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As filed, via EDGAR, with the Securities and Exchange Commission on June 9,
1999.
File No:
ICA No:
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
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_]Confidential, for Use of the
[_]Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[ ]Definitive Proxy Statement
[_]Definitive Additional Materials
[X]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Palomar Medical Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
The Monterey Stockholders Group LLC, Mark T. Smith, The
Rockside Foundation, Logg Investment Research, Inc.,
Thomas O'Brien
and
The R. Templeton Smith Foundation
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
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(1) Title of each class of securities to which transaction applies:
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[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
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MARK T. SMITH
7670 First Place
Oakwood, Ohio 44146
June 9, 1999
Dear Fellow Palomar Stockholder:
I am seeking your vote to elect a new Board of Directors for PALOMAR MEDICAL
TECHNOLOGIES, INC. I ask that you vote your BLUE proxy card FOR the nominees of
The Monterey Stockholders Group Inc., and that you do not vote for the re-
election of the current Board of Directors.
WHY ARE WE RUNNING A PROXY CONTEST TO OUST
THE CURRENT BOARD?
You do not need to look further than the share performance of the Company in
recent years to see that something is wrong. At the current stock price, the
Company's market value is below its net cash position, below its working
capital and below its net stockholders' equity. Based on the public statements
of the Company and private conversations with its management, I believe that
the current Board is not focused on the need to improve the Company's stock
performance now, in the near term. In the words of the Company's chairman,
"Clearly, it is the long-term approach, which is now unequivocally the
philosophy of Palomar." This is not my approach. I don't think it is yours. I
believe we should be seeking both near-term and long-term value in our
investment.
Performance graph Price of Palomar
representing the Company's (PMTI) common stock
stock price from June, 1996 (reflects 1:7 stock
to March, 1999. split in May 1999)
s = stock split
Note: The chairman of the present Board became a director in February 1997.
Two other current directors assumed office in June 1997, and the
remaining current director assumed office in November 1997. Members of
Monterey began significant purchases of stock in December 1997.
WHO IS MONTEREY AND WHY DO WE DESERVE YOUR VOTE?
Monterey represents a group of the Company's stockholders that I lead and
that is the Company's single largest stockholder. Together, we hold over 12% of
the Company's outstanding stock. This is many, many times over the amount of
stock held by the Company's current Board and its management. I have invested
my own money in the Company. I have also invested the funds of two charitable
foundations that were established by my family and that I manage. Based on
current market prices, I have seen
[GRAPH]
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my investment and the investments of the foundations in the Company decline by
about 40% or $3.4 million. I recognize that many of you have unfortunately
suffered an even greater percentage decline in your Palomar investment.
The interests of the Monterey group are your interests. We want to see a
significant improvement in the Company's market price, and we are not content
with a philosophy that focuses on the nebulous "long term." We intend to listen
to our fellow investors.
WHO ARE OUR NOMINEES?
Like me, all of our nominees are business people. We understand that a
company is run for the benefit of stockholders, and that the primary
responsibility of a board is to see to it that stockholders get as good a
return as possible on their investment.
Collectively, our nominees will bring valuable strengths to the Board. We
have built businesses in the areas of high tech and finance. We have managed
investments in high technology ventures. We have backgrounds in applied
science. We have training from one of the country's premier business schools,
the Stanford Graduate School of Business Administration. And we have a clear
vision for the direction in which our Company should be headed.
WHAT IS OUR PLAN FOR ENHANCING STOCKHOLDER VALUE?
We agree with the current Board on one point. Our Company has valuable
technology in cosmetic laser treatment, that may be the best in the market. We
need to translate this advantage into market value, and we should be doing this
as soon as possible.
We believe that the only way the market will realize the value in our
Company is through earnings per share, profitable operations that grow over
time. To get there, the Company needs to build its revenues and cut its costs.
How do we build revenues? There may be a variety of ways. Sales of equipment
alone may not be the answer. Licensing our superior technology to competitors,
which has been suggested by management, may not be a good idea. But there are
other models worth investigating. The market leader in the corrective vision
laser industry is realizing growing income from fees paid by doctors on a per
procedure basis for use of that company's equipment. This may work for our
Company as well. If elected, our Board intends to focus very hard on this and
other possible ways for building revenues in the near term.
What about costs? Based on what's publicly known about the Company, we think
costs are too high. The Company has recently disposed of its Star business,
that used to account for 80% of its revenues. Yet, management has said that the
disposition will not result in meaningful reductions in general and
administrative expenses. To us this is a red flag that something is wrong with
the Company's cost structure.
As you will read in our accompanying proxy materials, we intend if elected
to promptly engage a consultant to conduct a top-to-bottom review of the
Company and to make recommendations that will guide the new Board in
implementing its revenue growth and cost cutting strategy.
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WHY DO WE ALSO ADVOCATE A SIGNIFICANT STOCK
REPURCHASE PROGRAM?
We believe that the Company's stock price is presently significantly
undervalued. The Company has cash from the Star sale. One of the best
investments that the Company can make with this cash is in its own stock at the
currently depressed prices. This will provide liquidity for stockholders who
want it now, and should increase per share value for those stockholders like
ourselves who intend to hold onto their Palomar investment.
We believe that the Company's $5 million stock buyback program is
inadequate. If elected, our Board intends at current price levels to implement
a program that is two to three times this amount.
YOUR CHOICE IS CLEAR
We are presenting stockholders with a clear choice. You can vote for the
current Board which has presided over a steady decline in the stock price,
which we believe is not focused on enhancing value in the near term, which will
commit only $5 million to a stock buyback and which itself has only a modest
financial investment in the Company.
Or you can vote for the Monterey nominees, who
. intend to work to enhance stockholder value in both the near term and
the long term;
. plan at current price levels to implement a significant stock buyback
program; and
. represent the Company's single largest stockholder group, with a
substantial equity investment in the Company and whose interests in a
strong market value for our Company are aligned with your own.
TIME IS SHORT. VOTE YOUR BLUE PROXY CARD TODAY.
The June 23 Annual Meeting is just days away. We ask you to mark, sign, date
and mail the enclosed BLUE card in the post-paid envelope provided. Please do
so today.
To ensure your support for the Monterey nominees, you should not return any
of management's cards. Simply ignore management's cards.
If you have already voted for management's nominees, you have every legal
right to change your mind and vote to support the Monterey nominees on the BLUE
proxy cards. Doing so will revoke the management proxy cards. Only your latest-
dated proxy card will count in this election contest.
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CAST YOUR VOTE TODAY FOR DIRECTORS WHO INTEND TO WORK
FOR ENHANCING STOCKHOLDER VALUE NOW.
My fellow nominees and I look forward to your support.
Sincerely,
/s/ Mark T. Smith
Mark T. Smith
If you have any questions or need assistance in voting your shares or
changing your vote, please contact:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
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