SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PALOMAR MEDICAL TECHNOLOGIES, INC.
------------------------------------------------
(Name Of Registrant As Specified In Its Charter)
NOT APPLICABLE
------------------------------------------
(Name Of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
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:
5) Total fee paid:
/ / 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) Amount Previously Paid:_____
2) Form, Schedule or Registration Statement No.:_____
3) Filing Party:_____
4) Date Filed: _____
<PAGE>
[PALOMAR MEDICAL TECHNOLOGIES, INC.]
REJECT THE MONTEREY GROUP
June 4, 1999
DEAR FELLOW SHAREHOLDER:
As expected, a small group of dissidents calling themselves "The
Monterey Stockholders Group LLC" has now filed preliminary proxy materials in an
attempt to take control of your Company at the June 23 annual meeting. After
carefully reviewing the Monterey group's filing, your Board has reached the
unanimous conclusion: THE MONTEREY GROUP IS PROPOSING UNTRIED AND INEXPERIENCED
CANDIDATES TO PURSUE AN ILL-CONCEIVED AND SHORT-SIGHTED "PLAN" FOR YOUR COMPANY
WHICH WOULD BE DISASTROUS TO PALOMAR AND YOUR INVESTMENT IN IT. In your own best
interests, we urge you to reject the Monterey group. Do NOT sign ANY blue proxy
card you may receive from Monterey. Please sign, date and mail only the WHITE
management proxy enclosed with this letter.
WHO ARE THE DISSIDENT CANDIDATES?
MARK SMITH appears to be the leader of the dissident effort, since he is the
only candidate who owns any shares of Palomar. Mr. Smith, 45, discloses a
professional career of less than eight years, most of which was spent as
"Manager of Business Development" at a privately-owned generic drug
manufacturer. Mr. Smith has never served on the Board of a publicly-held
company, and has no experience in your Company's industry.
GEORGE MURPHY, a classmate of Mr. Smith, is a self-employed venture capitalist
whose primary business experience appears to be in the formation of private
companies dealing with animal cross-breeding. Mr. Murphy has never served as a
director of a publicly-held company and owns zero shares of Palomar.
JAY DELAHANTY, another self-employed venture capitalist, heads a money
management firm with a grand total of about $7 million under management,
including some of the Monterey group's funds. Like his fellow candidates, Mr.
Delahanty has never served on the board of a publicly-held company and has no
experience in your Company's industry. Mr. Delahanty owns zero shares of
Palomar.
MICHEL MARKS is a self-described "private investor, teacher and consultant." Mr.
Marks discloses that he is president of a privately held firm which provides
consulting services in "corporate strategy and therapy." Mr. Marks has never
served on the board of any publicly-held company, he has no experience in your
Company's industry and he does not own a single share of Palomar stock.
<PAGE>
The Monterey group wants you to believe that its candidates will bring
"seasoned expertise" to your Company. We disagree. Please compare the experience
and personal commitment of the Monterey group's candidates with that of your
Board's nominees. You decide to whom you should entrust the future of your
investment in Palomar.
YOUR BOARD'S NOMINEES
LOUIS P. VALENTE has been Chairman of Palomar's Board of Directors since
September 15, 1997. Before joining Palomar, Mr. Valente spent 28 years at EG &
G, a Fortune 200 company, concluding as senior vice president and presiding over
mergers and acquisitions. Mr. Valente serves as a director of MKS Instruments,
Inc. and Micrion Corporation, both publicly-held corporations.
NICHOLAS P. ECONOMOU is Chairman, President and Chief Executive Officer of
Micrion Corporation, a NASDAQ-listed semiconductor equipment company. Prior to
his employment at Micrion, Dr. Economou managed the development of advanced
semiconductor technology at M.I.T.'s Lincoln Laboratory. Dr. Economou's
knowledge of laser physics has been instrumental in shaping Palomar's new
products strategy.
JAMES G. MARTIN is Vice President for research at the Carolinas Medical Center
and a former governor of North Carolina. Dr. Martin brings the steady experience
gained from serving on the Boards of Directors of three public companies, Duke
Energy Company, Family Dollar, Inc. and Applied Analytical Industries, Inc., and
a Ph.D. in chemistry from Princeton University.
A. NEIL PAPPALARDO is founder and Chief Executive Officer of Meditech, a
provider of software systems to hospitals in the U.S. and abroad, with over
2,000 employees. Mr. Pappalardo also serves on M.I.T.'s executive committee. Mr.
Pappalardo demonstrated his confidence in Palomar's future by personally
guaranteeing a $10 million loan to the Company. Mr. Pappalardo's commitment to
your Company ensured the completion of Palomar's recent restructuring.
When the current management nominees joined Palomar's Board in 1997,
your Company had sustained losses totaling $85 million. In just two short years,
your Board reversed the losses and directed your Company to three straight
profitable quarters. DON'T RISK THE RECENT SUCCESS AT PALOMAR ON AN UNTRIED
OPPOSITION GROUP. SUPPORT YOUR BOARD'S NOMINEES BY SIGNING, DATING AND MAILING
THE ENCLOSED WHITE PROXY AT YOUR EARLIEST CONVENIENCE.
THE MONTEREY GROUP'S "NON-PLAN" FOR PALOMAR
In its attempt to get your vote, the Monterey group proposes a
so-called "plan" for enhancing stockholder value, promising that its candidates
will take "actions to redirect the Company's business towards profitability."
However, after studying the elements of their "plan," we are convinced that the
Monterey group has no knowledge of your Company's industry, and that the only
"actions" contemplated by the Monterey group would reverse the progress made by
the current Board and cripple your Compan s future. Here are the major elements
of the Monterey group's "plan":
- COMMENCE A REVIEW OF OPERATIONS WITH THE ASSISTANCE OF AN "EXPERT
CONSULTANT WITH EXPERIENCE IN THE LASER INDUSTRY." To us, this is an
admission of the Monterey group's complete lack of knowledge of your
Company and its business. If the Monterey group says its candidates
will bring "seasoned expertise" to the Palomar Board, why would they
need an "expert consultant" to assist them with a review of the
Company's operations? Who would the expert be and how much would he be
paid? WHAT WOULD HAPPEN TO YOUR COMPANY'S OPERATIONS WHILE THE MONTEREY
DIRECTORS LEARNED THE BUSINESS?
<PAGE>
- UNDERTAKE A REVIEW OF THE COMPANY'S OVERHEAD EXPENSES. The Monterey
group says that "based upon publicly available information," the
Company's costs and administrative overhead can be trimmed, but they
fail to cite one single specific area where this could be accomplished.
Your Board and management are constantly seeking ways to lower your
Company's expenses. IN FACT, IN THE MOST RECENT FISCAL QUARTER, GENERAL
AND ADMINISTRATIVE EXPENSES WERE REDUCED BY 11%.
- COMMENCE AN AGGRESSIVE SHARE REPURCHASE PROGRAM. In our opinion, along
with gaining control of Palomar's cash, this is the real motive behind
the Monterey group's attempt at control, and by far, the most
potentially damaging element of their plan. First of all, you should
know that your Board has already authorized up to $5 million toward the
repurchase of Palomar shares. We believe this repurchase program is
prudent in that it demonstrates confidence in your Company's future and
serves t support the price of Palomar stock without siphoning off funds
which are critical to your Company's operations and the development of
new products. WE ARE CONCERNED THAT THE MONTEREY GROUP WOULD SUDDENLY
COMMIT MOST OF YOUR COMPANY'S CASH TO AN ILL-ADVISED AND RECKLESS
REPURCHASE PROGRAM, LEAVING THE COMPANY WITHOUT FUNDS NECESSARY FOR
CONTINUED GROWTH AND LONG TERM PROFITABILITY. Furthermore, although
members of the Monterey group say they do not currently expect to
participate in a stock repurchase program, they "RESERVE THE RIGHT TO
CHANGE THEIR INTENTION." HOW MANY SHARES DO YOU THINK YOU COULD SELL IN
THE REPURCHASE PROGRAM IF THE MONTEREY GROUP FLOODED THE MARKET WITH
MORE THAN 12% OF THE COMPANY'S OUTSTANDING SHARES? WHAT WOULD PALOMAR'S
FUTURE PROSPECTS BE LIKE IN THE AFTERMATH?
- IMPROVE COMMUNICATIONS WITH THE MARKET. The Monterey group complains
that your Company has not been successful in conveying the significance
of the Company's technology and the prospects for growth. Please review
the following excerpts from a January 25, 1999 research report on
Palomar WRITTEN BY A MEMBER OF THE MONTEREY GROUP:
"THE COMPANY RECENTLY SCORED A MAJOR COUP IN ITS AGREEMENT . . .TO SELL ITS STAR
MEDICAL TECHNOLOGIES SUBSIDIARY TO COHERENT, INC."
"THE COMPANY IS NOW STREAMLINED AND READY TO FULLY EXPLOIT THE MANY MARKETS
WHICH ARE AVAILABLE"
"THE COMPANY'S BOARD OF DIRECTORS IS EXTREMELY IMPRESSIVE."
"WITH THE NEW FINANCIAL PLATFORM CREATED BY THE SALE OF STAR AND THE RESEARCH
AND DEVELOPMENT CAPABILITIES OF THE COMPANY, IT IS A GOOD BET THAT PALOMAR WILL
BE AT THE FOREFRONT OF THESE CUTTING EDGE TECHNOLOGIES."
The report is also highly complimentary of your Board, describing the sale of
Star as an "UNBELIEVABLE FEAT" for Mr. Valente, stating that Mr. Valente was a
"DRIVING FORCE BEHIND THE RESTRUCTURING" and praising Mr. Pappalardo's "BUSINESS
ACUMEN."
It is clear to us that, other than the potentially disastrous share
repurchase program, the Monterey group's "plan" is nothing more than election
rhetoric designed to get your vote while concealing the Monterey group's own
shortcomings and self-serving agenda. We believe your own interests will be
served best by decisively rejecting the Monterey candidates and their
ill-conceived plan for Palomar.
<PAGE>
YOUR BOARD HAS EARNED YOUR SUPPORT
When we joined the Board of Palomar two years ago, we inherited a
company with staggering losses and inadequate focus on the future. Our goal was
to restore order, streamline Palomar's business by focusing on its strengths and
return lost value to our patient stockholders. No one understands better than we
do how difficult a time it has been for our investors. As tough as the picture
seemed, however, we recognized exceptional value in Palomar's technology and set
out to exploit this valuable o asset for the benefit of our stockholders. Here
are our accomplishments to date on your behalf:
o We completed a vigorous restructuring program, selling off all
non-performing and non-core businesses, thereby creating a
tightly-focused cosmetic laser company.
o We sold our Star subsidiary for $65 million in cash - the most
profitable cash transaction in the history of the industry - and
retained a 7.5% royalty interest.
o We received FDA clearances for, and brought to market, three new laser
products: the EpiLaser, the Palomar E2000 and the LightSheer diode
system.
o We restored profitability to Palomar by generating earnings in the
last three consecutive quarters.
Although we believe our accomplishments are significant, much is yet to
be done. We intend to use some of the proceeds from the Star sale to bolster our
research and development in order to bring new products to market in the
cosmetic laser industry. This is what resulted in the first profits Palomar has
ever recorded, and it is the key to the Company's long-term success.
We need your support to continue our efforts on your behalf. We
strongly believe that your own best interests will be served, not through the
short-sighted and reckless program of an untried opposition group, but by
pursuing the sound business practices which have made your Company profitable
and created excellent prospects for Palomar's future. PLEASE SUPPORT YOUR BOARD
BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY TODAY.
Thank you.
ON BEHALF OF THE BOARD OF DIRECTORS
Sincerely,
/s/ Louis P. Valente
------------------------------------
LOUIS P. VALENTE
Chairman and
Chief Executive Officer
------ IMPORTANT ------
Please be sure your latest dated proxy is a WHITE proxy
voting FOR the management nominees. A later dated blue
proxy, even if marked "Withhold Authority" to vote for the
Monterey candidates, will only serve to revoke your vote
for management.
If you have any questions or need assistance in voting your shares,
please call Palomar at (781) 676-7300 or D.F. King & Co., Inc.,
which is assisting us in this matter, toll-free at: 800-628-8538.
