiveness of treating cardiovascular disease using the Heart Laser
and to train cardiac surgeons to perform TMR. To date, the Company has trained
only a limited number of physicians and will need to expand its marketing and
training capabilities. Moreover, even if TMR using the
-4-
Heart Laser becomes generally accepted by the medical community, physicians
trained in competitive TMR products may elect not to consider, or to recommend a
competitor's products instead of, the Company's Heart Laser. The ability of the
Company to conduct such marketing programs prior to FDA approval of the PMA for
the Heart Laser may be limited or restricted by FDA regulations, guidelines or
policies. No assurance can be given that TMR will be accepted as an alternative
to other existing or new therapies, or the cardiologists and cardiac surgeons
will accept TMR as an appropriate course of treatment for their patents. Lack of
clinical and market acceptance would have a material adverse effect on the
Company's business, financial condition and results of operations.
Patients have been treated with TMR since only January 1990. No
assurance can be given that patients may not suffer adverse, long-term
consequences from the TMR procedure.
DEPENDENCE ON THE HEART LASER PRODUCT. The Company focuses its
resources on the continued development and refinement of its Heart Laser and
single use surgical products. If the Company is unable to obtain requisite
regulatory approvals or to achieve commercial acceptance of the Heart Laser, the
Company's business, financial condition and results of operations would be
materially and adversely affected.
RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION. The medical care
products industry is characterized by extensive research efforts and rapid
technological progress. New technologies and developments are expected to
continue at a rapid pace in both industry and academia. Competition in the
market for surgical lasers and for the treatment of cardiovascular disease is
intense and is expected to increase. The Company is aware of several other
companies who have entered the TMR market or have announced their intention to
enter the TMR market. Most of these companies are using holmium lasers, two are
using excimer lasers and a company recently announced its intention to develop a
CO2 laser for TMR. Most of these companies are in the early stages of clinical
tests. Management believes that the Heart Laser, if approved for general sale by
the FDA, will compete primarily with conventional coronary bypass, balloon
angioplasty and new coronary procedures (including minimally invasive surgical
techniques, atherectomy, laser angioplasty and metallic stents). Several of the
companies who have entered the TMR market are developing percutaneous methods of
performing TMR. These percutaneous methods of performing TMR are in the early
stages of development and may not be commercially available for several years.
However, if these methods are developed, they could provide a less invasive
method for use by cardiac surgeons and cardiologists.
Many of the companies manufacturing these devices have substantially
greater capital, as well as greater research and development, regulatory,
manufacturing and marketing resources and experience than the Company and
represent significant competition for the Company. Such companies may succeed in
developing products that are more effective or less costly in treating coronary
disease than the Heart Laser, and may be more successful than the Company in
manufacturing and marketing their products. No assurance can be given that the
Company's competitors or others will not succeed in developing technologies,
products or procedures that are more effective or less invasive than any being
developed by the Company or that would render the Company's technology and
products obsolete or noncompetitive. The advent of either new devices,
procedures or new pharmaceutical agents could hinder the Company's ability to
compete effectively and have a material adverse effect on its business,
financial condition and results of operations.
HISTORY OF OPERATING LOSSES; NO ASSURANCE OF FUTURE PROFITABILITY.
Prior to acquiring PLC Medical System, Inc. (formerly known as Laser
Engineering, Inc.) in 1992, the Company had essentially no business, and had
incurred operating losses since its inception in 1987 until the year ended
December 31, 1995. For the year ended December 31, 1995, the Company had net
earnings of $2,004,000. For the year ended December 31, 1996 and the six months
ended June 30, 1997, the Company incurred net losses of $1,540,000 and
$5,719,000, respectively. No assurance can be given that the Company will
operate profitably on a quarterly or annual basis in the future.
The Company believes that periodic operating losses are likely until
such time as the Company receives an approval of its PMA from the FDA for the
Heart Laser. The Company submitted its PMA application in April
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1995. Although the Heart Laser has been granted "expedited review" status by the
FDA, given the current uncertainties on the time required by the FDA to approve
a PMA application and the recent decision by the FDA Advisory Panel, the Company
cannot project when, if at all, such approval would be granted. In February
1997, the Company's PMA application was filed by the FDA. The filing of this
expedited PMA application indicated that the FDA is prepared to prioritize and
commit its resources to this application through the remaining review process.
No assurance can be given that a PMA approval will be granted in 1997, if at
all. On July 28, 1997, the FDA Advisory Panel voted not to recommend approval of
a PMA for TMR using the Heart Laser. The preliminary denial will impact the
Company's Heart Laser shipments and will likely delay a number of future
shipments. Until such time, if ever, as PMA approval is granted, future
profitability will likely be determined by the number of international shipments
and the related mix of sales and placements. In addition, the Company must also
convince health care professionals, third party payors and the general public of
the medical and economic benefits of TMR. However, no assurance can be given
that the Company will be successful in marketing the Heart Laser and TMR or that
the Company will be able to operate profitably on a consistent basis, even
following FDA approval.
RELIANCE UPON PATENTS AND PROPRIETARY RIGHTS; EXISTING PATENT
LITIGATION. Since April 1992, the Company has received 11 U.S. patents. The
Company also has issued 13 U.S. patent applications pending relating to the
Heart Laser handpiece, other technology associated with minimally surgical
techniques and technologies associated with percutaneous TMR. In April 1996, the
Company received patents from the European Patent Office and the Japanese Patent
Office providing patent protection on its heart synchronization technology.
Additional Japanese issued patents cover laser beam manipulation and a laser
beam status indicator. In December 1996, a patent was issued in Canada covering
a self aligning coupler for a laser endoscope. The Company has 30 patents
pending related to the Heart Laser and its components in various international
patent offices. The Company expects to continue to file domestic and foreign
patent applications on various features of the Heart Laser. However, no
assurance can be given that any additional patents will be issued. Furthermore,
no assurance can be given that the existing patents will be held valid if
subsequently challenged, that any additional patents will be issued or that the
scope of any patent protection will exclude competition. Similarly, no assurance
can be given that the other parties will not be issued patents which will
prevent, limit or interfere with one or more of the Company's products, or will
require licensing and the payment of significant fees or royalties by the
Company to such third parties in order to enable the Company to conduct its
business. Any of these occurrences could have a material adverse effect on the
Company's business, financial condition and results of operations. No assurance
can be given that any patents will provide competitive advantages for the
Company's products.
In September 1996, CardioGenesis Corporation ("CardioGenesis") filed a
civil lawsuit in the United States District Court seeking to have the Company's
synchronization patent declared invalid, or, alternatively, asking the court to
determine whether CardioGenesis infringes on this patent. In October 1996, the
Company filed an answer and counterclaim alleging that CardioGenesis infringes
on this patent. In January 1997, CardioGenesis filed a challenge to the
Company's European synchronization patent in the European Patent Office and in
March 1997, the Company filed its response. In addition, in April 1997, the
Company filed an infringement lawsuit against CardioGenesis in the German courts
alleging infringement of its synchronization patent.
In February 1996, the Company filed suit against Eclipse Surgical
Technologies, Inc. ("Eclipse") in the United States District Court for the
District of Massachusetts alleging copyright infringement of certain copyrighted
FDA protocol works and unfair and deceptive trade practices.
Legislation is pending in Congress that may limit the ability of
medical device manufacturers in the future to obtain patents on surgical and
medical procedures that are not performed by, or as part of, devices or
compositions which are themselves patentable. While the Company cannot predict
whether the legislation will be enacted, or what limitations will result from
the law if enacted, any limitation or reduction in the patentability of medical
or surgical methods and procedures could have a material adverse effect on the
Company's ability to protect its proprietary methods and procedures.
-6-
The validity and breadth of claims covered in medical technology
patents involve complex legal and factual issues and therefore are highly
uncertain. There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry. Litigation, which
could result in substantial cost to and diversion of effort by the Company, may
be necessary to enforce patents issued to the Company, to protect trade secrets
or know-how owned by the Company, to defend the Company against claimed
infringement of the rights of others and to determine the scope and validity of
the proprietary rights of others. Adverse determinations in litigation could
subject the Company to significant liabilities to third parties, could require
the Company to seek licenses from third parties and could prevent the Company
from manufacturing, selling or using its products, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company also relies upon unpatented proprietary technology and
trade secrets that it seeks to protect, in part, through confidentiality
agreements with employees and other parties. No assurance can be given that
these agreements will not be breached, that the Company will have adequate
remedies for any breach, that others will not independently develop or otherwise
acquire substantially equivalent proprietary technology and trade secrets or
disclose such technology or that the Company can meaningfully protect its rights
in such unpatented technology. Any disclosure of such information could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, others may hold or receive patents which
contain claims that may cover products developed by the Company.
POTENTIAL LIMITATIONS ON THIRD PARTY REIMBURSEMENT. Health care
providers, such as hospitals and physicians, that purchase medical devices such
as the Heart Laser for use on their patients generally rely upon third party
payors, such as Medicare, Medicaid and private insurance plans, to reimburse all
or part of the costs and fees associated with the health care services provided
to their patients. Medicare and Medicaid (in some states) determine whether to
provide coverage for a particular procedure and reimburse hospitals for
inpatient medical procedures at a fixed rate according to diagnosis related
groups ("DRGs"). The Health Care Financing Administration ("HCFA"), the agency
responsible for administering the Medicare system, has prohibited Medicare
coverage for procedures that are not deemed safe and effective for the condition
being treated, or which are still investigational. Even if a device has FDA
approval, Medicare and other third party payors may deny reimbursement if they
conclude that the device is not cost-effective, or is experimental or used for
an unimproved indication. In November 1995, the Heart Laser was listed as a
Category B device by the FDA and HCFA. This classification means that treatments
performed with the Heart Laser are eligible for Medicare and Medicaid
reimbursement during the clinical trials, while the device is still
investigational. The rule allowing coverage for Category B devices left the
coverage determination for procedures involving those devices to the discretion
of local Medicare contractors, in the absence of a national coverage
instruction.
In February 1997, HCFA published a national noncoverage instruction for
TMR based upon its belief that scientific evidence substantiating the safety and
effectiveness of TMR is not currently available. HCFA often denies reimbursement
for procedures performed using devices which have not yet received FDA approval.
The noncoverage instruction applies to procedures performed on or after May 19,
1997 on Medicare beneficiaries. No assurance can be given that following FDA
approval of the Heart Laser, HCFA will reverse its policy and that such
reimbursement will be granted or, if granted that the reimbursement will be at
the same rate or will not be canceled in the future. Even if a device has FDA
clearance, Medicare and other third party payors may deny coverage if they
conclude that TMR is not reasonable, necessary and/or cost-effective. No
assurance can be given that, even if coverage is granted, private insurance
reimbursement levels will not adversely affect the Company's ability to sell its
products.
Capital costs for medical equipment by hospitals are currently
reimbursed separately from DRG payments. Moreover, even if reimbursement is
available, no assurance can be given that the payors' reimbursement levels will
be adequate to enable the Company to sell its product on a profitable basis.
Since 1984, Medicare has reimbursed hospitals' operational costs on the basis of
a prospective payment methodology; however, until recently, hospitals' capital
costs have been excluded from these prospective rates and reimbursed on a
capital cost pass-through basis. HCFA has issued final Medicare regulations
establishing the prospective
-7-
payment methodology for inpatient hospital capital-related costs. These new
regulations include a ten-year transition period which blends the old and the
new capital payments. It is anticipated that the new capital costs reimbursement
methodology may reduce Medicare reimbursement for hospital capital costs. Any
reductions in Medicare reimbursement implemented pursuant to this new
methodology could have an adverse impact on the market for the Heart Laser and
the Company's other surgical lasers. The market for the Company's products could
also be adversely affected by future legislation to reform the nation's health
care system or by changes in industry practices regarding reimbursement policy
and procedures.
PENDING LITIGATION. Following the July 28, 1997 FDA Panel Meeting, the
Company and certain of its officers were named as defendants in a number of
alleged class action suits alleging violations of federal securities laws. The
plaintiffs are seeking damages in connection with such alleged violations.
Although the outcome of these suits is not currently predictable, management
believes that the Company has meritorious defenses, and intends to vigorously
defend the suits. However, there can be no assurance that the Company will be
successful in these suits and any decision adverse to the Company and the
officers could have a material adverse effect on the Company's financial
position and results of operations and/or might require the issuance of stock or
other securities of the Company as part of any judgment or settlement.
DEPENDENCE UPON KEY PERSONNEL. The highly technical nature of the
Company's business, its ability to continue its technological developments and
to market its products and thereby develop a competitive edge in the marketplace
depends, in large part, on its ability to attract and maintain qualified
technical and key management personnel. Competition for such personnel is
intense, and no assurance can be given that the Company will be able to attract
and retain such personnel. The Company is dependent in particular upon the
services of Dr. Robert I. Rudko, its Chairman and Chief Scientist and William C.
Dow, its President and Chief Executive Officer. The loss of either Dr. Rudko or
Mr. Dow would have a material adverse effect on the Company.
RISKS RELATED TO GROWTH AND EXPANSION. As a result of both internal
growth and the potential for FDA PMA approval of the Heart Laser, of which no
assurance can be given, the Company could experience rapid growth and expansion.
This growth and expansion could place a significant strain on the Company's
manufacturing and technical support personnel and other resources. The Company's
growth would result in an increase in the level of responsibility for both
existing and new management personnel. If the Company's management is unable to
manage growth effectively, the Company's business, financial condition and
results of operations would be materially and adversely affected.
PRODUCT LIABILITY AND POSSIBLE INSUFFICIENCY OF INSURANCE. The
manufacture and sale of the Company's products entail the risk of product
liability claims. A recent United States Supreme Court decision held that,
despite a company's compliance with FDA regulations, it still may not be
shielded from common-law negligent design claims or manufacturing and labeling
claims based on state rules. No assurance can be given that the coverage limits
of the Company's product liability insurance policies, which are presently at an
annual aggregate maximum of $4 million, will be adequate. Such insurance is
expensive and in the future may not be available on acceptable terms, if at all.
A successful claim or series of claims brought against the Company in excess of
its insurance coverage, and the effect any product liability litigation may have
upon the reputation and marketability of the Company's technology and products,
together with diversion of the attention of the Company's key personnel, could
have a material adverse effect on the Company's business, financial condition
and results of operations.
POSSIBLE NEED FOR ADDITIONAL FUNDING. Management believes that the
Company's current capital resources and revenues from existing products will be
sufficient to meet its cash requirements for the next 12 months. However, delays
in obtaining regulatory approvals of the Heart Laser or unanticipated decreases
in operating revenues or increases in expenses, may adversely impact the
Company's expected funding requirements, in which event the Company may require
additional funding. In such an event, the Company would need to obtain financing
through the issuance and sale of debt or equity securities, bank financing,
joint ventures or other means, and no assurance can be given that additional
capital will be available to the Company or that capital, if any, will be
available upon satisfactory terms.
-8-
VOLATILE SECURITIES MARKET FACTORS AND POSSIBLE WIDE FLUCTUATIONS IN
STOCK PRICE. The markets for equity security in general, and for those of
medical device manufacturers in particular, have been volatile and the price of
the Company's Common Stock in the future could be subject to wide fluctuations
in response to quarterly variations in operating results, news and product
announcements, trading volume, general market trends and other factors. No
assurance can be given that the Company's Common Stock will trade in the future
at market prices in excess of its current market price.
SHARES ELIGIBLE FOR FUTURE SALE. Of the 16,646,266 shares of the
Company's Common Stock issued and outstanding on July 23, 1997, approximately
14,800,000 shares have been registered pursuant to the Act or were sold more
than two years ago and are not held by any affiliates of the Company and may be
resold without limitation under the provisions of Rule 144 or any other
provisions of the Act. Sales of such securities could have a possible depressive
effect upon the prices of the Company's securities in the public markets. The
remaining approximate 2,246,000 shares are restricted and subject to the
provisions of Rule 144 or a certain escrow agreement.
In July, 1997, the Company entered into a $20,150,000 financing
commitment. Under the terms of the financing, the Company received $10,075,000
in July 1997 and will receive an additional $10,075,000 in August 1997 on the
filing of the Registration Statement for this Prospectus from the issuance of
convertible debentures to the Selling Stockholders. The debentures are due five
years from the date of issuance. The debentures are convertible into common
shares under a predetermined formula and automatically convert into Common Stock
on the maturity date if not earlier converted. The first tranche of the
debentures are convertible into common shares at the lesser of (a) $25.98, or
(b) the market price of the Company's Common Stock at the time of conversion.
The second tranche of the debentures are convertible into common shares at the
lesser of (a) $14.60, or (b) the market price of the Company's Common Stock at
the time of conversion. Other than as described herein, a maximum of 2,515,000
shares of Common Stock are issuable in full payment of all accrued interest and
principal for all debentures.
The Company has further agreed that should the Company subsequent to
August 14, 1997 (1) receive a recommendation of non-approval of its Pre-Market
Application for its Heart Laser System from the Circulatory Systems Advisory
Panel of the U.S. Food and Drug Administration (the "Panel") or (2) not receive
a recommendation of approval from the Panel or FDA approval of its Pre-Market
Application for its Heart Laser System by August 14, 1998, then the maximum
number of shares of Common Stock which the Company shall be obligated to issue
upon conversion of the debentures shall be increased from 2,515,000 to
3,015,000.
The convertible debentures will accrue interest at 5% per annum,
payable in cash or common stock at the Company's option, at the time of
conversion. In connection with the issuance of the first tranche of convertible
debentures, the Company has issued 69,875 redeemable warrants to these Selling
Stockholders to purchase shares of its Common Stock at an exercise price of
$27.81 per share. In connection with the issuance of the second tranche of
convertible debentures, the Company has issued 80,125 redeemable warrants to the
Selling Stockholders to purchase shares of its Common Stock at an exercise price
of $15.78 per share. If the average closing sale price of its Common Stock for
any consecutive 30 trading day period commencing January 17, 1999 exceeds the
exercise price by more than 50%, the Company has the right, exercisable at any
time upon 30 days notice to the holder to redeem the warrant at a price of $.10
per warrant share. The warrants issued in connection with the first tranche
expire on July 17, 2002. The warrants issued in connection with the second
tranche expire on August 14, 2002.
SHARES RESERVED FOR EXERCISE AND GRANTING OF OPTIONS. The Company has
adopted stock option plans for employees, officers, and consultants (the "1992,
1993 and 1995 Plans") pursuant to which the Company may grant options to
purchase up to an aggregate of 3,155,000 shares of Common Stock and a 1993
Formula Stock Option Plan for nonemployee directors (the "Formula Plan") under
which options to purchase 250,000 shares of Common Stock may be granted and the
1997 Executive Stock Option Plan (the "Executive Plan") under which the Company
may issue non-qualified options to purchase up to 650,000 shares to its Chief
Executive Officer. The Company has granted options to purchase 2,473,694 shares
of Common Stock under the plans. Options to purchase up to an additional 484,532
shares are available under these plans. These options may be exercised, and the
underlying shares issued, at a time when the Company would otherwise be able to
obtain
-9-
additional equity capital on terms more favorable to the Company. Moreover, the
Company may issue additional equity to third party financing sources in amounts
that are uncertain at this time.
RESTRICTIONS ON ELECTIONS OF DIRECTORS. The Company is incorporated
under the laws of British Columbia. Under British Columbia corporate law, a
majority of the Company's directors must be residents of Canada and at least one
director must be a resident of British Columbia. As a result, security holders
may be limited with respect to the persons that can be nominated and elected as
directors of the Company. In addition, the Company's Articles, as amended,
provide for a classified Board of Directors. These provisions may have the
effect of delaying or preventing changes in control or management of the Company
and could adversely affect the prevailing market price of the Common Stock.
POSSIBLE UNENFORCEABILITY OF JUDGMENTS AGAINST THE COMPANY AND ITS
CANADIAN DIRECTORS. The Company is incorporated under the laws of British
Columbia. Under British Columbia corporate law, there is doubt as to the
enforceability in British Columbia against the Company and the Canadian
directors of original actions or actions for enforcement of judgments issued by
courts of the United States.
NON-PAYMENT OF DIVIDENDS. The Company has never paid cash dividends on
its Common Stock. The Company currently intends to retain all future earnings,
if any, for use in its business and does not anticipate that cash dividends will
be paid in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS
The shares of Common Stock offered hereby by the Selling Stockholders
are issuable upon (a) the conversion of convertible debentures in the aggregate
amount of $20,150,000 (the "Convertible Debentures") issued by the Company in
private placements in July and August 1997 (the "1997 Private Placements") to
Southbrook International Investments Ltd. ("Southbrook"), HBK Cayman, L.P. ("HBK
Cayman"), HBK Offshore Fund Ltd. ("HBK Offshore"), and Brown Simpson Capital
Growth Fund LLP ("Brown Simpson"), and (b) the exercise of warrants to purchase
an aggregate of 150,000 shares of Common Stock (the "Warrants") issued by the
Company to Southbrook, HBK Cayman, HBK Offshore and Brown Simpson in connection
with the 1997 Private Placements.
The number of shares registered on the registration statement of which
this Prospectus is a part and the number of shares offered hereby have been
determined by agreement between the Company, Southbrook, HBK Cayman, HBK
Offshore and BSSGF. The number of shares of Common Stock that will ultimately be
issued to Southbrook, HBK Cayman, HBK Offshore and BSSGF upon conversion of the
Convertible Debentures is dependent upon a conversion formula which relies in
part on the lowest closing bid price of the Common Stock for five consecutive
trading days during the 30 days immediately preceding the date of conversion
and, therefore cannot be determined at this time. In no event are more than
3,015,000 issuable upon conversion and payment for all debentures.
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Stockholders
as of August 20, 1997, and as adjusted to reflect the sale of the Common Stock
offered hereby by the Selling Stockholders assuming the maximum number of shares
are issued under the debentures:
-10-
<TABLE>
<CAPTION>
Maximum Number
of Shares Shares
Owned Prior to Registered for
Selling Stockholder Offering(1) Sale Hereby
- ------------------- -------------- -------
<S> <C> <C>
Southbrook International
Investments, Ltd. 1,568,542(2) 1,568,542
HBK Cayman, L.P. 784,271(3) 784,271
HBK Offshore Fund Ltd. 784,271(4) 784,271
Brown Simpson Capital
Growth Fund, LLP 27,916(5) 27,916
- ----------------------
</TABLE>
* Less than 1%
(1) Includes shares issuable upon payment of accrued interest on such
debentures. The shares referenced above also include up to 500,000
additional shares which may be issuable pro rata to the holders of the
debentures upon conversion of such debentures should the Company
subsequent to August 14, 1997 (1) receive a recommendation of
non-approval of its Pre-Market Application for its Heart Laser System
from the Circulatory Systems Advisory Panel of the U.S. Food and Drug
Administration (the "Panel") or (2) not receive a recommendation of
approval from the panel or FDA approval of its Pre-Market Application
for its Heart Laser by August 14, 1998.
(2) Includes up to a maximum of 1,496,278 shares of Common Stock issuable
upon conversion of $10,000,000 of Convertible Debentures and the
exercise of the Warrants owned by Southbrook to purchase up to 72,264
shares of Common Stock. The Convertible Preferred Stock Purchase
Agreement limits the conversion rights of Southbrook such that the
maximum number of shares of the Company's Common Stock issued upon
conversion or exercise of the Convertible Debentures and Warrants may
not exceed 4.99% of the then issued and outstanding shares of the
Company's Common Stock following such conversion.
(3) Includes up to a maximum of 748,139 shares of Common Stock issuable
upon conversion of $5,000,000 of Convertible Debentures and the
exercise of the Warrants owned by HBK Cayman, L.P. to purchase up to
36,132 shares of Common Stock.
(4) Includes up to a maximum of 748,139 shares of Common Stock issuable
upon conversion of $5,000,000 of Convertible Debentures and the
exercise of the Warrants owned by HBK Offshare Fund, Ltd. to purchase
up to 36,132 shares of Common Stock.
(5) Includes up to a maximum of 22,444 shares of Common Stock issuable upon
conversion of $150,000 of Convertible Debentures and the exercise of
the Warrants owned by Brown Simpson Capital Growth fund, L.P. to
purchase up to 5,472 shares of Common Stock.
PLAN OF DISTRIBUTION
The 3,165,000 shares of Common Stock of the Company offered hereby may
be offered and sold from time to time by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest. Such offers and
sales may be made from time to time on one or more exchanges or in the
over-the-counter market, or otherwise, at prices and on terms then prevailing or
at prices related to the then-current market price, or in negotiated
transactions. The methods by which the shares may be sold may include, but not
be limited to, the following: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account; (c) an exchange distribution in accordance with the rules of such
exchange; (d) ordinary brokerage transactions and transactions in which the
broker solicits
-11-
purchasers; (e) privately negotiated transactions; (f) short sales; and (g) a
combination of any such methods of sale. In effecting sales, brokers or dealers
engaged by the Selling Stockholder may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from the
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale. The Selling Stockholders may also sell such
shares in accordance with Rule 144 under the Securities Act.
From time to time the Selling Stockholders may engage in short sales,
short sales against the box, puts and calls and other transactions in securities
of the Company in derivatives thereof, and may sell and deliver the shares in
connection therewith. From time to time Selling Stockholders may pledge their
shares pursuant to the margin provisions of their respective customer agreements
with their respective brokers. Upon a default by a Selling Stockholder, the
broker may offer and sell the pledge shares of Common Stock from time to time.
The Company has agreed to use its best efforts to maintain the
effectiveness of the registration of the shares being offered hereunder until
August 2002 or such earlier date when all of the shares being offered hereunder
have been sold or may be sold without volume or other restrictions pursuant to
Rule 144 or Rule 144A under the Securities Act, as determined by counsel to the
Company pursuant to a written opinion letter.
The Selling Stockholders and any brokers participating in such sales
may be deemed to be underwriters within the meaning of the Securities Act. There
can be no assurance that the Selling Stockholders will sell any or all of the
shares of Common Stock offered hereunder.
All proceeds from any such sales will be the property of the Selling
Stockholder who will bear the expense of underwriting discounts and selling
commissions, if any, and their own legal fees.
LEGALITY OF COMMON STOCK
The validity of the shares of Common Stock offered hereby is being
passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., Boston, Massachusetts.
EXPERTS
The consolidated financial statements of PLC Systems Inc. at December
31, 1996 and 1995, and for the two years ended December 31, 1996, incorporated
by reference in PLC Systems Inc.'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. Such financial statements have been incorporated herein by reference
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
The consolidated statement of operations and cash flows of PLC Systems
Inc. for the year ended December 31, 1994, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, have been incorporated
by reference herein in reliance on the reports of Coopers & Lybrand, chartered
accountants, given the authority of that firm as experts in accounting and
auditing.
INTERESTS OF NAMED EXPERTS AND COUNSEL
A member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., owns
3,162 shares of Common Stock of the Company.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (File No. 1-11388).
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended June 30, 1997 and March 31, 1997.
-12-
(c) The description of the Company's capital stock contained in
the Company's registration statement on Form 8-A under the
1934 Act (File No. 1-11388), including amendments or reports
filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act,
prior to the filing of a post-effective amendment which indicates that all
securities covered by this Prospectus have been sold or which deregisters all
such securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all documents which have been incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Patricia L. Murphy, Chief Financial Officer, at PLC Systems Inc., 10 Forge Park,
Franklin, Massachusetts 02038, or by telephone at (508) 541-8800.
INDEMNIFICATION
The British Columbia Company Act (the "Company Act"), Section 152,
enables a corporation, with the approval of the Court, to indemnify a director
or a former director of the Company, or a director or a former director of a
corporation of which it is or was a shareholder, and his heirs and personal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or to satisfy a judgment, actually and reasonably
incurred by him, including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action, or proceeding to which
he is made a party by reason of being or having been a director, including an
action brought by the Company or corporation if:
a. he acted honestly and in good faith with a view to the best
interest of the corporation of which he is or was a director;
and
b. in the case of a criminal or administrative action or
proceeding, he had reasonable grounds for believing that his
conduct was lawful.
The Company Act also provides that a company may purchase and maintain
insurance for a director or former director of the Company, or a director or
former director of a corporation of which it is or was a shareholder, and his
heirs and personal representatives, against liability incurred by him as a
director or officer.
The Articles of the Company provide that the Company shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding whether or not brought by
the Company or by a corporation or other legal entity or enterprise whether
civil, criminal or administrative, by reason of the fact that he is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise in accordance
with Section 152 of the Company Act.
The Articles of the Company also provide that the Company shall
indemnify any person other than a director with respect to any loss, damage,
costs or expenses whatsoever incurred by him while acting as an officer,
employee or agent for the Company unless such loss, damage, cost or expense
shall arise out of failure to
-13-
comply with instructions, willful act, or default or fraud by such person in any
of which events the Company shall only indemnify such persons if the directors
in their absolute discretion so decide, or the Company by ordinary resolutions
shall so direct.
The indemnification provided by the Company's Articles shall continue
as to a person who has ceased to be a director, officer, employee or agent, and
shall benefit such person's heirs, executors and administrators.
The Articles of the Company authorize the directors from time to time
to cause the Company to give indemnities to any director, officer, employee,
agent or other person who has undertaken or is about to undertake any liability
on behalf of the Company or any corporation controlled by it.
The Articles of the Company further provide that, subject to the
Company Act no director, officer or employee for the time being of the Company
shall be liable for the acts, receipts, neglects or defaults of any other
director, officer, or employee or for joining in any receipt or act for
conformity, or for any loss, damages or expense happening to the Company through
insufficiency or deficiency of title to any property acquired by order of the
board for the Company, or for the insufficiency or deficiency of any security in
or upon which any monies of or belonging to the Company shall be invested or for
any loss or damages arising from the bankruptcy, insolvency or tortious act of
any person, firm or corporation with whom or which any monies, securities or
effects shall be lodged or deposited or for any loss occasioned by any error of
judgment or oversight on his part, or for any loss, damage or misfortune
whatever which may happen in the execution of the duties of his respective
office or trust or in relation thereto unless the same shall happen by or
through his own willful act of default, negligence, breach of trust or breach of
duty.
The Articles of the Company provide that the directors of the Company
may rely upon the accuracy of any statement of fact represented by an officer of
the Company to be correct, or upon statements in a written report of the auditor
of the Company, and shall not be reasonable or held liable for any loss or
damage resulting in the paying of any dividends or otherwise acting in good
faith upon any such statement.
The Articles of the Company permit the directors to cause the Company
to purchase and maintain insurance for the benefit of any person who was or is a
director, officer, employee or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability incurred by him as a director, officer, employee or agent.
COMMISSION POLICY
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
-14-
================================================================================
No dealer, salesman or any other person has been authorized in connection with
this Offering to give any information or to make any representations other than
those contained in this Prospectus 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 any of the securities offered hereby in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such 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 circumstances of the Company or
the facts herein set forth since the date hereof.
------------------
TABLE OF CONTENTS
PAGE
----
Available Information........................................ 2
The Company.................................................. 2
Risk Factors................................................. 4
Use of Proceeds.............................................. 10
Selling Stockholders......................................... 10
Plan of Distribution......................................... 11
Legality of Common Stock..................................... 12
Experts...................................................... 12
Interests of Named Experts and Counsel....................... 12
Incorporation of Certain Information
by Reference............................................... 12
Indemnification.............................................. 13
================================================================================
================================================================================
3,165,000 SHARES OF COMMON STOCK,
NO PAR VALUE PER SHARE
PLC SYSTEMS INC.
------------------
PROSPECTUS
------------------
AUGUST __, 1997
================================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered will be borne by the Registrant. Other than the SEC
registration fee and AMEX filing fee, the amounts stated are estimates.
SEC Registration Fee................................ $12,228.41
AMEX Filing Fee..................................... 17,500.00
Legal Fees and Expenses............................. 10,000.00
Accounting Fees and Expenses........................ 5,000.00
Miscellaneous....................................... 271.59
TOTAL........................................................ $45,000.00
The Selling Stockholders will bear the expense of their own legal
counsel and miscellaneous fees and expenses, if any.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
See "Indemnification" contained in Part I hereof, which is incorporated
herein by reference.
The corporation shall indemnify and hold harmless persons who serve at
its express written request as directors or officers of another organization in
which the corporation owns shares or of which it is a creditor.
In addition, the Registration Rights Agreement, filed as Exhibit 99.2
hereto, contains provisions for indemnification by the Selling Stockholders of
the Registrant and its officers, directors, and controlling persons against
certain liabilities under the Securities Act.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------
4.1 The Certificate of Incorporation of the Registrant (previously filed as
Exhibit 3a to the Registrant's Registration Statement on Form S-1, File
No. 33-48340, and incorporated herein by reference).
4.2 Form of Common Stock Certificate (previously filed as Exhibit No. 4c to
the Registrant's Registration Statement on Form S-1, File No. 33-48340,
and incorporated herein by reference).
5 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with
respect to the legality of the securities being registered.
23.1 Consent of Coopers and Lybrand
23.2 Consent of Ernst & Young LLP
23.3 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5)
24 Power of Attorney (filed in Part II of this Registration Statement)
*99.1 Convertible Debenture Purchase Agreement dated as of July 17, 1997
between Southbrook International Investment, Ltd., HBK Cayman, L.P. and
HBK Offshore Fund Ltd. and the Registrant.
*99.2 First Amendment to Convertible Debenture Purchase Agreement dated July
22, 1997.
*99.3 Second Amendment to Convertible Debenture Purchase Agreement dated
August 14, 1997.
*99.4 Form of Convertible Debenture.
*99.5 Form of Warrant.
*99.6 Registration Rights Agreement dated as of July 17, 1997 between
Southbrook International Investment, Ltd., HBK Cayman, L.P. and HBK
Offshore Fund Ltd. and the Registrant.
_______________________
* Each of Exhibits 99.1 through 99.6 were previously filed as Exhibits 10a
through 10f, respectively, to the Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1997 (File No. 1-11388), and are
incorporated herein by reference.
II-1
ITEM 17. UNDERTAKINGS.
A. Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b)(sec.230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs
(A)(i) and (1)(ii) do not apply if the registration statement is on
Form S-3 or Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. Filings Incorporating Subsequent Exchange Act Documents by Reference
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the 1934 Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Request for Acceleration of Effective Date or Filing of Registration
Statement on Form S-8
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director,
II-2
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Franklin, Commonwealth of Massachusetts, on August
__, 1997.
PLC SYSTEMS INC.
By: /s/ William C. Dow
-------------------------------------
William C. Dow
President and Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William C. Dow and Patricia L. Murphy, or
any of them, his attorney-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, (or any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act) and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their or his substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ William C. Dow President and Chief Executive August 25, 1997
---------------------------
William C. Dow Officer and Director (principal
executive officer)
/s/ Patricia L. Murphy
--------------------------- Chief Financial Officer, August 25, 1997
Patricia L. Murphy Treasurer (principal financial
officer and principal
accounting officer)
/s/ Robert I. Rudko Chairman of the Board of August 25, 1997
---------------------------
Robert I. Rudko, Ph.D Directors
/s/ Harold P. Capozzi
--------------------------- Director August 25, 1997
Harold P. Capozzi
--------------------------- Director August __, 1997
H.B. Brent Norton
/s/ Edward Pendergast
--------------------------- Director August 25, 1997
Edward Pendergast
/s/ Kenneth J. Pulkonik
--------------------------- Director August 25, 1997
Kenneth J. Pulkonik
/s/ Robert A. Smith
--------------------------- Director August 25, 1997
Robert A. Smith
</TABLE>
II-5
PLC SYSTEMS INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------
4.1 The Certificate of Incorporation of the Registrant (previously filed as
Exhibit 3a to the Registrant's Registration Statement on Form S-1, File
No. 33-48340, and incorporated herein by reference).
4.2 Form of Common Stock Certificate (previously filed as Exhibit No. 4c to
the Registrant's Registration Statement on Form S-1, File No. 33-48340,
and incorporated herein by reference).
5 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with
respect to the legality of the securities being registered.
23.1 Consent of Coopers & Lybrand
23.2 Consent of Ernst & Young LLP
23.3 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5).
24 Power of Attorney (filed in Part II of this Registration Statement) .
*99.1 Convertible Debenture Purchase Agreement dated as of July 17, 1997
between Southbrook International Investment, Ltd, HBK Cayman, L.P. and
HBK Offshore Fund Ltd. and the Registrant.
*99.2 First Amendment to Convertible Debenture Purchase Agreement dated July
22, 1997.
*99.3 Second Amendment to Convertible Debenture Purchase Agreement dated
August 14, 1997.
*99.4 Form of Convertible Debenture.
*99.5 Form of Warrant.
*99.6 Registration Rights Agreement dated as of July 17, 1997 between
Southbrook International Investment, Ltd., HBK Cayman, L.P. and HBK
Offshore Fund Ltd. and the Registrant.
- --------------------
* Each of Exhibits 99.1 through 99.6 were previously filed as Exhibits
10a through 10f, respectively, to the Registrant's Quarterly Report on
Form 10-Q for the period ended June 30, 1997 (File No. 1-11388), and
are incorporated herein by reference.
EXHIBIT 5
---------
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS
701 Pennsylvania Avenue, N.W. Telephone: 617/542-6000
Washington, D.C. 20004 Fax: 617/2241
Telephone: 202/434-7300
Fax: 202/434-7400
August 25, 1997
PLC Systems Inc.
10 Forge Park
Franklin, Massachusetts 02038
Ladies and Gentlemen:
We have acted as counsel to PLC Systems Inc., a British Columbia
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission of a Registration Statement on Form S-3
(the "Registration Statement"), pursuant to which the Company is registering
under the Securities Act of 1933, as amended, a total of 3,165,000 shares (the
"Shares") of its common stock, no par value per share (the "Common Stock"), for
resale to the public. The Shares are to be sold by the selling stockholders
identified in the Registration Statement. This opinion is being rendered in
connection with the filing of the Registration Statement.
In connection with this opinion, we have examined the Company's
Certificate of Incorporatin and By-Laws, both as currently in effect; such other
records of the corporate proceedings of the Company and certificates of the
Company's officers as we have deemed relevant; and the Registration Statement
and the exhibits thereto.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies.
Based upon the foregoing, we are of the opinion that (i) the Shares
have been duly and validly authorized by the Company and (ii) the Shares, when
sold, will have been duly and validly issued, fully paid and non-assessable
shares of the Common Stock, free of preemptive rights.
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
PLC Systems Inc.
August 25, 1997
Page 2
Our opinion is limited to the federal securities laws of the United
States, the laws of the Commonwealth of Massachusetts and the corporate laws of
the Province of British Columbia, Canada, and we express no opinion with respect
to the laws of any other jurisdiction. No opinion is expressed herein with
respect to the qualification of the Shares under the securities or blue sky laws
of any state or any foreign jurisdiction.
We understand that you wish to file this opinion as an exhibit to the
Registration Statement, and we hereby consent thereto. We hereby further consent
to the reference to us under the caption "Legality of Common Stock" in the
prospectus included in the Registration Statement.
Very truly your,
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY and POPEO, P.C.
cc: Board of Directors
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of PLC Systems Inc. on Form S-3 of our report dated March 1, 1995 on
our audit of the consolidated financial statements and financial statement
schedule of PLC Systems Inc. as of December 31, 1994, and for the year then
ended. We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND
August 25, 1997
Vancouver, B.C.
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of PLC Systems Inc.
for the registration of 3,165,000 shares of its common stock and to the
incorporation by reference therein of our reports dated February 21, 1997 with
respect to the consolidated financial statements of PLC Systems Inc.
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1996 and the related financial statement schedule included therein,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massacusetts
August 25, 1997
