As filed with the Securities and Exchange Commission on April 12, 1999
Registration No. 333-70391
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PALOMAR MEDICAL TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
04-3128178
------------------------------------
(IRS employer identification number)
45 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02421-3102 (781) 676-7300
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Sarah Burgess Reed
General Counsel
Palomar Medical Technologies, Inc.
45 Hartwell Avenue
Lexington, Massachusetts 02421-3102
(781) 676-7300
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
from time to time after the effective date of this registration statement as
determined by market conditions.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
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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 earlier
effective registration statement forthe 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. [ ]
<TABLE>
<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Title of Shares Amount to be Proposed Proposed
to be Registered Registered Maximum Maximum Amount of
Offering Price Aggregate Registration
Per Share Offering Price Fee
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Common Stock, par value $.01 3,000,000 $.84375(2) $2,531,250(2) $767(2)
per share.
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Common Stock, par value $.01 3,000,000 $3.00(2) $9,000,000(2) $2,727(2)
per share.
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
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(1) Consists of (i) 3,000,000 shares of common stock and (ii) 3,000,000 shares
of common stock issuable upon exercise of warrants, all of which were
issued in connection with a Securities Purchase Agreement dated July 24,
1998.
(2) Estimated solely for purposes of calculation of the fee. The fee for the
warrants is estimated pursuant to Rule 457(g) under the Act on the basis of
the exercise price. The fee for the common stock is estimated pursuant to
Rule 457(c) under the Act on the basis of the average of the high and low
sale prices reported on the Nasdaq SmallCap Market on January 8, 1999. The
Registrant has previously paid the aggregate filing fee of $3,594.
Pursuant to Rule 416, there are also registered hereby such additional
indeterminate number of shares of such common stock as may become issuable or to
prevent dilution resulting from stock splits, stock dividends or similar
transactions as set forth in the terms of the warrants referred to above.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Subject to completion, dated April 13, 1999
6,000,000 SHARES
PALOMAR MEDICAL TECHNOLOGIES, INC.
COMMON STOCK
Rockside Foundation may offer and sell up to 3.6 million shares of
common stock and Mark T. Smith may offer and sell up to 2.4 million shares with
this prospectus. We will not receive any proceeds of this offering. We issued
the securities to the Rockside Foundation and to Mr. Smith in a private
transaction on July 24, 1998.
Our common stock is listed on the National Association of Securities
Dealers Automated Quotation System and traded on the Nasdaq SmallCap Market
under the symbol "PMTI." The last reported bid price of our common stock on the
Nasdaq SmallCap Market on March 31, 1999 was $.531 per share.
AN INVESTMENT IN THESE SHARES INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
April 13, 1999
The information in this prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities, and the selling stockholders are
not soliciting offers to buy these securities, in any state where the offer or
sale is not permitted.
The date of this prospectus is ____________, 1999.
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PAGE
Prospectus Summary.......................................................................................5
Risk Factors ............................................................................................6
Forward Looking Information..............................................................................9
Business Overview.......................................................................................10
Selling Stockholders ...................................................................................11
Use of Proceeds.........................................................................................12
Plan of Distribution ...................................................................................12
Experts.................................................................................................13
Legal Matters...........................................................................................13
Pro Forma Financial Information of Palomar Excluding Star...............................................13
Where You Can Find More Information ....................................................................19
Signatures..............................................................................................26
</TABLE>
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PROSPECTUS SUMMARY
This is only a summary. Please read the entire prospectus, including
"Risk Factors" and the information incorporated by reference, before deciding to
invest in shares offered by this prospectus.
PALOMAR
OUR BUSINESS At this point in time, our exclusive focus is laser
hair removal and research and development relating to
that and other cosmetic laser products.
We have three lasers that have been cleared by the
FDA for hair removal in addition to other
applications such as treatment of leg veins and
non-cancerous skin discolorations.
RECENT DEVELOPMENTS Our exclusive distributor has entered into an
agreement with us to buy one of our subsidiaries for
$65 million in cash.
OUR FUTURE STRATEGY Assuming the sale of the subsidiary to our
distributor is completed, we will continue to
manufacture and develop cosmetic lasers at our
Massachusetts facility.
THE OFFERING
COMMON STOCK OFFERED The common stock offered consists of 3,000,000 shares
of common stock and 3,000,000 shares of common stock
issuable upon exercise of warrants. All of the
6,000,000 shares offered by this prospectus are being
sold by the selling stockholders.
OFFERING PRICE The selling stockholders may sell the shares in
amounts and on terms to be determined at the time of
sale.
USE OF PROCEEDS We will not receive any proceeds of this offering,
other than the $9,000,000 exercise price of the
warrants.
NASDAQ TRADING SYMBOL PMTI
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RISK FACTORS
An investment in shares of our common stock is risky. You should
consider carefully the following risk factors in addition to the remainder of
this prospectus, including information incorporated by reference, before
purchasing shares offered by this prospectus.
IF WE DO NOT CLOSE THE SALE OF OUR STAR SUBSIDIARY, WE MAY NOT HAVE ENOUGH MONEY
TO FINANCE FUTURE OPERATIONS.
We have recently signed an agreement with Coherent in which Coherent
has agreed to buy our Star subsidiary for 65 million dollars in cash. The sale
must be approved by stockholders holding a majority of the shares of our
outstanding common stock. The sale is also subject to standard closing
conditions. We may not receive a sufficient number of stockholder votes to
approve the transaction, or the transaction may fail to close for other reasons.
Our future operating plan is now to a great extent dependant on completing the
sale, in that it will provide us with the money necessary to finance our future
operations, including research and product development.
WE MAY BE DELISTED FROM NASDAQ. DELISTING MAY REDUCE YOUR ABILITY TO BUY AND
SELL OUR COMMON STOCK AND OUR ABILITY TO RAISE MONEY.
We have been notified by the Nasdaq Stock Market that for continued
listing on the Nasdaq SmallCap Market we must meet Nasdaq's minimum bid price of
$1.00 per share. Because our stock price fell below $1.00 for a 30 day trading
period between August 28 and October 9, 1998, it is now subject to delisting.
Nasdaq held a hearing on our delisting on March 18, 1999. Nasdaq's decision is
pending. To regain compliance with the minimum bid price requirement, we have
asked our stockholders to approve a one-for-seven reverse split of our common
stock. At the March 18, 1999 hearing, the Company volunteered to delist from the
Nasdaq SmallCap Market on May 18, 1999 if it is not in compliance with the
minimum bid price requirement by that date. We expect that we will be in
compliance by that date as a result of the reverse split and the Star sale.
Nevertheless, the reverse split may not enable us to regain compliance with the
minimum bid price requirement in time to prevent delisting. The delisting of our
common stock would likely reduce stockholders' ability to buy and sell our
common stock and our ability to raise capital. If our common stock is delisted
from the Nasdaq SmallCap Market, it will likely be quoted on the "pink sheets"
maintained by the National Quotation Bureau, Inc. or Nasdaq's OTC Bulletin
Board. These listings can make trading more difficult for stockholders. In
addition, a reverse split itself could hurt the market price of our common
stock.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING. EVEN IF WE DO OBTAIN SUCH
FINANCING, ADDITIONAL EQUITY FINANCING COULD DILUTE THE INTERESTS OF OUR
STOCKHOLDERS, AND WE MAY NOT HAVE ENOUGH CASH TO REPAY ANY DEBT FINANCING.
If we do not sell our Star subsidiary, we may have to secure additional
financing to complete our research and development activities, commercialize our
current and proposed cosmetic laser products, and fund ongoing operations. We
may also determine, depending upon the opportunities available, to seek
additional debt or equity financing to fund the costs of acquisitions or
expansion. There can be no assurance that we will be able to obtain such
additional financing. There are risks to such financing even if we do obtain it.
If we finance an acquisition with our stock, our issuance of such stock could
result in dilution to the interests of our stockholders. Additionally, if we
incur indebtedness to
* fund increased levels of accounts receivable
* finance the acquisition of capital equipment or
* issues debt securities in connection with any acquisition,
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we will be subject to risks associated with incurring substantial additional
indebtedness. One of those risks is that interest rates may fluctuate and our
cash flow may be insufficient to pay principal and interest on any such
indebtedness.
WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.
We have a history of losses. As a result, the report of our independent
public accountants in connection with our Consolidated Balance Sheets as of
December 31, 1998 and 1997, and the related Consolidated Statements of
Operations, Stockholders' Equity (Deficit) and Cash Flows for the three years
ended December 31, 1998 includes an explanatory paragraph stating that our
recurring losses, working capital deficiency and stockholders' deficit raises
substantial doubts about our ability to continue as a going concern.
WE WILL CONTINUE TO BE DEPENDENT ON COHERENT IF WE DO NOT SELL STAR, AND
COHERENT MAY NOT PROMOTE OUR PRODUCTS.
Under our sales agency agreement with Coherent, which will remain in
effect until November, 2001 if we do not sell Star to Coherent, Coherent
receives a marketing and sales commission, based on the end-user price, for each
of our lasers that it sells. If Coherent remains as our exclusive distributor
because we do not close the Star sale, Coherent may not be successful in
distributing our lasers or may not give sufficient priority to marketing our
products. In addition, Coherent may develop, market and manufacture its own
lasers that incorporate our proprietary technology and compete with our lasers,
in which case it must pay us a royalty on such sales. Under our agreement, if we
are unable or unwilling to manufacture the cosmetic laser products to be
distributed by Coherent, then we must license to Coherent the technology
necessary to make such products.
IF WE DO NOT SUCCESSFULLY DEVELOP NEW PRODUCTS, WE WILL NOT HAVE FUTURE REVENUE.
We face rapidly changing technology and continuing improvements in
cosmetic laser technology. In order to be successful, we must continue to make
significant investments in research and development in order to
* develop in a timely and cost-effective manner new products
that meet changing market demands,
* enhance existing products, and
* achieve market acceptance for such products.
We have in the past experienced delays in developing new products and enhancing
existing products. If we sell our Star subsidiary, our future revenue will be
entirely dependent on sales of newly introduced products. Although we have
recently introduced a new hair removal laser, it may not achieve market
acceptance or generate sufficient margins.
WE ARE DEPENDENT ON ONE TYPE OF PRODUCT, AND THIS PRODUCT MAY NOT BE
COMMERCIALLY SUCCESSFUL.
The market for the type of hair removal laser we manufacture may
already be saturated. We do not yet have broad market acceptance of laser hair
removal, and such broad acceptance is critical to our success. We need to
diversify our product line by developing cosmetic laser products other than hair
removal lasers.
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WE FACE INTENSE COMPETITION FROM BOTH COMPANIES WITH SUPERIOR FINANCIAL,
MARKETING AND OTHER RESOURCES AND ALTERNATIVE HAIR REMOVAL PROCEDURES.
The laser hair removal industry is highly competitive, and companies
frequently introduce new products. We compete in the development, manufacture,
marketing and servicing of hair removal lasers with numerous other companies,
many of which have substantially greater financial, marketing and other
resources than we do. As a result, some of our competitors are able to sell hair
removal lasers at prices significantly below the prices at which we sell our
hair removal lasers. In addition, if and when we sell Star, our current
distributor, Coherent, one of the largest and best financed laser companies,
will become our competitor, and we will have to find new ways to distribute our
products. Our laser products also face competition from alternative procedures,
such as electroloysis and waxing, among others. We may not be able to
differentiate our products from the products of our competitors, and customers
may not consider our products to be superior to competing products. especially
if competitive products and procedures are offered at lower prices. Our
competitors may develop products or new technologies that make our products
obsolete or less competitive.
OUR QUARTERLY OPERATING RESULTS MAY DECREASE IF WE SELL STAR, AND THAT MAY HURT
THE PRICE OF OUR COMMON STOCK.
Almost all of our revenues in our most recent two quarters were
attributable to sales of the LightSheer(TM) diode laser manufactured by Star. If
we sell Star, our revenues will decline significantly. If our operating results
fall below the expectations of investors or public market analysts, the price of
our common stock could fall dramatically.
OUR LASERS ARE SUBJECT TO NUMEROUS FDA REGULATIONS. COMPLIANCE IS EXPENSIVE AND
TIME-CONSUMING.
All of our products are laser medical devices. Laser medical devices
are subject to FDA regulations regulating clinical testing, manufacture,
labeling, sale, distribution and promotion of medical devices. Compliance with
these regulations is expensive and time-consuming.
OUR PRODUCTS MAY NOT BE ABLE TO OBTAIN THE NECESSARY FDA CLEARANCES BEFORE WE
CAN SELL THEM.
Before a new device can be introduced into the market, we must obtain
clearance from the FDA. Compliance with the FDA clearance process is expensive
and time-consuming, and we may not be able to obtain such clearances timely or
at all.
WE ARE DEPENDENT ON THIRD PARTY RESEARCHERS WHO MIGHT NOT SATISFACTORILY CONDUCT
OR COMPLETE RESEARCH ON OUR BEHALF OR GRANT US FAVORABLE LICENSES TO PRODUCTS
THEY DEVELOP.
We are substantially dependent upon third party researchers, over whom
we do not have absolute control, to satisfactorily conduct and complete research
on our behalf and to grant us favorable licensing terms for products which they
may develop. At present, our principal research partner is the Wellman Labs at
Massachusetts General Hospital. We provide research funding, laser technology
and optics know-how in return for licensing agreements with respect to specific
medical applications and patents. Our success will be highly dependent upon the
results of the research. We cannot be sure that such research agreements will
provide us with marketable products in the future or that any of the products
developed under these agreements will be profitable for us.
OUR COMMON STOCK COULD BE FURTHER DILUTED AS THE RESULT OF OUR ISSUING
CONVERTIBLE SECURITIES, WARRANTS AND OPTIONS.
In the past, we have issued convertible securities, such as debentures
and preferred stock, and warrants in order to raise money. We have also issued
options and warrants as compensation for services and incentive compensation for
our employees and directors. We have a substantial number of shares of common
stock reserved for issuance upon the conversion and exercise of these
securities. Our issuing additional convertible securities, options and warrants
could affect the rights of our stockholders, and could reduce the market price
of our common stock.
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WE MAY NOT BE ABLE TO PROTECT ADEQUATELY OUR PROPRIETARY TECHNOLOGY.
Our business could be materially and adversely affected if we are not
able to protect adequately our proprietary intellectual property rights. We rely
on a combination of patent, trademark and trade secret laws, license and
confidentiality agreements to protect our proprietary rights. We generally enter
into non-disclosure agreements with our employees and customers and restrict
access to, and distribution of, our proprietary information. Nevertheless, we
may be unable to deter misappropriation of our proprietary information, to
detect unauthorized use and to take appropriate steps to enforce our
intellectual property rights. Our competitors also may independently develop
technologies that are substantially equivalent or superior to our technology.
Although we believe that our services and products do not infringe on the
intellectual property rights of others, we cannot prevent someone else from
asserting a claim against us in the future for violating their intellectual
property rights. In addition, costly and time consuming lawsuits may be
necessary to enforce patents issued or licensed exclusively to us, to protect
our trade secrets and/or know-how or to determine the enforceability, scope and
validity of others' intellectual property rights.
OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY DISCOURAGE POTENTIAL TAKEOVER
ATTEMPTS THAT MIGHT BE BENEFICIAL TO STOCKHOLDERS.
Provisions of our Second Restated Certificate of Incorporation, our
by-laws and Delaware law could be used by our incumbent management to make it
more difficult for a third party to acquire control of us, even if the change in
control might be beneficial to our stockholders. This could discourage potential
takeover attempts and could adversely affect the market price of our common
stock. The provisions which could have an anti-takeover effect are:
* Section 203 of the Delaware General Corporation Law prohibits
us from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the
date of the transaction in which the person becomes an
interested stockholder, unless the business combination is
approved in a prescribed manner. The application of Section
203 could have the effect of delaying or preventing a change
of control.
* Our stock option grants generally provide for an exercise of
some or all of the optioned stock, including non-vested
shares, upon a change in control or similar event.
* Our board has authority to issue shares of preferred stock and
to fix the rights, preference, privileges and restrictions,
including voting rights, of these shares without any further
vote or action by our stockholders. The rights of our common
stockholders may be adversely affected by the rights of the
holders of any preferred stock issued in the future. Our board
may also issue authorized but unissued shares of common stock
without further stockholder approval. Our issuance of capital
stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party
to acquire a majority of our outstanding voting stock. This
could delay, defer, or prevent a change in control. We could
sell shares of authorized capital stock to purchasers who
might side with the board in opposing a takeover bid that the
board determines not to be in the best interests of our
stockholders.
FORWARD-LOOKING INFORMATION
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "continue" and similar words. You should
read statements that contain these words carefully because they
* discuss our future expectations
* contain projections of our future operating results or
financial conditions or
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* state other "forward-looking" information.
We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed in this section, as well as any other cautionary language in this
prospectus, provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of any of the events described in these risk factors
and elsewhere in this prospectus could have a material adverse effect on our
business, financial condition and results of operations. In such case, the
trading price of our common stock could decline and you could lose all or part
of your investment.
BUSINESS OVERVIEW
OUR BUSINESS
At this point in time, our exclusive focus is laser hair removal and
research and development relating to that and other cosmetic laser products. In
addition to manufacturing lasers for hair removal, as a small part of our
operations we place our lasers in places such as doctor's offices, spas and
salons, and receive in exchange a share of the revenue generated from the laser
hair removal procedures.
We have three lasers that have been cleared by the FDA for hair removal
in addition to other applications such as treatment of leg veins and
non-cancerous skin discolorations. The first, our EpiLaser(R) hair removal
system, is based in part on ruby laser technology originally developed in our
corporate headquarters in Massachusetts for tattoo and pigmented lesion removal.
The EpiLaser(R) and its successor, the Palomar E2000(TM), are the only hair
removal lasers on the market that have been cleared by the FDA for "permanent
hair reduction" labeling. The EpiLaser(R) is manufactured at our headquarters in
Massachusetts.
Our second FDA cleared hair removal laser, the LightSheer(TM) diode
hair removal laser, is based on diode technology developed at our Star Medical
Technologies, Inc. subsidiary in California. The LightSheer(TM) is manufactured
at Star, in California. The LightSheer(TM) is the only diode-based hair removal
product on the market that has FDA clearance.
RECENT DEVELOPMENTS
The laser diode stacking technology used in the LightSheer(TM) laser
has wide applications across a variety of commercial, industrial and medical
lasers, applications which Palomar, as a narrowly focused cosmetic laser
company, does not utilize. This technology, however, has enormous value to our
exclusive distributor, Coherent, Inc. Coherent is also located in California,
and manufactures a wide variety of lasers - medical, commercial and industrial.
As a result, Coherent has entered into an agreement with us to buy Star for $65
million in cash. The sale must still be approved by our stockholders at a
special meeting of stockholders that will be held on April 21, 1999. As part of
the deal, Coherent has agreed to pay us an ongoing 7.5% royalty on future sales
of its hair removal lasers. Thus, although the LightSheer(TM) diode laser will
no longer be in the Palomar family of products after the sale of Star, Palomar
will continue to receive an ongoing royalty on sales of that product.
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OUR FUTURE STRATEGY
Assuming the sale of Star to Coherent is completed, we will continue to
manufacture and develop cosmetic lasers at our Massachusetts facility. We have
recently introduced our second generation ruby laser, the Palomar E2000(TM), a
product which we anticipate will be superior to hair removal lasers currently on
the market in a number of respects, including speed and results. We will
consider a number of alternatives with respect to our future products,
including:
* manufacturing them ourselves and selling them directly and
through distributors
* selling the product line and/or technology to others, as in
the case of Star.
We will continue to choose the alternative in each case which we
believe best maximizes long-term shareholder value. To enhance shareholder value
and increase revenues, we will also consider:
* licensing our intellectual property (in particular, the
patents licensed exclusively to us by Massachusetts General
Hospital under which we practice our proprietary method of
skin cooling and hair removal)
* selling intellectual property rights that we do not intend to
exploit
* mergers, acquisitions or other transactions.
SELLING STOCKHOLDERS
All of the shares of common stock are being sold by the selling
stockholders identified in the following table. The table lists, in each case as
of February 16, 1999:
1. the name of each selling stockholder;
2. the number of shares each selling stockholder beneficially
owns;
3. how many shares of common stock the selling stockholder may
resell under this prospectus; and
4. assuming each selling stockholder sells all the share listed
next to its name, the number of shares each selling
stockholder will beneficially own after completion of the
offering.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Under the rules of the Securities and Exchange
Commission, shares of common stock which an individual or group has a right to
acquire within 60 days by exercising options or warrants are counted as
outstanding for the purpose of computing the ownership of such individual or
group. Percentage of beneficial ownership is based on 71,791,475 shares of
common stock outstanding as of February 16, 1999. Except as indicated by the
notes to the following table, we believe that the selling stockholders listed
below have sole voting power and investment power over the shares they
beneficially hold, subject to community property laws where applicable. To the
best of our knowledge, except as stated in this prospectus, the selling
stockholders have not held any office or maintained any material relationship
with us or any of our predecessors or affiliates over the past three years. The
selling stockholders may reduce the number of shares offered for sale or decline
to sell any or all of the shares registered in the prospectus.
No predictions can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sales, will have on the
market price of the common stock prevailing from time to time. Sales of
substantial amounts of common stock, including shares issued upon the exercise
of stock options or warrants, or the perception that such sales could occur,
could adversely affect prevailing market prices for the common stock.
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<TABLE>
<S> <C> <C> <C> <C> <C>
Number Number Shares to be
of Shares Beneficially of Beneficially Owned
Owned Prior Shares After Offering If
Selling to Offering Offered All Shares Sold
STOCKHOLDERS NUMBER PERCENT NUMBER PERCENT
- -----------------------------------------------------------------------------------------------------------------
Rockside Foundation(1) 12,161,650 16.9% 3,600,000 8,561,650 11.9%
c/o Woodlawn Foundation, Inc.
524 North Avenue
New Rochelle, NY 10801
Mark T. Smith(1) 12,161,650 16.9% 2,400,000 9,761,650 13.6%
5090 Warwick Tr.
Pittsburgh, PA 15213
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
1. Based on information provided in Amendment No. 3 to a Schedule 13D, filed
on February 16, 1999. Includes beneficially owned shares with respect to
which four other individuals and entities share voting and dispositive
power. Also includes 3,000,000 shares of common stock beneficially owned
which may be acquired within 60 days upon the exercise of warrants.
USE OF PROCEEDS
The selling stockholders are selling the common stock. We will not
receive any of the proceeds of the offering, other than $9,000,000 exercise
price of the warrants.
PLAN OF DISTRIBUTION
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may from time to time offer shares
of our common stock registered in this registration statement, depending on
market conditions and other factors
* in one or more transactions on Nasdaq or other securities
exchanges on which our common stock is traded,
* in the over the counter market or otherwise,
* at market prices prevailing at the time of sale.
They may offer the shares at negotiated prices, or at fixed prices.
The selling stockholders also may sell such shares through the sale and
exercise of warrants. Common stock may be offered in any manner permitted by
law, including: .
* sales to underwriters who will acquire shares of
common stock for their own account and resell them in one or
more transactions at fixed prices or at varying prices
determined at time of sale;
* block transactions in which the broker or dealer so engaged
may sell shares as agent or principal;
* purchases by a broker or dealer as principal who resells the
shares for its account;
* an exchange distribution in accordance with the rules of any
such exchange;
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* ordinary brokerage transactions and transactions in which a
broker solicits purchasers; and
* privately negotiated sales, which may include sales directly
to institutions.
Except in the case of privately negotiated sales, brokers and dealers
will receive customary compensation in the form of underwriting discounts,
concessions or commissions from the selling stockholders and/or purchasers of
our common stock. The selling stockholders and any broker or dealer that
participates in the distribution of common stock may be deemed to be
underwriters and any commissions they receive and any profit on the resale of
our common stock positioned by a broker or dealer may be deemed to be
underwriting discounts and commissions under the Securities Act. In the event
the selling stockholders engage an underwriter in connection with the sale of
our common stock, to the extent required, a prospectus supplement will be
distributed, which will set forth the number of shares of common stock being
offered and the terms of the offering, including the names of the underwriters,
any discounts, commissions and other items constituting compensation to
underwriters, dealers or agents, the public offering price and any discounts,
commissions or concessions allowed or reallowed or paid by underwriters to
dealers.
In addition, the selling stockholders may, from time to time, sell
shares in transactions under Rule 144 under the Securities Act.
Some of the underwriters, brokers, dealers or agents and their
associates who participate in the distribution of the shares may engage in
transactions with and perform other services for Palomar in the ordinary course
of their business.
EXPERTS
As indicated in their report, the audited consolidated financial
statements incorporated by reference in this registration statement and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, and are included here upon the authority of
Arthur Andersen LLP as experts in accounting and auditing. Please refer to that
report, which includes an explanatory paragraph regarding Palomar's ability to
continue as a going concern.
LEGAL MATTERS
Our General Counsel has advised us with respect to the validity of the
shares of common stock offered by this prospectus.
PRO FORMA FINANCIAL INFORMATION OF
PALOMAR EXCLUDING STAR
On December 7, 1998, we entered into an Agreement and Plan of
Reorganization to sell all of the issued and outstanding shares of common stock
of our majority-owned Star subsidiary to Coherent for $65,000,000 in cash.
Following the exercise of outstanding options to purchase 625,507 shares of
Star's common stock at exercise prices ranging from $2.50 to $19.00 per share,
we will own 82.46% of Star. Under the terms of this transaction, we will receive
gross proceeds of approximately $54,000,000. We anticipate that we will receive
net proceeds of approximately $48,825,000. This amount reflects:
* transaction costs of approximately $600,000,
* income taxes of approximately $2,500,000,
* costs associated with the repurchase of Coherent's EpiLaser
inventory of $1,125,000, and
13
<PAGE>
* an earnout bonus of $950,000 for the employees of Star based
on the attainment of production milestones through the date of
closing.
The accompanying pro forma consolidated condensed balance sheet as of
December 31, 1998 assumes that Coherent purchased Star on the last reported
balance sheet date, December 31, 1998.
The accompanying pro forma consolidated condensed statements of
operations for the year ended December 31, 1998 assume the sale of Star took
place on January 1, 1998, the beginning of Palomar's fiscal year ended December
31, 1998. The pro forma consolidated condensed statements of operations do not
include the effect of the gain from our sale of Star to Coherent.
The accompanying pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which would actually have been reported had the sale of
Star occurred as assumed, or which may be reported in the future.
The accompanying pro forma consolidated condensed financial statements
should be read in conjunction with the historical financial statements and
related notes thereto for Palomar and Star.
14
<PAGE>
PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
As of December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
Consolidated Star Other Adjustments Pro Forma
------------ -------- ---------------------------- --------------
ASSETS (a)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,874,718 $ (310,088)(b) $ 50,757,547 $ -- 52,322,177
Accounts receivable, net 9,938,121 (9,339,566) -- -- 598,555
Inventories, net 5,416,342 (3,072,843) -- -- 2,343,499
Escrow amount due from Coherent, Inc. -- --(c) 3,254,908 -- 3,254,908
Other current assets 1,056,388 (500,016) -- -- 556,372
------------- ------------- ------------- ------------- -------------
Total current assets 18,285,569 (13,222,513) 54,012,455 -- 59,075,511
------------- ------------- ------------- ------------- -------------
PROPERTY AND EQUIPMENT, AT COST, NET 3,314,087 (933,050) -- -- 2,381,037
============= ============= ============= ============= =============
OTHER ASSETS:
Cost in excess of net assets acquired, net 1,699,983 (816,537) -- -- 883,446
Deferred financing costs 58,923 -- -- -- 58,923
Other non-current assets 167,352 (40,420) -- -- 126,932
Total other assets 1,926,258 (856,957) -- -- 1,069,301
$ 23,525,914 $ (15,012,520) $ 54,012,455 $ -- $ 62,525,849
============= ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 6,290,041 $ (4,000,000) $ -- $ -- $ 2,290,041
Accounts payable 6,553,745 (5,244,694) -- -- 1,309,051
Accrued expenses 10,301,624 (3,080,371) --(d) 2,500,000 9,721,253
Current portion of deferred revenue 1,143,796 -- -- -- 1,143,796
------------- ------------- ------------- ------------- -------------
Total current liabilities 24,289,206 (12,325,065) -- 2,500,000 14,464,141
------------- ------------- ------------- ------------- -------------
NET LIABILITIES OF DISCONTINUED OPERATIONS 1,680,171 -- -- -- 1,680,171
------------- ------------- ------------- ------------- -------------
LONG-TERM DEBT, NET OF CURRENT PORTION 3,150,000 -- -- -- 3,150,000
------------- ------------- ------------- ------------- -------------
DEFERRED REVENUE, NET OF CURRENT PORTION 870,000 -- -- -- 870,000
------------- ------------- ------------- ------------- -------------
INTERCOMPANY PAYABLE -- (12,885,893) --(e) 12,885,893 --
------------- ------------- ------------- ------------- -------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value- 69 -- -- -- 69
Common stock, $.01 par value- 705,240 (2,488,800) --(e) 2,488,800 705,240
Additional paid-in capital 160,733,433 (1,874,823) --(e) 1,874,823 160,733,433
Accumulated deficit (166,263,346) 14,562,061(e) 14,562,061(f) 48,825,000 (117,438,346)
Less: Treasury stock- (345,000 shares
at cost) (1,638,859) -- -- -- (1,638,859)
------------- ------------- ------------- ------------- -------------
Total stockholders' equity (deficit) (6,463,463) 10,198,438 14,562,061 53,188,623 42,361,537
------------- ------------- ------------- ------------- -------------
$ 23,525,914 $ (15,012,520) $ 14,562,061 $ 68,574,516 $ 62,525,849
============= ============= ============= ============= =============
</TABLE>
15
<PAGE>
PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
(Unaudited)
<TABLE>
Historical Pro Forma
Consolidated Star Other Adjustments Pro Forma
(g)
------------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 44,514,057 $(35,581,717) $ -- $ 8,932,340
COST OF REVENUES 23,050,834 (12,733,833) -- 10,317,001
------------ ------------ ------------ ------------
Gross margin 21,463,223 (22,847,884) -- (1,384,661)
------------ ------------ ------------ ------------
OPERATING EXPENSES
Research and development 7,029,348 (3,869,088)(h) 1,333,333 4,493,593
Sales and marketing 15,132,595 (13,872,735)(j) 1,333,333 2,593,193
Restructuring and asset write-off (131,310) (131,310)
General and administrative 8,866,530 (5,748,432)(j) 4,000,000 7,118,098
------------ ------------ ------------ ------------
Total operating expenses 30,897,163 (23,490,255) 6,666,666 14,073,574
------------ ------------ ------------ ------------
Loss from operations (9,433,940) 642,371 (6,666,666) (15,458,235)
------------ ------------ ------------ ------------
INTEREST EXPENSE, NET (1,257,825) 1,030,065(i) (225,535) (453,295)
OTHER INCOME 724,522 -- -- 724,522
------------ ------------ ------------ ------------
NET LOSS FROM CONTINUING OPERATIONS $ (9,967,243) $ 1,672,436 $ (6,892,201) $(15,187,008)
============ ============ ============ ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE FROM:
Continuing Operations $ (0.18) $ (0.26)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 62,868,696 62,868,696
============ ============
</TABLE>
16
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998 AND
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1998
(Unaudited)
NOTE (1) PRO FORMA BALANCE SHEET ADJUSTMENTS
The following pro forma adjustments are required to reflect Palomar's
sale of its majority owned subsidiary, Star, to Coherent as of December 31, 1998
(the balance sheet date). Such allocations may be revised to reflect the actual
costs of this transaction as of the closing date.
(a) eliminate Star's assets, liabilities and equity.
<TABLE>
<S> <C> <C> <C>
OTHER PRO FORMA ADJUSTMENTS Net Amount
--------------------------- ----------
(b) account for Palomar's net cash received from the sale of
Star to Coherent. $50,757,547
(c) account for the amount due from Coherent for the escrow
related to the sale of Star. $3,254,908
(d) record income taxes due related to the sale of Star. $2,500,000
(e) eliminate Palomar's intercompany balance due from Star
and net investment basis of Star. $2,687,455
(f) reflect the gain, net of related income taxes, on the sale of
Star as follows:
Net proceeds to be received
by Palomar from
Coherent $48,825,000
Add: Net negative book
value of Star 10,198,438
Add: Dividends to Palomar 2,687,455
-----------
to cause the net book
value of Star to be zero
Less: Amounts due to
Palomar from Star (12,885,893) $48,825,000
------------
</TABLE>
17
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998 AND
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1998
(Unaudited)
NOTE (2) PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
The following pro forma adjustments are required to reflect the pro
forma consolidated condensed statements of operations as a result of Palomar's
anticipated sale of its majority owned subsidiary, Star, to Coherent as of
December 31, 1997. For purposes of the pro forma statements of operations, it is
assumed that the sale of Star and resulting gain of approximately $48.8 million
occurred on December 31, 1997 so that the statement of operations would only
include results from continuing operations.
(b) To eliminate the effects of Star's operations on the consolidated
statements of operations for the year ended December 31, 1998.
<TABLE>
<S> <C> <C> <C>
OTHER PRO FORMA ADJUSTMENTS December 31, 1998
---------------------------
(h) Represents the elimination of research and development
expense allocated to Star by Palomar. $1,333,333
==========
(i) Total interest expense reduction for Palomar due to the sale
of Star to Coherent $804,530
Less: 10% interest expense charged to Star by
Palomar based on the weighted average outstanding
balances and reflected on the historical statements of Star. (1,030,065)
-----------
Net pro forma adjustment interest expense
increase $(225,535)
(k) To eliminate expenses allocated to Star by Palomar as
follows:
General and Administrative $4,000,000
Selling and Marketing $1,333,333
</TABLE>
18
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can inspect
and copy these reports, proxy statements and other information at the public
reference facilities of the SEC, in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York
10048; and Suite 1400, Citicorp Center, 500 W. Madison Street, Chicago, Illinois
60661-2511. You can also obtain copies of these materials from the public
reference section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Please call the SEC at 1-800-SEC- 0330 for further
information on the public reference rooms. The SEC also maintains a web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC
(http://www.sec.gov).
We have filed a registration statement and related exhibits with the
SEC under the Securities Act of 1933, as amended. The registration statement
contains additional information about us and our common stock. You may inspect
the registration statement and exhibits without charge at the office of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies
from the SEC at prescribed rates.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the following documents we filed with the SEC in accordance with
Section 13 of the Securities Exchange Act of 1934:
* Annual Report on Form 10-K for the year ended December 31,
1998;
* Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
* Current Report on Form 8-K filed on June 3, 1998;
* Description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on June 6, 1992,
including the amendment on Form 8 dated December 17, 1992; and
* All documents filed by us with the SEC in accordance with
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and before the offering the common
stock thereby is stopped, other than those portions of such
documents described in paragraphs (i), (k), and (l) of Item
402 of Regulation S-K promulgated by the SEC.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Palomar Medical Technologies, Inc.
45 Hartwell Avenue
Lexington, Massachusetts 02421-3102
(781)676-7300
Attention: John J. Ingoldsby
(e-mail: [email protected])
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Registrant in connection with the issuance and distribution of the shares of
common stock being registered. All amounts shown are estimates except for the
Securities and Exchange Commission registration fee. The Registrant will pay all
expenses in connection with the distribution of the shares of common stock being
sold by the selling stockholders, including fees and expenses of counsel for the
Registrant, except for any commission or discounts due to any broker or dealer
in connection with sales of shares offered by this prospectus.
<TABLE>
<S> <C> <C>
Securities and Exchange Commission Filing Fee $ 767
Accounting Fees and Expenses 3,000
Legal Fees and Expenses 1,000
Blue Sky Filing Fees and Expenses 500
Printing and Mailing Costs 100
Transfer Agent Fees 500
Miscellaneous 500
-------------------
Total Expenses $6,367
-------------------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was deemed illegal or obtaining an improper
personal benefit. Palomar's Certificate of Incorporation includes the following
language:
"To the maximum extent permitted by Section 102(b)(7) of the General
Corporation Laws of Delaware, a director of this corporation shall not
be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper
personal benefit."
Section 145 of the General Corporation Law of the State of Delaware
generally provides that a corporation may indemnify any director, officer,
employee or agent against expenses, judgments, fines and amounts paid in
settlement in connection with any action against him by reason of his being or
having been such a director, officer, employee or agent, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action, had no
reasonable cause to believe his conduct was unlawful. No indemnification shall
be made, however, if he is adjudged liable for negligence or misconduct in the
performance of his duty to the corporation, unless a court determines that he is
nevertheless entitled to indemnification. If he is successful on the merits or
otherwise in defending the action, the corporation must indemnify him against
expenses actually and reasonably incurred by him. Article IX of Palomar's Bylaws
provides indemnification as follows:
20
<PAGE>
INDEMNIFICATION
SECTION 1. ACTIONS, ETC. OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall, to the full extent legally permissible, indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including a grand jury proceeding, and all
appeals (but excluding any such action, suit or proceeding by or in the right of
the Corporation), by reason of the fact that such person is or was a director,
executive officer (as hereinafter defined) or advisory council member of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct in question was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that such person did not act in good faith and in a
manner which such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that such person had reasonable cause to believe that the conduct in
question was unlawful. As used in this Article IX, an "executive officer" of the
Corporation is the president, treasurer, a vice president given the title of
executive vice president, or any officer designated as such pursuant to vote of
the Board of Directors.
SECTION 2. ACTIONS. ETC. BY OR IN THE RIGHT OF THE CORPORATION. The Corporation
shall, to the full extent legally permissible, 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 suit, including appeals, by or in the right of the
Corporation to procure a judgment in its favor, by reason of the fact that such
person is or was a director or executive officer of the Corporation as defined
in Section 1 of this Article, or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 3. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any indemnification of a
director or officer (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that such
indemnification is proper in the circumstances because the director or executive
officer has met the applicable standard of conduct as set forth in Sections 1
and 2 hereof. Such a determination shall be reasonably and promptly made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) (if such a
quorum is not obtainable, or, even if obtainable if a quorum of disinterested
directors so directs) by independent legal counsel in a written opinion, or
(iii) by the stockholders.
SECTION 4. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
any other provision of this Article, to the extent that a director or officer of
the Corporation has been successful in whole or in part on the merits or
otherwise, including the dismissal of an action without prejudice, in defense of
any action, suit or proceeding or in defense of any claim, issue or matter
therein, such person shall be indemnified against all expenses incurred in
connection therewith.
21
<PAGE>
SECTION 5. ADVANCES OF EXPENSES. Expenses incurred by a director or officer in
any action, suit or proceeding shall be paid by the Corporation in advance of
the final disposition of thereof, if such person shall undertake to repay such
amount in the event that it is ultimately determined, as provided herein, that
such person is not entitled to indemnification. Notwithstanding the foregoing,
no advance shall be made by the Corporation if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum of
disinterested directors, or (ii) (if such a quorum is not obtainable or, even if
obtainable, if a quorum of disinterested directors so directs) by independent
legal counsel in a written opinion, that, based upon the facts known to the
Board of Directors or such counsel at the time such determination is made, such
person has not met the relevant standards set forth for indemnification in
Section 1 or 2, as the case may be.
SECTION 6. RIGHT TO INDEMNIFICATION UPON APPLICATION: PROCEDURE UPON
APPLICATION. Any indemnification or advance under Sections 1, 2, 4 or 5 of this
Article shall be made promptly, and in any event within ninety days, upon the
written request of the person seeking to be indemnified, unless a determination
is reasonably and promptly made by the Board of Directors that such person acted
in a manner set forth in such Sections so as to justify the Corporation's not
indemnifying such person or making such an advance. In the event no quorum of
disinterested directors is obtainable, the Board of Directors shall promptly
appoint independent legal counsel to decide whether the person acted in the
manner set forth in such Sections so as to justify the Corporation's not
indemnifying such person or making such an advance. The right to indemnification
or advances as granted by this Article shall be enforceable by such person in
any court of competent jurisdiction, if the Board of Directors or independent
legal counsel denies the claim therefor, in whole or in part, or if no
disposition of such claim is made within ninety days.
SECTION 7. OTHER RIGHT AND REMEDIES: CONTINUATION OF RIGHTS. The indemnification
and advancement of expenses provided by this Article shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, Vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office. All
rights to indemnification or advancement under this Article shall be deemed to
be in the nature of contractual rights bargained for and enforceable by each
director and executive officer as defined in Section 1 of this Article who
serves in such capacity at any time while this Article and other relevant
provisions of the General Corporation Law of the State of Delaware and other
applicable laws, if any, are in effect. All right to indemnification under this
Article or advancement of expenses shall continue as to a person who has ceased
to be a director or executive officer, and shall inure to the benefit of the
heirs, executors and administrators of such a person. No repeal or modification
of this Article shall adversely affect any such rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought based in whole or
in part upon any such state of facts. The Corporation shall also indemnify any
person for attorneys' fees, costs, and expenses in connection with the
successful enforcement of such person's rights under this Article.
SECTION 8. OTHER INDEMNITIES. The Board of Directors may, by general vote or by
vote pertaining to a specific officer, employee or agent, advisory council
member or class thereof, authorize indemnification of the Corporation's
employees and agents, in addition to those executive officers and to whatever
extent it may determine, which may be in the same manner and to the same extent
provided above.
SECTION 9. INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, advisory council member or agent of the
Corporation, or is or was serving at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article.
22
<PAGE>
SECTION 10. CONSTITUENT CORPORATIONS. For the purposes of this Article,
reference to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors and officers so that any person who is or was a director or officer of
such a constituent corporation or is or was serving at the request of such
constituent corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
SECTION 11. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, executive officer,
advisory council member, and those employees and agents of the Corporation
granted indemnification pursuant to Section 3 hereof as to expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding, and all appeals, and any
action by the Corporation, to the full extent permitted by any applicable
portion of this Article that shall not have been invalidated or by any other
applicable law.
SECTION 12. OTHER ENTERPRISES. FINES. AND SERVING AT CORPORATION'S REQUEST. For
purposes of this Article, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to any employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner such person reasonably believed to be in
the interest of the participants and beneficiaries of any employee benefit plan
shall be deemed to have acted in a manner not opposed to the best interests of
the Corporation" as referred to in this Article.
In addition, Palomar maintains a directors' and officers' insurance
policy that covers certain liabilities of directors and officers of Palomar,
including liabilities under the Securities Act of 1933.
23
<PAGE>
ITEM 16. EXHIBITS
The following are filed as part of this registration statement:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1* Second Restated Certificate of Incorporation of Palomar
Medical Technologies, Inc. (included with Registration
Statement on Form S-3 as initially filed on January 11, 1999).
4.2* By-laws of Palomar Medical Technologies, Inc., as amended
(incorporated by reference to Exhibit 3.5 to Palomar's Report
on Form 10KSB/A-4 for the period ending December 31, 1996).
4.3* Specimen certificate for the Common Stock (incorporated by
reference to Exhibit No. 4.1 of Palomar's Annual Report on
Form 10-KSB/A-4 for the fiscal year ending December 31, 1996).
4.4* Form of Securities Purchase Agreement (included with
Registration Statement on Form S-3 as initially filed on
January 11, 1999).
4.5* Form of warrant to purchase common stock (incorporated by
reference to Exhibit 4(b) of Palomar's Form S-3 Registration
Statement No. 333-57261).
5* Opinion of General Counsel of Palomar regarding legality of
shares registered hereunder (included with Registration
Statement on Form S-3 as initially filed on January 11, 1999).
23.1 Consent of Arthur Andersen LLP, independent public
accountants.
23.2* Consent of General Counsel of Palomar (included in Exhibit 5)
(included with Registration Statement on Form S-3 as initially
filed on January 11, 1999).
* Previously filed.
24
<PAGE>
ITEM 17. UNDERTAKINGS
(a) We hereby undertake:
(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 of 1933;
(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;
and
(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)(1)(i) and (a)(1)(ii)
above do not apply if the registration statement is on Form
S-3, Form S-8 or Form F-3, 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 Securities Exchange Act
of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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) We hereby undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of our annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) 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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the provisions described in this registration
statement above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by us
of expenses incurred or paid by a director, officer or controlling person of us
in the successful defense of any action, suit or proceeding) is asserted against
us by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
25
<PAGE>
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 Town of Lexington, Commonwealth of Massachusetts, on April
13, 1999.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By: /S/ LOUIS P. VALENTE
---------------------
Louis P. Valente,
Chief Executive Officer
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>
<S><C> <C> <C>
SIGNATURE TITLE DATE
/s/ Louis P. Valente Chairman of the Board April 13, 1999
------------------------------ President and Chief Executive
Louis P. Valente Officer (Chief Executive Officer)
/s/ Joseph P. Caruso Chief Financial Officer and Treasurer April 13, 1999
------------------------------ (Principal Financial and Accounting
Joseph P. Caruso Officer)
/s/ Nicholas P. Economou Director April 13, 1999
------------------------------
Nicholas P. Economou
/s/ A. Neil Pappalardo Director April 13, 1999
------------------------------
A. Neil Pappalardo
/s/ James G. Martin Director April 13, 1999
------------------------------
James G. Martin
</TABLE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report and to all references to our Firm included in or made
part of the registration statement.
Arthur Andersen LLP
Boston, Massachusetts
April 13, 1999
