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):
- - - --------------------------------------------------------------------------------
(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 STOCKHOLDERS
TO BE HELD NOVEMBER 9, 1999
TO THE STOCKHOLDERS OF DIEHL GRAPHSOFT, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (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 9, 1999 for the
following purposes:
1) To elect two Directors to serve until the 2000 Annual Meeting of
Stockholders (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, 2000 (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 record date for the Annual Meeting will be the close of business
on September 27, 1999 (the "Record Date") for purposes of determining
stockholders who are entitled to notice of and to vote at the Annual Meeting.
All stockholders 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
each nominee for director and the other described proposal to be considered at
the meeting.
By Order of the Board of Directors
Joseph Schmelzle
Secretary
September 27, 1999
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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 EACH 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 Stockholders
November 9, 1999
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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 1999 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at Diehl Graphsoft Inc. located
at 10270 Old Columbia Road Suite 100, Columbia, Maryland 21046, on
November 9, 1999 at 10:00 a.m. local time.
All stockholders of record as of the close of business on September
27, 1999 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 stockholders
on or about October 10, 1999.
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
termsof the proxy, if no instructions are indicated, such shares will be voted
"FOR" the election of each 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 thereonin accordance with their judgment and
discretion.
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A stockholder 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,
1999, including Financial Statements, is enclosed with this Proxy Statement.
Stockholders 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 27, 1999, will be eligible to vote at the Annual Meeting. As of
September 27, 1999, 3,055,612 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 stockholders for a vote at the Annual Meeting. As of
September 27, 1999, the directors and officers of the Company have benefical
ownership of approximately 69% 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
nominee, 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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Percent of
Name and Address of Beneficial Owner (1) Number of Shares Owned (2) Class
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Richard Diehl
President and Director 1,933,055 63.26
Donald Webster
Vice President 30,000(3) *
Joseph Schmelzle
Treasurer/Secretary and Director 129,250 4.23
Sean Flaherty
Vice President, Engineering 39,900(3) 1.29
Richard Hug
Director 3,169 *
Frederic Unger
Director 854 *
All officers and directors
as a group (6 persons) 2,136,228 68.57
* Represents less than 1% of shares outstanding.
(1) The address of each person listed above is c/o Diehl Graphsoft, Inc.
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 30,000
shares of Common Stock.
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ELECTION OF DIRECTORS (PROPOSAL 1)
Two Director are to be elected at the Annual Meeting to serve the
specified term or until successors are elected and qualified. The Board of
Directors has nominated the following persons for election as Directors:
Year of
Name Class of Director Expiration of Term
Richard Diehl III 2002
Frederic Unger III 2002
The shares represented by the proxies solicited hereby will be voted "FOR" the
election of each person named unless authorization to do so is withheld in the
proxy. The election of each 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
1999, 2000 and 2001 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.
Each nominee has 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. Each nominee
has consented to the nomination and has agreed to serve if elected. If either
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 nominees will be unable or unwilling to serve if
elected.
The Board of Directors recommends a vote FOR each nominee.
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Director Class of
Name Age Since Director Recent Business Experience
Richard Hug 64 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 44 1985 II Mr. Schmelzle is a
Certified Public Accountant
who has served the Company
as Treasurer and Chief
Financial Officer since its
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 44 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 60 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 1999.
During fiscal year 1999, 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. Unger who was not present for one board meeting and the audit
committee meeting.
During fiscal year 1999, 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 51, 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 30, 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
1999, 1998 and 1997 fiscal years and for which the Company paid to or accrued
for each executive officer whose salary and bonus exceeded $100,000 in any of
the last three fiscal years (the "Named Executive Officers") is set forth in
the following table.
Summary Compensation Table
Long-Term
Compensation Awards
Name
and Securities
Principal Annual Compensation All other Underlying
Position Fiscal Salary ($) Bonus ($) Compensation ($)(1) Options (#)
- - - -------- ------- ---------- --------- ------------------- ------------
Year
----
Richard
Diehl 1999 171,491 135,267 5,000 -
President 1998 168,065 56,172 4,748 -
1997 169,000 5,548 4,514 -
Donald Webster 1999 97,938 35,228 - -
Vice President 1998 81,261 26,772 - -
1997 77,611 1,910 - 10,000
Seam Flaherty 1999 89,868 37,175 2,500 -
Vice President 1998 73,150 25,517 2,375 -
1997 66,207 1,608 1,706 10,000
(1) Represents Company matching contribution to retirement plan
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, $45,362 in fiscal
1999 and $29,695 in fiscal 1998. These amounts were based on rates which the
Company negotiated at arms length.
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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, 1999. Ernst & Young LLP has no direct or material
indirect interest in the Company. At a meeting held on September 7, 1999, 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. The Board of Directors 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 Annual
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, 2000.
Ernst & Young LLP is not presently expected to have a representative
present at the Annual Meeting and, therefore, will not make a statement or
respond to questions at the Annual 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, 2000.
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SECTION 16A BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Joseph Schmelzle 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 Annual Meeting will be tabulated by the
inspectors of election appointed for the Annual 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 Annual Meeting who abstain from
voting, will be treated as present for purposes of determining the presence of
a quorum.
The election of each 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 Annual Meeting. Any abstentions or broker
non-votes will be disregarded for purposes of determining approval of the
aforementioned matters.
The Company does not expect that other business will be presented at
the 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 2000 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 12, 2000, 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 noticeof the Annual Meeting (or
any supplement thereto) given by the Company pursuant to 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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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 20, 1999 and no later than November 1, 1999. 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,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 27, 1999
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