SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 6, 1999
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PLC SYSTEMS INC.
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(Exact name of Registrant as specified in charter)
British Columbia
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(State or other jurisdiction of incorporation)
1-11388 04-3153858
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(Commission File Number) (IRS Employee
Identification No.)
10 Forge Park, Franklin, Massachusetts 02038
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 541-8800
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Not Applicable
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(Former name or former address, if changed since last report)
THIS DOCUMENT CONSISTS OF 6 PAGES.
Item 5. OTHER EVENTS.
SETTLEMENT OF LITIGATION. PLC Systems Inc. (the "Company") is
pleased to announce that CardioGenesis Corporation
("CardioGenesis") agreed to the validity and enforceability of
PLC's patents covering the synchronization technology in our
heart-synchronized laser system in connection with a settlement of
all outstanding litigation between the companies. Please refer to
the "News Release" below.
News Release
FOR IMMEDIATE RELEASE
CONTACT: PLC Systems Inc.
(508) 541-8800
Robert Svikhart
Chief Financial Officer
Noonan/Russo Communications, Inc.
(212) 696-4455
Meredith, Milewicz, ext. 228
PLC SYSTEMS AND CARDIOGENESIS SETTLE PATENT DISPUTE
FRANKLIN, MA., January 6, 1999 -- PLC Systems Inc. (AMEX: PLC) and
its wholly-owned subsidiary, PLC Medical Systems, announced today
that CardioGenesis Corporation (Nasdaq: CGCP) agreed to the
validity and enforceability of PLC's patents covering its
heart-synchronized laser system in connection with a settlement of
all outstanding litigation between the companies.
The patents, U.S. Patent No. 5,125,926 and related international
patents, cover PLC's proprietary synchronization technology, a
critical factor in ensuring the safety of TMR procedures. PLC
granted CardioGenesis a non-exclusive worldwide license to the
patents in exchange for payment of a license fee and ongoing
royalties over the life of the patents. A minimum of $2.5 million
will be paid by CardioGenesis to PLC over the next 42 months.
Other financial terms were not disclosed.
"This settlement confirms the significant clinical benefit of PLC's
synchronization technology," said William Dow, PLC's president and
chief executive officer. "We are very pleased with the financial
terms of our settlement. We maintain ownership of this essential
patent and believe this settlement is in the best interests of PLC
shareholders."
TMR using The Heart Laser* System is performed on a beating
heart, generally through a small left chest incision. The Heart
Laser System is used to create between 20 and 40 one-millimeter-wide
channels through the oxygen deprived heart muscle (myocardium), into
the heart's left ventricle, allowing blood to flow into the heart
muscle again, despite
* The Heart Laser is a trademark of PLC Medical Systems Inc.
blocked arteries. The pulse of the laser is synchronized with the
beating of a patient's heart.
TMR using The Heart Laser System is considered less invasive
heart surgery. It usually involves a small left chest incision;
generally does not necessitate a blood transfusion; and, because it
is performed on a beating heart, does not require the use of a
heart-lung machine. Recovery is potentially quicker, less
traumatic and less costly than in open-heart procedures.
PLC Systems Inc. is a cardiac revascularization company that is
pioneering, developing and supplying the systems and components for
TMR. The Company is also investigating TMR as an adjunct to
cardiac bypass surgery. PLC, founded in 1981 and located in
Franklin, Massachusetts, has 95 employees worldwide.
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Note: Certain of the above statements may be forward-looking
statements that involve risks and uncertainties. Actual results
could differ materially from those indicated by such
forward-looking statements as a result of a variety of factors,
including competitive developments, regulatory approval
requirements, the ability to convince health care professionals and
third party payers of the medical and economic benefits of The
Heart Laser System, and risk factors described in the Company's
Registration Statement on Form S-3 (as filed with the Securities
and Exchange Commission on December 15, 1998 and any subsequent
amendments thereto), Annual Report and SEC Form 10-K for fiscal
year ended December 31, 1997, and the Company's other SEC reports.
RESULTS OF INCENTIVE COMPENSATION PLANS. We would also like to
take this opportunity to summarize the results of four incentive
compensation programs adopted during the latter half of 1998. As
we have previously reported, we received approval from the U.S.
Food and Drug Administration ("FDA") to market The Heart Laser
System on August 20, 1998. We are the first company to receive FDA
approval for a laser system to perform TMR.
Although we are pleased with FDA approval of The Heart Laser
System, we believe that our future success depends on our ability
to market TMR using the Heart Laser System and, in particular, on
our ability to retain and motivate our directors, executive
officers and other key personnel during the period in which we are
marketing The Heart Laser System. To reward employees for their
service, ensure that morale remains high and provide an incentive
for continued service to the Company during the crucial period
ahead, the Board of Directors (together with its Compensation and
Executive Committees) adopted the following four incentive
compensation programs.
1. The outstanding options of all directors and executive
employees having a higher exercise price were repriced to the
average daily closing price of our no-par Common Stock ("Common
Stock"), as traded on the American Stock Exchange, for the three
days immediately following FDA approval ($7.75 per share). As a
result, the exercise price of options to purchase 1,373,500 shares
of Common Stock was repriced to $7.75 per share.
2. The 1997 Stock Option Plan (the "Plan") was amended to
increase the total number of shares of Common Stock eligible to be
issued under the Plan from 650,000 to 950,000.
3. A new Senior Management Investment Program ("SMIP") was
adopted to promote additional investment by directors and members
of our senior management team. Under the SMIP, individuals who
purchased additional shares of the Company's Common Stock between
September 15, 1998 and December 31, 1998 (the "Participants")
received options to purchase an additional 1.5 shares of Common
Stock at an exercise price equal to the Participant's share
purchase price (the "Share Purchase Price").
In addition, Participants received ten "option credits"
for each share of Common Stock purchased between September 15, 1998
and December 31, 1998. Participants could use each "option credit"
to:
(i) reduce the exercise price of an outstanding option
(vested or unvested) to purchase one share of Common
Stock to the Participant's Share Purchase Price; or
(ii) extend the expiration date of any outstanding option
(vested or unvested) for an additional three years; or
(iii) acquire new vested options with an exercise price equal
to the Participant's Share Purchase Price (at a rate of
6.67 option credits for each new option to purchase one
share of Common Stock).
Based on information received from the Participants, we have
granted options to purchase an additional 266,475 shares of Common
Stock at exercise prices ranging from $4.50 to $6.625 per share
under the SMIP. Furthermore, the Company has reduced the exercise
prices of options to purchase 1,193,500 shares of common Stock to
new exercise prices ranging from $4.50 to $6.625.
4. The outstanding options held by employees not eligible to
participate in the SMIP having a higher exercise price were
repriced to the closing price of our Common Stock, as traded on the
American Stock Exchange, on December 4, 1998 ($4.875 per share).
As a result, the exercise price of options to purchase 332,316
shares of Common Stock was repriced to $4.875 per share.
We currently have outstanding 19,739,647 shares of Common
Stock and options to purchase an additional 2,722,956 shares of
Common Stock. The exercise prices of these options range from
$3.69 to $8.88 per share, with a weighted average purchase price of
$5.26 per share. If these options are exercised at a time when the
market price of our Common Stock is significantly higher than the
exercise price of the options, investors may experience significant
dilution in the market value and earnings per share of their Common
Stock.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLC SYSTEMS INC.
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(Registrant)
Date: January 13, 1999 By: /s/ ROBERT SVIKHART
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Robert Svikhart
Chief Financial Officer and
Treasurer