As filed, via EDGAR, with the Securities and Exchange Commission on
June 4, 1999.
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:
[_] 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 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.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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>
THE MONTEREY STOCKHOLDERS GROUP LLC
Dear Palomar Stockholder:
The Monterey Stockholders Group LLC is engaging in a proxy contest for the
election of its nominees as the directors of Palomar Medical Technologies, Inc.
on June 23, 1999. Monterey is running this contest because it does not believe
that the Company's Board is committed to increasing stockholder value in both
the near and long term. Monterey's candidates are committed to formulating a
strategic plan designed to address the Company's disappointing market value
reflected by its depressed stock price.
[CHART OF PALOMAR COMMON STOCK PRICES FROM JUNE 1996 THROUGH MAY 1999]
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 purchasing stock in December 1997.
WHO IS MONTEREY?
Monterey represents a group led by Mr. Mark Smith, which is the Company's
single largest stockholder. The group's holdings of over 12% of the Company's
common stock is more than 75 times the combined holdings of the Company's
current board and management (excluding stock options and warrants).
WHERE CAN I LEARN ABOUT MONTEREY'S NOMINEES AND ITS PLATFORM?
Monterey has filed preliminary proxy materials with the Securities and
Exchange Commission. An excerpt of these materials, which provides information
about the Monterey nominees and platform, is enclosed. The full filing is
available at the world wide web site maintained by the SEC at www.sec.gov.
WHAT SHOULD I DO NOW?
Read Monterey's preliminary proxy materials. Wait for Monterey's definitive
proxy materials and proxy card, which will be mailed to you as soon as possible.
DO NOT RETURN THE WHITE PROXY CARD THAT MAY HAVE
BEEN FURNISHED TO YOU BY MANAGEMENT.
WAIT FOR MONTEREY'S BLUE PROXY CARD.
WHO CAN I CALL IF I HAVE QUESTIONS?
Please call our proxy solicitor MacKenzie Partners, Inc. at (800) 322-2885
(toll free).
We look forward to your support.
June 4, 1999
<PAGE>
PRELIMINARY COPY, SUBJECT TO COMPLETION, JUNE 1, 1999
MONTEREY NOMINEES FOR DIRECTORS
Mark T. Smith, age 45, is currently the President and Chief Operating
Officer of Oakwood Laboratories, L.L.C., located in Oakwood, Ohio. Oakwood is a
pharmaceutical and drug development company founded in April 1997 as Ben Venue
Therapeutics, LLC to commercialize technologies licensed from universities and
other research institutions. From February 1997 to December 1997, Mr. Smith was
Director of Business Development of Ben Venue Laboratories, Inc., Bedford, Ohio,
a privately owned generic and proprietary drug manufacturer and marketer. From
October 1991 to February 1997 his title was Manager of Business Development. In
such capacities, Mr. Smith initiated and shared responsibility for the
development of a five-year plan to develop and market generic and proprietary
products, and was responsible for the in-licensing of patented products and
technologies and the management of their commercial development. Mr. Smith
contributed significantly to changing the focus of the company from contract
manufacturing to product marketing, as a result of which the company increased
in value from approximately $50 million to in excess of $500 million at the time
of its sale in 1997. In April 1997 he became President of Ben Venue
Therapeutics, LLC, which subsequently was spun off from Ben Venue Laboratories,
Inc. and changed its name to Oakwood Laboratories, L.L.C. Mr. Smith has an
M.B.A. from the Stanford University Graduate School of Business (1980) and a
B.A. from Harvard College (1976). Mr. Smith's business address is 7670 First
Place, Oakwood, OH 44146.
George F. Murphy, Jr., age 50, is the Chairman and Chief Executive Officer
of AviGenics, Inc., the leading avian transgenesis animal company which he
founded in 1996. He is also a General Partner of Taraval Associates Seed Capital
Fund ("TASCF"), located in Menlo Park, California. TASCF is a venture capital
fund currently raising $25 million to invest in start-up and early-stage life
sciences companies. Mr. Murphy has extensive experience in the management of
early-stage ventures and in technology transfer, both as a founder and manager
of technology-driven companies and as a technology licensing professional. From
1989 through 1998, he was the owner of Taraval Associates, which provided new
venture development services to technology-based companies, primarily in the
life sciences area. In 1993 he assisted in the formation of Full Spectrum, Inc.,
an Iowa-based manufacturer of peripherals for medical lasers. In 1991 he managed
a technology acquisition program for LaserScope, Inc., a public company,
focusing on licensing opportunities to complement that company's product
portfolio and internal development programs. Mr. Murphy has served as the
director and significant equity owner of several privately-held companies
involved in life sciences, including several companies involved in the
commercialization of transgenic animals. Mr. Murphy received an M.B.A. from the
Stanford University Graduate School of Business (1980) and a B.Sc. in Chemical
Engineering from Cornell University (1975). Mr. Murphy's business address is 845
Oak Grove Avenue, Suite 220, Menlo Park, CA 94025.
Jay Delahanty, age 49, is the President of DelTech Management, Inc.,
located in Dedham, Massachusetts. DelTech is a venture capital and money
management firm specializing in early stage high tech companies with
approximately $ 7 million under management. DelTech manages some funds of The
Rockside Foundation and The R. Templeton Smith Foundation, which are members of
Monterey. Mr. Delahanty and his firm also provide management, strategic
partnering and fund raising consulting services to emerging high tech companies.
He is currently the director of five private, development stage companies. From
1981 through 1992, Mr. Delahanty was a General Partner of One Liberty Ventures
(formerly Morgan, Holland Ventures), a $100 million venture capital partnership
located in Boston, Massachusetts. He started his career at Arthur D. Little,
Inc. in San Francisco, California and Cambridge, Massachusetts, where he worked
as a consultant in the mechanical engineering section and the chemical
management section. Mr. Delahanty received an M.B.A. from the Stanford
University Graduate School of Business (1976) and a B.S. and M.S. in mechanical
engineering from the Massachusetts Institute of Technology (1972). Mr.
Delahanty's business address is 280 Bridge Street, Suite 202, Dedham, MA 02026.
Michel D. Marks, age 49, is the Chairman Emeritus of the New York
Mercantile Exchange (the "NYMEX"), New York, New York, and served as its
Chairman from 1978 to 1987. During that time, he was the youngest person ever to
head a futures market in the United States and led a major reorganization and
turnaround. At the time of his retirement, the NYMEX was the third largest
futures exchange in the world. Mr. Marks is currently a private investor,
teacher and consultant. He is the Chairman of the Board of Parris Securities
Corporation, a New York investment firm, and President of Silibis Corporation, a
privately held firm which provides consulting services in corporate strategy and
therapy. Mr. Marx received a B.A. from Princeton University. His business
address is P.O. Box 51, Rumson, NJ 07760.
<PAGE>
MONTEREY'S PLAN FOR ENHANCING STOCKHOLDER VALUE
Affiliates of Monterey have offered suggestions to management about actions
that could improve long-term profitability in a competitive industry with a view
towards increasing stockholder value. As the largest equity holders in the
Company, the members of Monterey have witnessed with dismay the steady decline
in the price of the Company's common stock. The members of Monterey have
concluded that the Board has not earned the confidence or attention of the
marketplace. Monterey believes that the cosmetic laser industry in which the
Company is active has significant opportunities and that the Company has
superior technology and resources to capture those opportunities for the benefit
of stockholders. Monterey also believes that the current Board is not properly
focused on utilizing the Company's resources to increase stockholder value in
the near term. If its nominees are elected, Monterey expects that the new Board
will take the following actions to redirect the Company's business towards
profitability and enhanced stockholder value:
o Commence a review of operations, technology and business opportunities with
the assistance of an expert consultant with experience in the laser
industry. Monterey expects that the new Board will promptly retain a
management and operations consultant with an engineering background to
undertake a thorough review of the Company's technology and operations. The
consultant would assist the Board in formulating short term and long term
strategic goals for the Company and would make specific recommendations for
effective utilization of technology, an improved sales and marketing
program, appropriate levels of research and development and allocation of
key management responsibilities. Monterey anticipates that the consultant
would draw on business models and experience in the related field of laser
surgery for vision correction, which has grown significantly in recent
years. Monterey anticipates that the new Board will retain existing
management pending the conduct of the strategic review.
o Undertake an immediate review of the Company's overhead expenses. Monterey
is of the view that the Company's costs remain excessive. Based upon
publicly available information about the Company, Monterey believes that
the Company's costs and administrative overhead can be meaningfully trimmed
without adversely affecting the Company's business or prospects.
o Commence an aggressive, well-conceived and disciplined share repurchase
program. Monterey believes that, at the currently depressed prices, the
Company's common stock is undervalued. Accordingly, Monterey expects that
the new Board would use a portion of the Company's cash available as a
result of the sale of its Star business to undertake a significant,
disciplined stock repurchase program. Such a program would provide market
liquidity for those stockholders who wish to sell their stock, and would
enhance value for stockholders who are longer term investors in the
Company. The members of Monterey do not currently expect to participate in
a stock repurchase program, although they reserve the right to change their
intention.
o Capitalize on valuable technology. Monterey believes that the Company's
most valuable asset is its superior technology. Key technologies should be
exploited at the lowest cost, and licensing out such promising technologies
to competitors or to other third parties is not necessarily the best
approach to building long term stockholder value. Monterey expects that the
strategic review referred to above will address the issue of how best to
develop the Company's key technologies.
o Improve communications with the market. Monterey believes that the Company
has not maintained effective communication with the investment community
and that as a result the Company has been undervalued in the market. In
particular, the current Board has not been successful in conveying to
investors the significance of the Company's technology and the prospects
for growth and development in the Company's industry. Monterey expects that
the new Board will make investor relations and concerns a priority, with a
view to enhancing market realization of the Company's value.
All four Monterey nominees have substantial experience in operating in,
evaluating and investing in technology-based companies. Mark Smith oversaw the
growth of a private pharmaceutical manufacturing company from approximately $50
million in value to approximately $500 million in value in the course of only
six years. George Murphy has been a technology consultant for over ten years,
has served on numerous boards and has experience in the laser industry. Jay
Delahanty has managed multi-million dollar
<PAGE>
technology investments for a large venture capital fund, has significant board
experience with technology companies and has advised growth companies in
management and strategic partnering issues. Michel Marks was the youngest
Chairman of the New York Mercantile Exchange, and in his tenure of almost ten
years supervised its growth to the third largest commodities exchange in the
world. Three of the nominees have graduate degrees in business administration.
In addition to their advanced business degrees, Messrs. Murphy and Delahanty
have superior academic backgrounds in science. All of the Monterey nominees have
demonstrated their ability to grow businesses and create long term value.
Collectively, the Monterey nominees bring to the Company seasoned expertise in a
wide variety of business environments and market climates.
Stockholders need to decide which slate of nominees is best suited to
implementing both short-term and long-term strategies focusing on the creation
and maintenance of stockholder value. Monterey believes that its nominees have
the experience and the track record that justify your vote and confidence.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
The following is a list of the names and stockholdings, if any, of persons
who may be deemed to be "participants" in Monterey's solicitation with respect
to the Company's annual meeting. These stockholdings reflect a one for seven
reverse share split recently effected by the Company, as reflected in its Report
on Form 10-Q for the period ended March 31, 1999: Mark Smith (359,022 shares of
Common Stock and 171,429 warrants to purchase shares of Common Stock at an
exercise price of $21 per share); The Rockside Foundation (515,515 shares of
Common Stock and 257,143 warrants to purchase shares of Common Stock at an
exercise price of $21 per share); The R. Templeton Smith Foundation (430,829
shares of Common Stock); Logg Investment Research, Inc. (858 shares of Common
Stock); Thomas O' Brien (2,586 shares of Common Stock); and Messrs. Murphy,
Delahanty and Marks, none of whom own any of the Company's securities.
