SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
x Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11 (C) or Rule 14a-12
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DIEHL GRAPHSOFT INC.
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Payment of Filing Fee (Check the appropriate box):
x No fee required.
Fee computed on table below per Exchange Act Rules 14a-6 (i) (I) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11 (a) (2) and identify The filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
Number, or the form or schedule and the date of its filing.
(1) Anount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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DIEHL GRAPHSOFT, INC.
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 10, 1998
TO THE SHAREHOLDERS OF DIEHL GRAPHSOFT, INC.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Diehl Graphsoft Inc. (the "Company"), will be held at the
principal executive office of the Company at 10270 Old Columbia Road, Suite
100, Columbia, Maryland 21046 at 10:00 a.m., on November 10, 1998 for the
following purposes:
1) To elect a Director to serve until the 1999 Annual Meeting of Shareholders
(Proposal 1);
2) To consider a proposal to ratify the selection of Ernst & Young LLP to
audit the Company's books and records for the fiscal year ending May 31,
1999 (Proposal 2); and
3) To consider and transact such other business as may properly and lawfully
come before the Annual Meeting or any adjournment thereof.
Each of the foregoing is more fully set forth in the Proxy Statement
accompanying this Notice.
The transfer books of the Company will close as of the end of business
on September 28, 1998 (the "Record Date") for purposes of determining
shareholders who are entitled to notice of and to vote at the Annual Meeting,
but will not be closed for any other purpose.
All shareholders are cordially invited to attend the Annual Meeting in
person. If you cannot attend the Meeting, please take tbe time to promptly
sign, date and mail the enclosed proxy in the envelope we have provided. If you
attend the Annual Meeting and decide that you want to vote in person, you may
revoke your proxy. The Board of Directors recommends that you vote in favor of
the nominees for directors and the described proposals to be considered at the
meeting.
By the Board of Directors
Joseph Schmelzle
Secretary
September 28, 1998
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THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND IS REVOCABLE
AT ANY TIME PRIOR TO BEING EXERCISED. THE PROXY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS THEREON. IF A CHOICE IS NOT INDICATED, HOWEVER, THE
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEE AS DIRECTOR, IN FAVOR OF
THE RATIFICATION OF THE SELECTION OF AUDITORS AT THE ANNUAL MEETING, AND IN THE
BEST JUDGMENT OF THE PROXIES CONCERNING ANY OTHER MATTERS CONSIDERED AT THE
MEETING.
DIEHL GRAPHSOFT, INC.
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
Annual Meeting of Shareholders
November 10, 1998
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PROXY STATEMENT
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SOLICITATION OF PROXIES
This proxy statement ("Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Diehl Graphsoft,
Inc. (the "Company") for use at the Company's 1998 Annual Meeting of
Shareholders (the "Annual Meeting") to be held at Diehl Graphsoft Inc. located
at 10270 Old Columbia Road Suite 100, Columbia, Maryland 21046, on November 10,
1998 at 10:00 a.m. local time.
All shareholders of record as of the close of business on September
28, 1998 are entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
The Company will pay the cost of proxy solicitation. In addition to
the solicitation of proxies by use of the mails, directors, officers and other
employees of the Company may solicit proxies in person or by telephone,
telegram, facsimile or other electronic means. None of these individuals will
receive compensation for such services, which will be performed in addition to
their regular duties. The Company also has made arrangements with brokerage
firms, banks, nominees and other fiduciaries to forward proxy solicitation
material for shares held of record by them to the beneficial owners of such
shares. The Company will reimburse such persons for their reasonable
out-of-pocket expenses in forwarding such material.
It is anticipated that this Proxy Statement and the enclosed proxy
will first be mailed to the Company's shareholders on or about October 7, 1998.
A proxy for use at the Annual Meeting and a retum envelope are
enclosed. Shares of the Company's common stock, par value $0.01 per share
("Common Stock"), represented by a properly executed proxy, if such proxy is
received in time and not revoked, will be voted at the Annual Meeting in
accordance with the instructions indicated in such proxy. Pursuant to the terms
of the proxy, if no instructions are indicated, such shares will be voted "FOR"
the election of the nominee as director, in favor of the ratification of the
selection of auditors at the Annual Meeting, and in the best judgment of the
proxies concerning any other matters considered at the meeting. Discretionary
authority is provided in the proxy as to any matters not specifically referred
to therein, although the Board of Directors does not know of any other matters
to be presented at the Annual Meeting. However, if any such matters properly
come before the Annual Meeting, the persons named in the proxy are fully
authorized to vote thereon in accordance with their judgment and discretion.
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A shareholder who has given a proxy may revoke it at any time prior to
its exercise at the Annual Meeting by: (1) giving written notice of revocation
to the Secretary of the Company; (2) properly submitting to the Company a duly
executed proxy bearing a later date; or (3) voting in person at the Annual
Meeting. All written notices of revocation or other communications with respect
to revocation of proxies should be addressed as follows: Diehl Graphsoft, Inc.,
10270 Old Columbia Road, Suite 100, Columbia, Maryland 21046, Attention:
Corporate Secretary.
Annual Report
The Annual Report of the Company for the fiscal year ending May 31,
1998, including Financial Statements, is enclosed with this Proxy Statement.
Shareholders may also obtain a copy of the Annual Report on Form 10-KSB without
charge upon written request addressed to Joseph Schmelzle, Secretary, Diehl
Graphsoft, Inc., 10270 Old Columbia Road, Suite 100, Columbia, Maryland 21046.
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EQUITY SECURITIES AND CERTAIN HOLDERS THEREOF
All holders of record of the Company's Common Stock at the close of business on
September 28, 1998, will be eligible to vote at the Annual Meeting. As of
September 28, 1998, 3,147,637 shares of the Common Stock were outstanding. Each
share of Common Stock entitles the holder thereof to one vote on each matter
brought before the shareholders for a vote at the Annual Meeting. As of
September 28, 1998, the directors and officers of the Company have benefical
ownership of approximately 66% of the outstanding shares of Common Stock. The
Company's directors and officers have advised the Company that they intend to
vote the shares under their control in favor of the proposals set forth in this
Proxy Statement.
The presence, in person or by proxy, of the stockholders entitled to
cast a majority of the votes will constitute a quorum for the transaction of
business at the Annual Meeting. Votes cast in person or by proxy, abstentions
and broker non-votes will be considered in the determination of whether a
quorum is present.
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock for (1) each of the Company's directors
and nominees, each of the Company's executive officers named in the Summary
Compensation Table below (see "Executive Compensation and Other Information"),
and all directors , nominees and executive officers of the Company as a group,
and (2) each person known by the Company to beneficially own more than 5% of
the Company's Common Stock as of the Record Date, except where another date is
indicated below, based solely on the contents of Schedules 13D filed with the
Securities and Exchange Commission as of the Record Date.
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Name and Address
of Beneficial Owner (1) Number of Shares Owned (2) Percent of Class
----------------------- -------------------------- ----------------
Richard Diehl
President and Director 1,933,055 61.41
Donald Webster
Vice President 22,000(3) *
Joseph Schmelzle
Treasurer/Secretary and Director 122,750 3.90
Sean Flaherty
Vice President, Engineering 31,900(3) 1.01
Richard Hug
Director 1,919 *
Frederic Unger
Director 229 *
All officers and directors
as a group (6 persons) 2,111,853 66.17
* Less than 1% of shares outstanding.
(1) The address of each person listed above is c/o Diehl Graphsoft, 10270 Old
Columbia Road, Suite 100, Columbia, Maryland 21046.
(2) The designated owner has voting and investment power with respect to the
shares.
(3) Includes vested and exercisable options to purchase 22,000 shares of Common
Stock.
Interests of Management and Others in Certain Transactions
The Company paid for accounting, management and financial services
rendered to corporations wholly owned by Joseph Schmelzle, $29,695 in fiscal
1998 and $28,500 in fiscal 1997. These amounts were based on rates which the
Company negotiated at arms length.
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ELECTION OF DIRECTOR (PROPOSAL 1)
One director is to be elected at the meeting to serve the specified
term or until a successor is elected and qualified. The Board of Directors has
nominated the following person for election as Director:
Year of
Name Class of Director Expiration of Term
---- ----------------- ------------------
Joseph Schmelzle II 2001
The shares represented by the proxies solicited hereby will be voted "FOR" the
election of the person named unless authorization to do so is withheld in the
proxy. The election of the nominee requires a plurality of the votes cast at
the annual meeting. Unless directed to the contrary, proxies will be voted for
the election of such nominees.
The directors are divided into three classes, denominated as Class I,
Class II, and Class III, with the terms of office of each Class expiring at the
1998, 1999 and 2000 annual meetings of stockholders, respectively. At each
annual meeting following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term to expire at the third succeeding annual meeting of stockholders after
their election. The directors are divided into classes as follows: Class I:
Richard Hug; Class II: Joseph Schmelzle; Class III: Richard Diehl and Frederic
Unger
There are no family relationships among any of the Company's directors and
executive officers.
The nominee informed the Company that he will be available to serve as
a director. The other members of the Board of Directors who are not currently
standing for election continue to be available to serve. The nominee has
consented to the nomination and has agreed to serve if elected. If the nominee
should not be available for election, the persons named as proxies may vote for
another person in their discretion. The Board of Directors has no reason to
believe that the nominee will be unable or unwilling to serve if elected.
The Board of Directors recommends a vote FOR the nominee.
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Director Class of
Name Age Since Director
Richard Hug 63 1996 I
Mr. Hug was President of Environmental Elements Corporation from 1974 until
1983 when he became Chairman and Chief Executive Officer. From 1990 he remained
Chairman until his retirement in 1995, and currently serves as a Director and
Chairman Emeritus. Mr.Hug serves as Chairman of The Great American Car Wash,
Inc., Deco-Sign Products, Inc., and Hug Enterprises, Inc. all unrelated private
companies in which he holds majority ownership interests.
Joseph Schmelzle 43 1985 II
Mr. Schmelzle is a Certified Public Accountant who has served the Company as
Treasurer and Chief Financial Officer since it inception, and as Secretary since
1993. He also serves as President of JJ Schmelzle & Co., P.C. and Joseph J.
Schmelzle & Assoc., Inc., both unrelated private companies which he owns, that
have provided accounting and financial consulting services since 1991. Mr.
Schmelzle received a B.S. from Clarkson College in 1977, and an M.B.A. from the
University of Rochester in 1979.
Richard Diehl 43 1985 III
Mr. Diehl has served as President and Chief Executive Officer of the Company
since its inception. Mr. Diehl received a B.S. from Towson State University in
1980, and an M.S. from Johns Hopkins University in 1984.
Frederic Unger 59 1996 III
Mr. Unger is the founder and majority stockholder of Digital Press, a Company
which he has served as President since 1991. He has also served as Director of
AEC Software since 1986, a Company in which he was a founder and still retains
an equity interest. Prior to 1991 he was associated with DuPont where he
served in their marketing division.
Information as to the directors' beneficial ownership of Common Stock
is set forth above, under "Equity Securities and Certain Holders Thereof"
The Board of Directors maintains an Audit Committee to oversee actions
taken by the Company's independent auditors, to recommend the engagement of
auditors, and to review any internal audits the Company may perform. The
current members of the Audit Committee are Richard Diehl, Richard Hug and
Frederic Unger. The Audit Committee held one meeting during fiscal 1998.
During fiscal year 1998, the Board of Directors held four meetings. No
director attended fewer than 75 percent of the aggregate of (1) the total
number of meetings of the board of directors (held during the period for which
he has been a director); and (2) the total number of meetings held by all
committees of the board on which he served (during the periods that he served),
except for Mr. Hug who was not present for one board meeting and the audit
committee meeting.
During fiscal year 1998, outside directors who are not employed in any
other capacity by the Company received annual fees of $5,000, of which 50% is
payable in Company stock, for serving on the Board of Directors and the Audit
Committee. Inside directors, who also serve as officers of the Company, receive
no additional compensation for their services as directors.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The following information is provided with respect to officers who are
not also directors of the Company.
Donald Webster, age 50, Vice President of the Operations, has been with
the Company since 1992. From 1987 until 1992, he was the Director of
Communication Services for Arthur Young & Co. in its National Marketing Office
in Reston, Virginia working primarily with video production.
Sean Flaherty, age 29, Vice President of Engineering, has been with the
Company since 1985. He was initially employed as a software programmer. In
1991, he was appointed Vice President, assuming day to day responsibility for
engineering operations.
Cash Compensation
Cash compensation which was earned for services in all capacities for
1998, 1997 and 1996 fiscal years and which the Company paid to or accrued for
the Chief Executive Officer during the last fiscal year (the "Named Executive
Officer") is set forth in the following table. No other executive officer of
the Company is a Named Executive Officer, as none has the minimum required
annual salary and bonus to be deemed as such.
Summary Compensation Table
Long-Term Compensation Awards
Annual Compensation All other
------------------- ---------
Name and
Principal Position Fiscal Salary ($) Bonus ($) Compensation $ (1)
- ------------------ ------ ---------- --------- ------------------
Year
----
Richard Diehl 1998 168,065 56,172 4,748
President 1997 169,000 5,548 4,514
1996 169,000 23,914 4,564
(1) Represents Company matching contribution to retirement palan
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SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
Ernst & Young LLP served as independent auditors of the Company for
its fiscal year ended May 31, 1998. Ernst & Young LLP has no direct or material
indirect interest in the Company. At a meeting held on September 8, 1998, the
Company's Directors selected Ernst & Young LLP as independent auditors of the
Company for the current fiscal year, subject to ratification by the
stockholders. If the appointment is not ratified, the Board of Directors will
appoint another firm as the Company's independent auditor for the year ending
May 31, 1999. The Board of Directors also retains the power to appoint another
independent auditor for the Company to replace an auditor ratified by the
stockholders in the event that the Board of Directors determines that the
interests of the Company require such a change.
The affirmative vote of a majority of the votes cast at the meeting
shall be required to ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending May 31, 1999.
Ernst & Young LLP is not presently expected to have a representative
present at the meeting and, therefore, will not make a statement or respond to
questions at the meeting.
The Board Directors recommends that the stockholders vote FOR the
ratification of the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending May 31, 1999.
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SECTION 16A BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Frederic Unger inadvertently failed to file, on a timely basis a Form
4, required by Section 16(a) of the Exchange Act, for the most recent fiscal
year.
VOTE REQUIRED TO APPROVE MATTERS
The presence in person or by proxy of shareholders entitled to cast a
majority of the votes at the Annual Meeting will constitute a quorum. Votes
cast by proxy or in person at the meeting will be tabulated by the inspectors
of election appointed for the meeting. Proxies marked with abstentions, broker
non-votes (i.e., proxies from brokers or nominees marked to indicate that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares as to the vote on a particular matter with
respect to which the brokers or nominees do not have discretionary power to
vote), and shareholders present at the meeting who abstain from voting, will be
treated as present for purposes of determining the presence of a quorum.
The election of a director requires a plurality of votes cast at the
Annual Meeting. The ratification of the appointment of Ernst & Young LLP as
independent accountants of the Company requires the affrrmative vote of a
majority of the votes cast at the meeting. Any abstentions or broker non-votes
will be disregarded for purposes of determining approval of the aforementioned
matters.
There is no reason to believe that any other business will be
presented at this Annual Meeting; however, if any other business should
properly and lawfully come before the Annual Meeting, the proxies will vote in
accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
In order to be considered for inclusion in the proxy statement for the
1999 annual meeting of shareholders, shareholder proposals must be submitted in
writing, be received on or before June 19, 1999, and include the full and
correct name and address of the shareholder making the proposal and the number
of shares of common stock owned by such shareholder. If the shares are not
registered in the shareholder's name but are beneficially owned, proof of
ownership must be submitted with the proposal. In addition, the shareholder must
state in writing his or her intention to appear personally or by proxy at that
meeting to present the proposal.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management does not know of any other matters that will come before the
Annual Meeting. If any other matters are properly brought before the Annual
Meeting, or if any of the persons named above as nominees for election as
directors should decline or be unable to serve as a director, the holders of the
proxies are authorized to vote the shares as they deem advisable and will act
according to their best judgment.
The Bylaws provide that, to be properly brought before the Annual
Meeting, business must be (1) specified in the notice of the Annual Meeting (or
any supplement thereto) given by the Company pursuant the Bylaws; (2) brought
before the Annual Meeting by or under the direction of the Board of Directors
(or the Chairman of the Board or the President), or (3) properly brought before
the Annual Meeting by a shareholder. In addition to any other applicable
requirements, for business to be properly brought before the Annual Meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary. The Bylaws provide that, nominations of persons for election to
the Board of Directors of the Company may be made at the Annual Meeting, by or
under the direction of the Board of Directors, or by any nominating committee or
person appointed by the Board of Directors, or by any shareholder of the Company
entitled to vote for the election of directors at the Annual Meeting who
complies with the notice procedures set forth below. Such nominations, other
than those made by or under the direction of the Board of Directors or by any
nominating committee or person appointed by the Board of Directors, can only be
made pursuant to timely notice in writing to the Secretary. To be timely, such
shareholder's notice must be delivered to or mailed and received by the
Secretary at the principal executive offices of the Company, not less than 20
days nor more than 30 days prior to the Annual Meeting (or, with respect to a
proposal required to be included in the Company's proxy statement pursuant to
Rule 14a-8 of the Securities Exchange Act of 1934, or its
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<PAGE>
successor provision, the earlier date such proposal was received); provided,
however, that in the event that less than 30 days notice or prior public
disclosure of the date of the Annual Meeting is given or made by the Company,
notice by the shareholder to be timely must be so received by the Secretary not
later than the close of business on the 10th day following the earlier of the
day on which the Company's notice of the date of the Annual Meting was mailed or
the day on which the Company's first public disclosure of the date of the Annual
Meting was made. Accordingly, any such notice must be received by the Secretary
no earlier than October 21, 1998 and no later than November 2, 1998. Such
shareholder's notice shall set forth: (a) as to each person whom the shareholder
proposes to nominate for election as a director, (1) the name, age, business
address and residence address of the person, (2) the principal occupation or
employment of the person, (3) the class and number of shares of stock of the
Company which are beneficially owned by the person, and (4) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to the rules and
regulations under the Securities Exchange Act of 1934, as amended; (b) as to
each matter the shareholder proposes to bring before the Annual Meeting, (1) a
brief description of the business desired to be brought before the Annual
Meeting (2) the reasons for conducting such business at the Annual Meeting, and
(3) any material interest of the shareholder in such business; and (c) as to the
shareholder giving the notice, (1) the name and address of the shareholder and
(2) the class and number of shares of the Company which are beneficially owned
by the shareholder. The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
Joseph Schmelzle
Secretary
Columbia, Maryland
September 28, 1998
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