SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
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240.14a-12
DIOMED HOLDINGS, INC.
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1) Amount Previously Paid:
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4) Date Filed:
DIOMED HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2006
As a stockholder of DIOMED HOLDINGS, INC., a Delaware corporation (the
"Company"), you are cordially invited to be present, either in person or by
proxy, at the annual meeting of stockholders of the Company to be held at the
offices of our counsel, McGuireWoods LLP, 1345 Avenue of the Americas, 7th
Floor, New York, NY 10105 at 9:00 a.m., local time, on May 23, 2006, for the
following purposes:
1. To elect nine directors to serve until the next annual meeting of
stockholders, or until their successors are duly elected and
qualified;
2. To approve the issuance of shares of common stock in exchange for
preferred stock we issued on September 30, 2005 at an exchange rate
less than $2.17 per share if the antidilution provisions of the
preferred stock so require;
3. To approve the issuance of shares underlying the warrants we issued
on September 30, 2005 at an exercise price of less than $2.12 per
share if the antidilution provisions of the warrants so require;
4. To ratify the selection of BDO Seidman, LLP as the Company's
independent registered public accounting firm for 2006; and
5. To transact such other business as may properly come before the
meeting.
Your board of directors recommends that you vote in favor of each of the
proposals described in this proxy statement.
Only stockholders of record at the close of business on April 3, 2006 will
be entitled to receive notice of, and to vote, either in person or by proxy, at
the annual meeting and any adjournment or postponement thereof. The transfer
books will not be closed.
We hope you can attend the annual meeting in person. Even if you plan to
attend, however, we ask that you MARK, SIGN, DATE and RETURN the enclosed proxy
promptly in the enclosed self-addressed envelope, so that we may be assured of a
quorum to transact business. If you receive more than one proxy because you own
shares registered in different names or addresses, each proxy should be
completed and returned. Your proxy is revocable and will not affect your right
to vote in person if you are able to attend the meeting. Your attention is
directed to the attached proxy statement.
If you plan to attend the annual meeting, please note that this is a
stockholders' meeting and attendance will be limited to stockholders of the
Company or their qualified representatives. Each stockholder may be asked to
present valid picture identification, such as a driver's license or passport.
Stockholders holding stock in brokerage accounts ("street name" holders) must
bring a copy of a brokerage statement reflecting stock ownership as of the
record date. A qualified representative of a stockholder must have
identification as well as a properly executed proxy from the stockholder he or
she is representing. Cameras, recording devices and other electronic devices
will not be permitted at the annual meeting.
By Order of the Board of Directors,
/s/ David B. Swank
Secretary
Andover, Massachusetts
April 24, 2006
DIOMED HOLDINGS, INC.
ONE DUNDEE PARK
ANDOVER, MA 01810
978-475-7771
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2006
Please note that you can find additional information from various sources,
including the Securities and Exchange Commission's web site at
http://www.sec.gov. You may also read and copy any document the Company files
with the SEC at its public reference facilities. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its public reference
facilities. In addition, all of our recent SEC filings are available at
www.diomedinc.com.
GENERAL INFORMATION
The annual meeting of stockholders (the "annual meeting") of Diomed
Holdings, Inc., a Delaware corporation (the "Company"), will be held on May 23,
2006, at the time and place and for the purposes set forth in the Notice of
Annual Meeting of Stockholders accompanying this proxy statement. This proxy
statement is furnished in connection with the solicitation of proxies by our
board of directors on behalf of the Company in connection with the annual
meeting and any continuation or adjournment thereof. Accompanying this proxy is
a copy of our Annual Report on Form 10-KSB/A, including financial statements,
for the year ended December 31, 2005. We first distributed this proxy statement
and the enclosed form of proxy to our stockholders on or about April 25, 2006.
Description of Business
We refer you to our 2005 annual report for information concerning our
business, the history of our corporate structure and risk factors related to our
business. The 2005 annual report also contains our consolidated financial
statements for the year ended December 31, 2005.
Solicitation of Proxies
In addition to solicitation by mail, our authorized directors, officers,
employees and agents may solicit proxies in person, electronically (by facsimile
or email or through the Internet) or by telephone at no additional compensation.
We will also request record holders of common stock who are brokerage firms,
custodians and fiduciaries to forward proxy material to the beneficial owners of
such shares and, upon request, will reimburse such record holders for the costs
of forwarding the material in accordance with customary charges. We will bear
all the cost of all proxy solicitations.
Revocation of Proxies
Any proxy given pursuant to this solicitation may be revoked by filing
with, and the receipt by, the Secretary of the Company of a written revocation
or duly executed proxy bearing a later date. Providing us with your proxy does
not preclude the stockholder from voting in person at the annual meeting. The
persons named in the form of proxy solicited by the board of directors will vote
all proxies that have been properly executed by stockholders of record and
returned to the Company prior to the annual meeting.
Voting Proxies
If a stockholder specifies on its proxy a choice with respect to the
Proposal to be acted upon, the proxy will be voted in accordance with that
specification. IF NO DIRECTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAMED
IN THE PROXY WILL VOTE THE SHARES REPRESENTED THEREBY IN FAVOR OF THE ELECTION
OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT AND FOR EACH PROPOSAL
LISTED ON THE PROXY CARD. If necessary, and unless the shares represented by the
proxy are voted against the election of the nominees for director named in this
proxy statement and the Proposals described herein, the persons named in the
proxy also may vote in favor of a proposal to recess the annual meeting and to
reconvene it on a subsequent date or dates without further notice, in order to
solicit and obtain sufficient votes to approve the matters being considered at
the annual meeting.
Record Date
Holders of record of our common stock and our preferred stock at the close
of business on April 3, 2006 have the right to receive notice of and to vote at
the annual meeting. As of the record date, 19,448,728 shares of common stock
were issued and outstanding and 3,975,000 shares of preferred stock were issued
and outstanding.
Voting Rights
Each holder of record of common stock and preferred stock is entitled to
one vote for each share held with respect to each matter, except the election of
directors, to be voted upon at the annual meeting. With respect to the election
of directors, each stockholder shall be entitled to cast as many votes as shall
equal the number of votes that such stockholder would be entitled to cast (but
for the provision of cumulative voting), multiplied by the number of directors
to be elected. For example, a holder of eight shares of common stock would be
entitled to cast 72 votes in the election of directors, which is equal to the
eight shares held multiplied by the nine directors to be elected. A holder may
cast, in the holder's discretion, all of such holder's votes for one nominee or
may distribute the votes for any two or more nominees.
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Quorum
Presence in person or by proxy of the holders representing a majority of
the outstanding shares of capital stock entitled to vote at the annual meeting
will constitute a quorum. Shares for which the holder has elected to abstain or
has withheld authority to vote on a matter (including broker non-votes) will
count towards a quorum, but will not be voted. A "broker non-vote" is a vote
withheld by a broker on a particular matter in accordance with stock exchange
regulations because the broker has not received instructions from the customer
for whose account the shares are held.
Vote Required
In the case of Proposal 1, directors will be elected by a plurality of
votes cast. Each of the other Proposals will be approved if the holders of at
least a majority of the outstanding shares present at the meeting of our common
stock and our preferred stock, voting as a single class, vote to approve those
Proposals. Shares for which the holder has elected to abstain or has withheld
authority to vote on a matter will count towards a quorum, but will not count as
votes cast on such matter. An abstention from voting on Proposals 2 through 4
has the same legal effect as a vote against the matter, even though the
stockholder may interpret such action differently.
Interests of Certain Stockholders
As a result of the securities purchased by the investors in our September
30, 2005 preferred stock financing transaction, these investors have an interest
in the outcome of the stockholder's votes on Proposal 2 and Proposal 3, since,
in either case, approval of the Proposal will allow the possibility of a
reduction in the price at which the investor may acquire shares of our common
stock in the future. The terms and conditions of these securities are described
in further detail in our 2005 annual report, and the forms of the agreements
under which we issued these securities are included as exhibits to the Current
Report on Form 8-K that we filed on October 4, 2005 with the SEC.
We expect the investors holding shares of common stock and preferred stock
as of the April 3, 2006 record date for the annual meeting who are holders of
the preferred stock and warrants that we issued on September 30, 2005 to vote
their shares in favor of Proposal 2 and/or Proposal 3. As of the record date, we
believe that the investors who hold preferred stock we issued on September 30,
2005 owned at least approximately 1,309,000 shares of common stock as of the
record date, and these investors owned 3,975,000 shares of preferred stock as of
the record date. However, not all of the preferred stock held will be voted,
because under an agreement with the Company entered into at the time they
purchased the preferred stock, two affiliated investors, who collectively own
2,000,000 shares of preferred stock, agreed not to vote their preferred stock to
the extent that such votes would exceed 4.99% of the outstanding shares of
common stock (calculated assuming all of the preferred stock had been exchanged
for common stock). Therefore, although all shares of preferred stock held by
these two investors will count for purposes of determining a quorum, these
investors will only be able to vote up to approximately 1,170,000 shares of
preferred stock at the annual meeting. Accordingly, we believe that the
investors holding preferred stock may cast approximately 4,480,000 votes in
favor of Proposal 2. In addition, we believe that those investors who hold the
warrants we issued on September 30, 2005 hold approximately 1,363,000 shares of
common stock and 3,975,000 million shares of preferred stock as of the record
date. After giving effect to the voting agreement described above, we believe
that these investors may cast approximately 4,534,000 votes in favor of Proposal
3.
BENEFICIAL OWNERSHIP
The following table sets forth beneficial ownership information as of March 30,
2006 for our capital stock owned by:
- our chief executive officer and other executive officers whose
salary and bonuses for 2005 exceeded $100,000 and whose annualized
salary exceeds $100,000 (we refer to these persons as the Named
Executive Officers);
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- each director;
- our directors and executive officers as a group; and
- each person who is known by us to beneficially own more than 5% of
the outstanding shares of our common stock and other classes of
voting stock.
To our knowledge, each person, along with his or her spouse, has sole voting and
investment power over the shares unless otherwise noted.
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ---- -------------------- -------------------
Sidney Braginsky 36,250 (2) .2%
Gary Brooks 41,250 (3) .2%
A. Kim Campbell 44,250 (4) .2%
Joseph Harris 36,250 (5) .2%
Geoffrey Jenkins 96,083 (6) .5%
Peter Klein 40,250 (7) .2%
Edwin Snape 36,250 (8) .2%
David Swank 151,467 (9) .8%
James A. Wylie, Jr. 619,873 (10) 3.1%
Christopher Geberth 32,833 (11) .2%
Cary Paulette 73,750 (12) .4%
Kevin Stearn 92,500 (13) .5%
John J. Welch 77,500 (14) .4%
All officers and directors
as a group (13 persons) 1,378,506 6.7%
Beneficial Owners of More than 5% of the Company's common stock
Samuel Belzberg 1,714,260 (15) 8.8%
Zesiger Capital Group 1,672,786 (16) 8.6%
Galleon Healthcare Partners, L.P.
and affiliates 1,134,000 (17) 5.8%
Omicron Master Trust 2,524,912 (18) 11.5%
ProMed Partners, L.P.
and affiliates 2,120,401 (19) 10.3%
Gruber McBain and affiliates 1,403,100 (20) 6.8%
(1) Calculated pursuant to Rule 13d-3 of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended. Percentages shown for all
officers and directors as a group are calculated on an aggregate basis and
percentages shown for individuals are rounded to the nearest one-tenth of
one percent. The mailing address for each of the directors and officers is
c/o Diomed, Inc., One Dundee Park, Andover, MA 01810.
(2) Includes 36,250 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(3) Includes 1,000 shares held plus 40,250 shares of common stock issuable
upon the exercise of stock options vested through 5/31/06.
(4) Includes 44,250 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(5) Includes 36,250 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(6) Includes 96,083 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(7) Includes 40,250 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(8) Includes 36,250 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(9) Includes 10,000 shares held plus 141,467 shares of common stock issuable
upon the exercise of stock options vested through 5/31/06.
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(10) Includes 85,961 shares held plus 533,912 shares of common stock issuable
upon the exercise of stock options vested through 5/31/06.
(11) Includes 2,000 shares held plus 30,833 shares of common stock issuable
upon the exercise of stock options vested through 5/31/06.
(12) Includes 73,750 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(13) Includes 92,500 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(14) Includes 77,500 shares of common stock issuable upon the exercise of stock
options vested through 5/31/06.
(15) Includes 1,709,593 shares of common stock held by Gibralt US, Inc. and
4,667 shares issuable upon the exercise of fully vested stock options held
by Mr. Belzberg. Mr. Belzberg is an affiliate of Gibralt Capital Corp. and
Gibralt U.S. Inc., and therefore is deemed to beneficially own the
securities it holds. Mr. Belzberg's address is c/o Gibralt Capital Corp.,
1075 W Georgia Street, Suite 1075, Vancouver, BC V6E 3C9 Canada.
(16) Includes 1,672,786 shares of common stock as to which we believe Zesiger
has sole dispositive power, as investment adviser for Zesiger clients,
none of whom individually owns more than 5% of the common stock. Zesiger's
address is 320 Park Avenue, 30th Floor, New York, NY 10022.
(17) Includes 1,134,000 shares of common stock held. Galleon's address is 135 E
57th Street, 16th Floor, New York, NY 10022.
(18) Includes 965,940 shares underlying convertible debentures plus 1,558,972
shares of common stock underlying warrants. Omicron's address is 810
Seventh Ave., 39th Floor, New York, NY 10019.
(19) Includes 1,025,401 shares of common stock held, 775,000 shares of
preferred stock held and 320,000 shares of common stock underlying
warrants. Does not give effect to 9.9% limitations on ownership which
restrict the exchange of preferred stock and exercise of warrants.
ProMed's address is 230 Park Avenue, 9th Floor, New York, NY 10017.
(20) Includes 283,100 shares of common stock held, 800,000 shares of common
stock underlying preferred stock held and 320,000 shares of common stock
underlying warrants held. Does not give effect to 4.9% limitations on
ownership which restrict the exchange of preferred stock and exercise of
warrants. Gruber McBain's address is 50 Osgood Place, San Francisco, CA
94133.
RELATED TRANSACTIONS
During the past two years, we have entered into transactions with several
related parties. The transactions were completed to finance our operations and
to implement our business plans. We believe that each of these transactions were
on terms as favorable to it as the terms we could have obtained from independent
third parties.
PARTICIPATION BY RELATED PARTIES IN THE
SEPTEMBER 30, 2005 PRIVATE PLACEMENT FINANCING
Among the investors in the financing transaction that we completed on September
30, 2005 are ProMed Partners, L.P., ProMed Partners II, L.P., ProMed Offshore
Fund, Ltd. and ProMed Offshore Fund II, L.P. Prior to the September 30, 2005
financing, these entities collectively beneficially owned excess of 5% of our
outstanding common stock. These entities collectively invested a total of $2
million in our September 30, 2005 financing transaction, and accordingly, we
issued an aggregate of 800,000 shares of preferred stock and warrants to
purchase up to 320,000 shares of common stock to these entities. The ProMed
entities participated in the September 30, 2005 financing transaction on
identical terms as the other investors in that financing.
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One of our private placement agents in the September 30, 2005 financing, Musket
Research Associates, Inc., is a related party to the ProMed entities.
Specifically, Mr. David Musket is the president of Musket Research Associates
and he also has investment and voting control over the shares of our common
stock beneficially owned by the ProMed entities. With the prior approval of our
board of directors, we entered into a written placement agency agreement with
Musket Research Associates. Pursuant to that agreement, Musket Research
Associates raised $7 million in gross proceeds in the September 30, 2005
financing (including the $2 million invested by the ProMed entities), and we
paid Musket Research Associates commissions of $350,000 for its services in
connection with the September 30, 2005 financing. The rate of commission paid to
Musket Research Associates is the same rate as that we paid to our other private
placement agent in the September 30, 2005 financing, Roth Capital Partners, LLC,
which is not a related party. Roth Capital raised $3 million in gross proceeds
and accordingly we paid $150,000 in placement agent fees to Roth Capital. Our
board of directors determined that our agreement with Musket Research to be on
fair terms, as if it had been negotiated at arms-length with an unrelated party.
Among the holders of convertible debentures we issued in October 2004 to
investors who participated in a financing that we entered into on September 28,
2004 is Omicron Master Trust. As a result of the securities it acquired in that
transaction, Omicron became the beneficial holder of in excess of 5% of our
common stock. The terms of the debentures we issued to Omicron and the two other
debt investors in the 2004 private placement include negative covenants that
were implicated by the proposed financing that we ultimately completed on
September 30, 2005. As an inducement to and in consideration for the waiver of
these negative covenants, we issued common stock purchase warrants to Omicron
and the other debenture holders for the purchase of 200,000 shares of common
stock, on a pro rata basis, according to the principal amount of debentures
held. Of these, we issued 119,181 warrants to Omicron. Our board of directors
determined that the issuance of these warrants was fair consideration for the
waiver of rights by the debenture holders as if the same had been negotiated at
arms-length with unrelated parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons who own more than 10% of any class of our capital
stock to file with the SEC initial reports of ownership and reports of changes
in ownership and to provide copies of such reports to us. Based solely on a
review of the copies of such reports furnished to us and written representations
that no other reports were required to be filed during the fiscal year ended
December 31, 2005, we believe that all of the filing requirements applicable to
our officers, directors and beneficial owners of greater than 10% of our common
stock were complied with during the most recent fiscal year as to which we have
issued our annual report.
PROPOSAL 1
ELECTION OF DIRECTORS
Our directors are elected annually to serve until the next annual meeting
of stockholders, or until their successors are elected and have been qualified.
As a result, the terms of each of the nominees below will expire at the annual
meeting.
Although all nominees have indicated their willingness to serve if
elected, if at the time of the annual meeting any nominee is unable or unwilling
to serve, shares represented by properly executed proxies will be voted at the
discretion of the persons named in those proxies for such other person as the
board may designate.
Information about the nominees for election as directors appears below:
DIRECTOR PRINCIPAL OCCUPATION DURING
NAME AGE SINCE LAST FIVE YEARS AND DIRECTORSHIPS
- ---- --- -------- ---------------------------------
Geoffrey Jenkins 54 2002 Mr. Jenkins has been a director of the Company's wholly-owned subsidiary,
Diomed, Inc. since 2001 and a director of the Company since the February 14,
2002 merger. He is chairman of the Compensation Committee and the Nominating
- Corporate Governance Committee, and has been the chairman of the board of
directors of the Company since January 2003. He has over twenty-five years of
experience in building consumer and professional healthcare companies. Mr.
Jenkins is currently Vice President of W/W Operations for Inverness Medical a
leader in rapid diagnostic tests. In 2000, he founded and became the
president of UV-Solutions, LLC, a product development company. From 1998 to
2000, Mr. Jenkins held the positions of chief operating officer and then
president of MDI Instruments, which was acquired by Becton Dickinson in 1999.
Prior to MDI, Mr. Jenkins was Corp. Vice President of Operations for MediSense
which introduced the first biosensor-based blood glucose test for people with
diabetes. Jenkins holds a BS and BA from Clarkson University, awarded in 1976.
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Sidney Braginsky 68 2004 Mr. Braginsky has been a director since January 2004. Mr. Branginsky has in
excess of thirty years of executive experience in scientific and consumer
products. During the past five years and prior thereto, Mr. Braginsky has
held a variety of executive level positions. Currently, Mr. Braginsky is the
chairman of DoubleD Venture Fund, LLC, chairman of Atropos Technologies, LLC,
chief executive officer and president of Ineedmd, Ltd. and chairman and chief
executive officer of Digilab, LLC, a manufacturer and marketer of spectroscopy
instruments. From 2001 through 2003, Mr. Braginsky was president of
Mediscience Corp., a designer and developer of diagnostic medical devices.
From 1994 through 2000, he was president and chief operating officer of
Olympus America, Inc., which he joined in 1970. During his tenure at Olympus
America, a business unit of the global Japanese company, Mr. Braginsky built
Olympus America into a billion dollar business unit focused on optical
products. Mr. Braginsky currently serves as a director of Noven
Pharmaceutical Corp. (where he is a member of the Audit Committee), a director
of Estech Cardiology and a director of E.O.S. Electro-Optical Systems. Mr.
Braginsky is also chairman of the board of City University of New York, Robert
Chambers Laboratory, chairman of International Standards Organization Optics
and Electro-Optical Systems and a board member of several other organizations
in the scientific and educational community. Mr. Braginsky attended the City
University of New York.
Gary Brooks 72 2003 Mr. Brooks has been a director of the Company since March 2003 and is a member
of the Audit Committee. Mr. Brooks is a nationally recognized turnaround
consultant and crisis manager. During the past five years and prior thereto,
Mr. Brooks has principally served as chairman and chief executive officer of
Allomet Partners, Ltd. where, since 1985, he has provided turnaround
consulting and interim management services to more than 400 companies.
Currently, Mr. Brooks also serves as the Managing Director of the Central Fund
of the Community Development Venture Capital Alliance. The Fund invests in
enterprises that are expected to yield both financial and social returns to
their communities. He has over thirty-five years of diversified executive
management experience. Mr. Brooks earned a BS in Biochemical Engineering and
Industrial Management from Massachusetts Institute of Technology in 1955 and
an MS in Chemical Engineering and Operations Research from the University of
Rochester in 1959.
A. Kim Campbell 59 2002 Ms. Campbell has been a director of the Company since March 2002, and is a
member of the Compensation Committee. Ms. Campbell served as Canada's 19th
(and first female) Prime Minister in 1993. She was also Canada's Minister of
Justice, Attorney General and Minister of National Defense. Currently, Ms.
Campbell is the Secretary General of the Club of Madrid, an organization which
promotes democracy and is comprised of 70 former heads of state and
government. She maintains her long-standing relationship with Harvard
University by serving as an Honorary Fellow to the Center for Public
Leadership at the John F. Kennedy School of Government. In 2000, she
completed a four-year term as Consul General of Canada in Los Angeles,
California, in which she fostered trade in the high-tech and biotechnology
industries. Ms. Campbell holds a range of prestigious positions, including
Senior Fellow of the Gorbachev Foundation of North America in Boston,
Massachusetts, member of the International Council of the Asia Society of New
York and Chair Emerita of the Council of Women World Leaders, an organization
of current and former Presidents and Prime Ministers. Ms. Campbell holds a BA
and an LLB from the University of British Columbia, awarded in 1969 and 1983,
respectively, performed doctoral work in Soviet government at the London
School of Economics from 1970 to 1973 (ABD), and holds seven honorary
doctorates.
Joseph Harris 59 2004 Mr. Harris has been a director of Diomed since February 2004. Mr. Harris is
currently a partner in Trillium Lakefront Partners, III, an early stage and
growth equity venture capital company. He has also served as senior
vice-president and director of corporate strategy & development for Smithkline
Beecham, where his responsibilities included management of corporate
acquisitions, divestitures, and joint ventures; Eastman Kodak, as managing
director of business development and director of Licensing Technology
Development; and senior vice president, corporate development at Cantel
Medical Corp, a publicly-traded medical device company. Mr. Harris was a
certified public accountant with Coopers & Lybrand and practiced law in the
State of New York with the Mackenzie law firm. Mr. Harris also serves on the
board of directors of Ortho Vita, Inc., a manufacturer and marketer of
bio-materials. Mr. Harris received his bachelors degree in Accounting and his
MBA from Syracuse University School of Business. He earned his Juris Doctor
degree from the Syracuse University School of Law.
Peter Klein 53 2002 Mr. Klein has been a director of the Company's wholly-owned subsidiary,
Diomed, Inc., since 1999 and a director of the Company since the February 14,
2002 merger. Mr. Klein served as the president and chief executive officer of
Diomed, Inc. from June 1999 and of the Company since the merger through
January 2003, at which time he resigned from the offices of president and
chief executive officer, but remained a director. Mr. Klein is currently
president and chief executive officer of Enefco International Inc., a
manufacturer of custom die cut and assembly work products. For thirteen years
prior to joining Diomed, Mr. Klein has served as an executive in the medical
image processing business, first as founder, president and co-chairman of
Tomtec Imaging Systems, then as president and chief executive officer of
Medison America, Inc., a subsidiary of the Korean Group Medison.
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Edwin Snape, Ph.D. 66 2004 Dr. Snape has been a director since January 2004. Dr. Snape has extensive
experience in a broad range of medical-related fields. His experience in the
field of medical devices represents a broad range of technologies and markets,
including wound drainage, blood transfusion, ultrasound, MRI, implantable
devices, drug delivery, vascular access, organ isolation, arterial
fibrillation, cardiac monitoring, temperature management and thrombectomy. In
the diagnostic field, Dr. Snape's experience includes alcohol and drug
testing, diabetes, cardiovascular disease, haemotology testing and
antibody-based diagnostic testing. His experience in the pharmaceutical field
includes drug delivery, CNS disorders, viral and bacterial diseases, GI tract
disorders, human tissue and organ regeneration and oncology. During the past
five years and prior thereto, Dr. Snape has been a partner of New England
Partners, a venture capital company based in Boston, Massachusetts founded in
1995. He was either the founder or management partner in nine private equity
funds, and has been involved in numerous investments, including over 32
investments in the health care sector, fourteen of which completed initial
public offerings and seventeen of which were either merged or acquired. Dr.
Snape earned Bachelor of Science and Ph.D. degrees from University of Leeds,
England.
David Swank 48 2003 Mr. Swank has been a Director of the Company since March 2003 and served as
Chairman of the Audit Committee from that time until he became the Company's
Chief Financial Officer, effective September 1, 2003. Mr. Swank is President
and Founder of BrookstoneFive, Inc., a private consulting firm engaged in
corporate strategy formulation and capital acquisition. Since 1997, Mr. Swank
has principally been the President of BrookstoneFive, Inc., although from 2001
to the beginning of 2003, he also served as Executive Vice President and Chief
Financial Officer of Melard Technologies, Inc., a New York-based, privately
held high-tech developer of wireless computing devices. From 1994 to 1996, he
served as Executive Vice President - Corporate Development and Senior Vice
President - Chief Financial Officer at Telxon Corporation, a publicly traded
developer of mobile computing devices, and from 1989 to 1992; he was Regional
Controller for PepsiCo Foods International (PFI), the international snack food
subsidiary of PepsiCo, Inc. Mr. Swank's other experience includes Chief
Financial Officer at AVM Systems, Inc., a high-tech developer of Command and
Control Systems, and Audit Manager at Peat, Marwick, Mitchell & Company
(currently KPMG), an international "Big Four" accounting firm. Mr. Swank
earned a BS in Business Administration in the honors accounting program at The
Ohio State University in 1980 and an MBA with a concentration in Finance at
Southern Methodist University in 1989.
James A. Wylie, Jr. 67 2003 Mr. Wylie has been a Director of the Company since January 2003, at which time
he also became the Company's President and Chief Executive Officer. Prior to
joining the Company, Mr. Wylie acted as a consultant from 1994 through 2002,
providing strategic advisory and interim executive management services to
institutional investors and operating companies in the medical device, health
care, chemical and telecommunications industries. Mr. Wylie has more than 30
years of global executive management experience as a Division President, Group
Executive, President and Chief Executive Officer of both private and public
corporations. Mr. Wylie holds a BS in Chemistry from Bates College.
None of the persons named above are related by blood, marriage or adoption
to any other director nominees or any of our executive officers.
Director Nomination by Stockholders
In accordance with our by-laws, a stockholder who is interested in
nominating a person to the board (or making any other proposal to the
stockholders) should submit in writing to the Secretary of the Company timely
notice of such nomination (or stockholder proposal). Any such notice must be
given either by personal delivery or by United States mail, postage prepaid, not
less than 30 nor more than 90 days in advance of the annual meeting; provided
however, that in the event we give less than 40 days' notice of the date of the
meeting, notice of such nomination (or stockholder proposal) must be received
not later than the close of business on the tenth day following the day on which
our notice of the date of the meeting was mailed or otherwise given. The
contents of a stockholder notice of director nomination (or other proposal) must
be as specified in our by-laws, a copy of which may be obtained by any
stockholder who directs a written request for the same to the Secretary of the
Company.
-7-
Communicating with the Board of Directors
The board of directors will give appropriate attention to written
communications received from stockholders and will respond if and as the board
in its discretion deems appropriate. The chairman of the board of directors is
primarily responsible for monitoring communications from stockholders and for
referring matters submitted by stockholders as the chairman, in consultation
with our outside legal counsel, deems appropriate. Generally, the chairman will
refer to the board communications from stockholders that relate to important
substantive matters and include suggestions, comments or information that the
chairman considers important for the directors to know. Communications related
to corporate governance and long-term corporate strategy are generally more
likely to receive the attention of the board than are communications relating to
ordinary business affairs, personal grievances and matters to which we tend to
receive repetitive or duplicative communications.
Stockholders who wish to send communications to the board of directors
should address such communications in writing to the Board of Directors, c/o
Investor Relations, Diomed Holdings, Inc., One Dundee Park, Andover, MA 01810.
CERTAIN INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
Committees
Our board of directors has established three standing committees: an Audit
Committee, a Nominating-Corporate Governance Committee (which we refer to as the
Nominating Committee in this discussion) and a Compensation Committee.
The Audit Committee members are Gary Brooks, a member since 2003 and the
Chairman until January 2004; Sidney Braginsky, a member since January 2004; and
Joseph Harris (Chairman), a member since January 2004 and successor to Mr.
Brooks as Chairman. The Audit Committee is charged with overseeing that
management has (a) maintained the reliability and integrity of the accounting
policies and financial reporting and disclosure practices of the Company; (b)
established and maintained processes to assure that an adequate system of
internal control is functioning within the Company; and (c) established and
maintained processes to assure compliance by the Company with all applicable
laws, regulations and Company policies. The Audit Committee operates pursuant to
a charter adopted by the board, which is attached to this proxy statement as
Appendix A. The 2005 report of the Audit Committee is included below.
In choosing the board's Audit Committee members, the board of directors
considered a number of factors, including the business experience and financial
expertise of proposed Audit Committee members. At the time they became
directors, the board of directors determined that Gary Brooks and Joseph Harris
each satisfied the Securities and Exchange Commission's definition of "Audit
Committee financial expert" contained in the SEC's rules. It is our practice
that the Audit Committee shall approve all audit, audit-related, tax fees and
all other fees in advance of the performance of such services.
The members of the Nominating Committee are Geoffrey H. Jenkins
(chairman), Sidney Braginsky and A. Kim Campbell. The principal functions of the
Nominating Committee are to consider the credentials of prospective directors
and executive officers and make recommendations to the board with respect to
filling vacancies; and to develop and recommend to the board corporate
governance principles. The Nominating Committee operates pursuant to a charter
adopted by the board, which is attached to this proxy statement as Appendix B.
The board established the Nominating Committee in January 2004, and it expanded
the role of the Nominating Committee and adopted a charter in February 2005. The
2005 report of the Nominating Committee is included below.
The members of the Compensation Committee are Geoffrey H. Jenkins
(chairman), A. Kim Campbell and Dr. Edwin Snape. The functions of the
Compensation Committee include reviewing, evaluating and approving the amount,
design and implementation of compensation programs for officers and key
personnel; making awards under and administering the Company's stock incentive
programs; reviewing and making recommendations with respect to senior management
organization and reviewing the Company's programs for attracting and
compensating management personnel at lower and middle levels. The 2005 report of
the Compensation Committee is included below.
-8-
Meetings
During 2005, the board of directors held nine meetings, the Audit
Committee held five meetings, the Compensation Committee held eight meetings and
the Nominating Committee held two meetings. No director attended less than 75
percent of the aggregate number of meetings of the board and committees on which
he or she served. The board of directors also takes action from time-to-time on
specific matters by adopting resolutions on various matters by unanimous written
consent in lieu of a meeting.
Director Compensation
Directors who are also our employees do not receive separate compensation
for their service as directors, although we may award stock options or other
compensation in our discretion. We pay an honorarium to directors who are not
also our employees (see the Compensation Committee Report, below), and we
typically award stock options or other stock-based compensation in our
discretion. The board retains discretion to award other forms of compensation to
directors. We also reimburse non-employee directors for reasonable out-of-pocket
expenses incurred in attending directors' meetings.
AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors provided the following
report for 2005:
The Audit Committee acts under a written charter adopted by the board of
directors. The Audit Committee's primary function is to assist the board of
directors in its oversight of the Company's financial reporting process.
Management is responsible for the preparation, presentation and integrity of the
Company's financial statements; accounting and financial reporting principles;
internal controls; and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Our independent registered public
accounting firm, BDO Seidman, LLP, is responsible for performing an audit of our
consolidated financial statements in accordance with standards established by
the Public Company Accounting Oversight Board (United States).
In performing its oversight role, the Audit Committee has reviewed and
discussed the audited financial statements with management and the Company's
independent registered public accounting firm, BDO Seidman, LLP. The Audit
Committee has also discussed with the independent registered public accounting
firm the matters required to be discussed by Statement on Auditing Standards No.
61, Communication with Audit Committees, and has received the written
disclosures and the letter from the independent registered public accounting
firm required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. The Audit Committee has considered whether
the provision of non-audit services (none of which related to financial
information systems design and implementation) by the independent registered
public accounting firm is compatible with maintaining the registered public
accounting firm's independence and has discussed with BDO Seidman its
independence. Based on the review and discussions described in this report, and
subject to the limitations on its role and responsibilities described below and
in its charter, the Audit Committee recommended to the board of directors that
the audited financial statements be included in the Company's Annual Report on
Forms 10-KSB and 10-KSB/A for the fiscal year ended December 31, 2005 filed with
the SEC.
Mr. Brooks and Mr. Harris each have expertise in accounting and auditing
matters, and the board of directors determined that they each satisfy the SEC's
definition of "audit committee financial expert." Each member of the Audit
Committee during 2005 was an "independent director" (as defined under AMEX
rules).
Joseph Harris (Chairman)
Sidney Braginsky
Gary Brooks
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the board of directors provided the
following report for 2005:
The Compensation Committee is responsible for determining the nature and
amount of compensation to be paid to the Company's executive officers, including
establishing performance-based criteria and goals related to compensation,
administering the Company's equity incentive and bonus plans, making grants of
awards under such plans, and approving agreements with the chief executive
officer and the other executive officers. The members of the Compensation
Committee are "independent directors" (as defined under AMEX rules).
-9-
Compensation Policy. The primary goal of the Compensation Committee when
assessing compensation alternatives is to attract and retain highly qualified
executive officers and key employees in an effort to enhance shareholder value.
The Company intends to realize this goal by providing competitive compensation
and permitting executive officers to take an ownership stake in the Company
commensurate with their relative levels of seniority and responsibility. The
Compensation Committee performs a general review each year of the Company's
executive compensation.
With respect to 2005, the Compensation Committee's primary goal was to
provide the executive officers with total compensation that, based on individual
and Company performance over an appropriate period of time, was commensurate
with the total compensation for executives with comparable positions at peer
companies.
The Compensation Committee addressed hiring of executive officers and
highly compensated employees (those with annual compensation of $100,000 or
more), as well as other executive compensation matters applicable to specific
persons, on an individual basis during 2005. No new hires came before the
Compensation Committee for consideration during 2005. The executive compensation
matters that the Compensation Committee considered during 2005 are described
below.
The Compensation Committee also recognizes that stock-based compensation
is an important component of overall compensation for directors, officers,
employees and others who provide services to the Company. In 2003, we adopted a
stock-based incentive plan, the 2003 Omnibus Incentive Plan, to provide for
stock-based compensation to be awarded to these persons. The 2003 Omnibus Plan
provided for the issuance of up to 1,600,000 (as adjusted to reflect the 1:25
reverse stock split that became effective June 17, 2004) shares of common stock
(including stock options) as incentive grants. The stockholders approved the
2003 Omnibus Plan at our 2003 annual meeting of stockholders in November 2003.
The Compensation Committee determined that the amount of shares available
for grant under the 2003 Omnibus Plan (approximately 60,000 as of March 23,
2005) was insufficient for future grants of stock-based compensation and that
the Company would be well advised to grant in the future. Therefore, the
Compensation Committee recommended to the board of directors an amendment to the
2003 Omnibus Plan to increase by 1,500,000 the number of shares available for
grant. The board concurred, and proposed to the Company's stockholders an
increase in shares available under the 2003 Omnibus Plan to 3,100,000 at its
2005 annual meeting of stockholders. The Stockholders approved this proposal and
accordingly, the Company increased the number of shares available under the 2003
Omnibus Plan to 3,100,000 shares.
In 2005, the Company sought to achieve a mix of the various forms of
compensation noted above to properly compensate and motivate its executives on
an individual basis commensurate with their relative levels of seniority and
responsibility. A variety of factors were considered in arriving at the amount
and mix of compensation paid or awarded to the Company's executive officers and
other highly compensated employees. Key factors in the assessment of the
compensation of the Company's executive officers were the Company's overall
performance and their respective roles in the achievement of individual and
Company goals during 2005.
Base Salary. The Company's philosophy with respect to setting base salary
is generally to compensate its executive officers with reasonable current income
on a competitive basis. Accordingly, the Company increased the salaries of three
executive officers during 2005, as follows:
Amount of Annual Base Salary
Name and Title Increase after Increase
-------------- --------- ------------------
James A. Wylie, Jr., $25,000 $355,000
Chief Executive Officer
David B. Swank, $15,000 $215,000
Chief Financial Officer
Christopher Geberth, $ 9,000 $134,000
Vice President, Finance
-10-
Management Incentive Program ("MIP") Payments. The Company agreed to pay
cash MIP payments to certain officers in 2006 as recognition of their
performance and their contributions to the Company's overall performance in
2005. These cash MIP payments are as follows:
Total Amount of MIP
Payments Awarded
for 2005 Performance
Name and Title (Paid in 2006)
-------------- --------------------
James A. Wylie, Jr., $139,000
President and CEO
David B. Swank, $71,000
CFO
Kevin Stearn, $31,000
Managing Director, Diomed Ltd.
Christopher Geberth, $33,500
VP, Finance
Cary Paulette, $71,000
VP, North American Sales
John Welch, $44,000
VP, North American Marketing
The Company also awarded MIP payments in 2005 to other key managers based
on Company and personal performance goals achieved.
Equity-Based Incentive Compensation. The Company's equity-based incentive
compensation granted in 2005 was in the form of stock option grants. The
Committee believes that reliance upon such incentives is advantageous to the
Company because it fosters a long-term commitment by the recipients to the
Company, aligns the interests of management with investors and does not require
a cash outlay by the Company. During the fiscal year ended December 31, 2005,
the Company granted stock options to directors and named executive officers
(including highly compensated employees) under the 2003 Omnibus Incentive Plan
(except where otherwise noted):
Name and Title Number of Options Date Granted Exercise Price per Share
- -------------- ----------------- ------------ ------------------------
James A. Wylie, Jr., President 182,000 1/10/05 $4.20
and CEO; Director (27,076 granted under 1998
Option Plan, 23,732 granted
under 2001 Option Plan and
131,192 granted under 2003
Omnibus Plan)
David B. Swank, 56,800 1/10/05 $4.20
CFO and Secretary; Director
Geoffrey Jenkins, 20,000 1/10/05 $4.20
Director (Chairman)
Sidney Braginsky, 15,000 1/10/05 $4.20
Director
Gary Brooks, 15,000 1/10/05 $4.20
Director
A. Kim Campbell, 15,000 1/10/05 $4.20
Director
-11-
Joseph Harris, 15,000 1/10/05 $4.20
Director (Audit Committee
Chairman)
Edwin Snape, 15,000 1/10/05 $4.20
Director
Peter Klein, 15,000 1/10/05 $4.20
Director
Kevin Stearn, 43,600 1/10/05 $4.20
Managing Director, Diomed Ltd.
Christopher Geberth, 10,000 1/10/05 $4.20
VP, Finance
Cary Paulette, 50,000 1/10/05 $4.20
VP, North American Sales (15,000 under 2003 Omnibus
Plan, 35,000 outside of plan
as a new hire)
John Welch, 39,400 1/10/05 $4.20
VP, North American Marketing
Accelerated Vesting of Stock Options. On December 16, 2005, with the
approval of the Compensation Committee, our board of directors determined to
accelerate the vesting of our unvested stock options previously awarded to our
directors, officers and employees pursuant to our 2003 Omnibus Incentive Plan,
2001 Stock Option Plan and 1998 Stock Option Plan with an exercise price greater
than $4.00 per share. The closing price of the Company's common stock on the
American Stock Exchange on that date was $1.90. As a result of this
acceleration, the Company will recognize no compensation expense for options to
acquire approximately 574,000 shares of common stock (representing approximately
3% of the common stock outstanding on December 16, 2005) which would have vested
during the fiscal years ended December 31, 2006 and 2007 had the Company not
accelerated vesting of these options. As a result of these actions, the Company
eliminated approximately $1,657,000 of after-tax compensation expense relating
to employee stock options that would have been recognized after January 1, 2006.
Compensation of CEO. Effective December 28, 2003, we entered into a new
employment agreement with James A. Wylie, Jr., under which he became the Chief
Executive Officer of the Company and which, among other things, extended for one
year (until December 31, 2005) the term of his employment with the Company.
Effective February 15, 2005, we further extended the term of Mr. Wylie's
employment, increased his salary and made other changes to the terms of his
employment. We also modified certain terms of the employment of several other
executive officers on February 15, 2005. (See "Employment Agreements," below,
for a description of these changes). Effective January 11, 2006, the Company
increased Mr. Wylie's annual base salary to $367,425.
Compensation of Directors. With the approval of the Compensation Committee
and the board of directors, in 2004 the Company implemented a program of
providing honorariums to directors to whom we do not also pay a salary. We
instituted this program because we believed it was appropriate to provide
monetary compensation to our outside directors for their efforts on behalf of
the Company, and would assist the Company in attracting and retaining qualified
persons to act as directors and to serve on committees of the board. These
stipends are $1,000 per face-to-face meeting, plus annual stipends, as follows:
Position Amount per Annum
-------- ----------------
Director $12,000
Chairman of Board of Directors $10,000
Audit Committee Chairman $10,000
Audit Committee Member $ 5,000
Compensation Committee Chairman $ 5,000
Compensation Committee Member $ 2,500
-12-
Under this program, the Company awarded stipends to non-employee directors
in the aggregate amount of $159,000 during 2005.
Benefits. The Company seeks to provide benefits to its executives and
other employees that are commensurate with those provided by other companies
comparable to us, in a cost-effective manner. In particular, the Compensation
Committee determined that is imperative to provide adequate director and
liability insurance in order to attract and retain qualified persons to serve as
our directors and officers.
Geoffrey Jenkins (Chairman)
A. Kim Campbell
Edwin Snape, Ph. D.
NOMINATING COMMITTEE REPORT
The Nominating Committee operates under a charter the board of directors
adopted in February 2005, at which time it expanded the functions of the
Nominating Committee to include certain corporate governance matters and to
require the members. After adoption of the charter in February 2005, the board
named A. Kim Campbell, an independent director, as the third member of the
Nominating Committee, to join Mr. Jenkins (Chairman) and Dr. Snape who had been
members of the Nominating Committee since January 2004. The members of the
Nominating Committee have staggered terms of three years. Mr. Jenkins' term is
through 2008, Ms. Campbell's term is through 2007 and Dr. Snape's term is
through 2006.
The purposes of the Nominating Committee are to identify individuals who
are qualified to serve on the Company's board of directors, to recommend to the
board to select, the director nominees for the next annual meeting of
stockholders and to develop and recommend to the board corporate governance
principles with respect to the Company. The Nominating Committee also formerly
administered a stockholders' agreement with certain investors, but that
stockholders' agreement terminated by its terms during 2005.
Candidates will be identified by the Nominating Committee on the basis of
the anticipated needs of the board when vacancies on the board occur or are
contemplated, through various sources, including management, directors,
stockholders and stockholders with contractual rights to designate nominees for
appointment and election. The Nominating Committee's policy with regard to
candidates designated by stockholders is to consider such candidates and to
evaluate the merits of such candidates on the basis of their credentials,
skills, character (including demonstrated ethical standards), experience
(including experience in the medical device industry) and diversity that they
would bring to the board of directors, among other factors. The Nominating
Committee would also consider the independence and other appropriate
characteristics of the candidate under AMEX and SEC rules (including any
specific minimum criteria that are required of directors) and the board's needs
as currently constituted.
The Nominating Committee will consider candidates suggested by
securityholders in any manner consistent with the Company's by-laws and any
applicable agreement to which the Company is a party. Generally, a
securityholder who wishes to suggest a candidate to the Nominating Committee
will contact the Company's secretary in writing and include the name and address
of the securityholder as it appears in the Company's books and records, the
number and class of each class of securities beneficially owned, the name,
address and biographical information of the suggested nominee, an indication
that the suggested nominee would be willing to serve as a director and a
description of any arrangements, understandings or relationship between the
securityholder and the suggested nominee. Any such candidates suggested by
securityholders will be evaluated on the same basis as candidates identified by
the Nominating Committee, except to the extent that the Company may be bound by
any agreement to put forth for appointment or election any designees of any
securityholders, although the Nominating Committee and the board of directors
will generally retain in the board ultimate discretion as to whether to nominate
or appoint any director candidate under any such agreement.
-13-
No candidates came before consideration of the Nominating Committee in
2005, as no changes in the board of directors occurred or were contemplated. The
Nominating Committee determined that there was no need to modify its charter
during 2005. The Nominating Committee recommended the nomination of each of the
nine incumbent directors for re-election at the 2006 annual meeting of
stockholders.
Geoffrey Jenkins (Chairman)
Edwin Snape, Ph.D
A. Kim Campbell
CODE OF ETHICS AND CODE OF BUSINESS CONDUCT
In April 2004, our board of directors adopted a formal policy regarding
ethical requirements imposed upon the Company's chief executive officer and
those officers engaged in financial management. Also in April 2004, our board of
directors adopted a formal policy regarding the business standards to which all
of the Company's directors, employees and consultants will be held.
We have filed with the Securities and Exchange Commission copies of the
Code of Ethics and the Code of Business Conduct, and we have posted them on our
website, www.diomedinc.com. We will provide copies of the Code of Ethics and/or
Code of Business Conduct free of charge upon written request directed to: Diomed
Holdings, Inc., One Dundee Park, Andover, MA 01810, Attention: Corporate
Secretary, or by oral request to the Corporate Secretary at telephone
978-475-7771.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation that we paid for services rendered in all capacities for the fiscal
years ended December 31, 2004 and 2005 and by those individuals serving as our
chief executive officer during 2004 and 2005 and our other executive officers
serving on December 31, 2005 whose salary and bonuses for 2005 exceeded
$100,000. We refer to these officers as the "Named Executive Officers." This
information is unaudited.
Long Term
Compensation
Awards
Securities
Name and Underlying All Other
Principal Fiscal Year Annual Compensation Options Compensation
Position End Salary Bonus (No. Shares)(1) (2)
- -----------------------------------------------------------------------------------------------------------------------------
James Wylie (3) 12/31/04 $330,000 $50,000 287,412 $0
12/31/05 $355,000 $66,000 82,000 $0
David Swank (4) 12/31/04 $177,544 $83,300 70,000 $0
12/31/05 $215,000 $42,000 56,800 $0
Kevin Stearn (5) 12/31/04 $171,000 $32,000 34,000 $0
12/31/05 $195,900 $32,000 43,600 $0
John Welch (6) 12/31/04 $165,500 $25,000 28,000 $0
12/31/05 $175,500 $25,000 39,400 $0
Christopher Geberth (7) 12/31/04 $ 80,000 $ 0 30,000 $0
12/31/05 $130,625 $20,000 10,000 $0
Cary Paulette (8) 12/31/04 $ 11,330 $ 0 50,000 $0
12/31/05 $184,000 $30,000 50,000 $0
-14-
(1) During fiscal 2005 and 2004, neither Diomed Holdings, Inc. nor Diomed,
Inc. granted any restricted stock awards or stock appreciation rights or
made any long-term incentive plan payouts to any Named Executive Officer.
Numbers of shares are adjusted to reflect the 1:25 reverse split we
implemented effective June 17, 2004.
(2) Includes all other annual compensation and all other long-term
compensation. Perquisites are not included if the aggregate amount is less
than the lesser of $50,000 or 10% of salary and bonus.
(3) Pursuant to terms of Mr. Wylie's employment agreement, Mr. Wylie's annual
salary was $355,000. We granted options to purchase 182,000 shares of
common stock to Mr. Wylie in 2005. We paid Mr. Wylie a bonus of $66,000 in
2005 in recognition of his services performed in 2004, and we agreed to
pay Mr. Wylie a bonus of $139,000 in 2006 in recognition of his services
performed in 2005. Effective January 11, 2006, we increased Mr. Wylie's
annual base salary to $367,425. See "Employment Agreements," below.
(4) Mr. Swank became a director in March 2003 and served on our Audit
Committee from that time until September 1, 2003, when we appointed Mr.
Swank as chief financial officer on a consulting basis. We paid Mr. Swank
consulting fees of $215,000 during 2005. We granted options to purchase
56,800 shares of common stock to Mr. Swank in 2005. We also paid Mr. Swank
an aggregate bonus of $42,000 in 2005, in recognition of his other
services performed in 2004, and we agreed to pay Mr. Swank a bonus of
$71,000 in 2006 in recognition of his services performed in 2005.
(5) Mr. Stearn began employment in February 2000. All figures expressed as
converted into US dollars from British Pounds Sterling. Mr. Stearn's
annual salary was increased from BPS 91,000 to BPS 96,000 effective
September 1, 2004. We granted options to purchase 43,600 shares of common
stock to Mr. Stearn in 2005. We paid Mr. Stearn a bonus of $32,000 in 2005
in recognition of his services performed in 2004. We agreed to pay Mr.
Stearn a bonus of $31,000 in 2006 in recognition of his services performed
in 2005.
(6) Mr. Welch became our vice president of North American marketing in October
2002. We increased Mr. Welch's annual salary to $175,000 effective October
1, 2004. We granted options to purchase 39,400 shares of common stock to
Mr. Welch in 2005. We paid Mr. Welch a bonus of $25,000 in 2005 in
recognition of his services performed in 2004, and we agreed to pay Mr.
Welch a bonus of $44,000 in 2006 in recognition of his services performed
in 2005.
(7) Mr. Geberth became our vice present of finance in May 2004, at an
effective annual salary of $125,000. Mr. Geberth's salary was increased to
$134,000 effective May 17, 2005. We granted options to purchase 10,000
shares of common stock to Mr. Geberth in 2005, and we paid Mr. Geberth a
bonus of $20,000 in 2005 in recognition of his services performed in 2004.
We also agreed to pay Mr. Geberth a bonus of $33,500 in 2006 in
recognition of his services performed in 2005.
(8) Mr. Paulette became our vice president of North American sales in December
2004, at an effective annual salary of $175,000. We granted options to
purchase 50,000 shares of common stock to Mr. Paulette in 2005, and we
paid Mr. Paulette a bonus of $30,000 in 2005 as an incentive to join the
Company. We also agreed to pay Mr. Paulette a bonus of $71,000 in 2006 in
recognition of his services performed in 2005.
EQUITY COMPENSATION PLAN INFORMATION
As of December 31, 2005, 1,504,644 shares were available for issuance
under our 2003 Omnibus Plan, 2,542 shares were available for issuance under our
2001 Plan and zero shares were available for issuance under our 1998 Plan.
-15-
The following table describes as of December 31, 2005 the outstanding
warrants, stock options and other rights issued under our 2003 Omnibus Plan,
2001 Plan and 1998 Plan that were then outstanding and exercisable:
Number of securities
Number of securities to be remaining available for
issued upon exercise of future issuance under
outstanding options, Weighted average exercise equity compensation plans
warrants and rights price of outstanding (excluding securities
(expressed in common stock) options, warrants and rights reflected in column (a))
Plan Category (a) (b) (c)
- -------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans 1,700,648 $6.47 1,507,186
approved by stockholders
- -------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not 0 0 0
approved by stockholders
- -------------------------------------------------------------------------------------------------------------------------------
Total 1,700,648 $6.47 1,507,186
In May 2005, our stockholders approved an increase of 1.5 million reserved
shares providing for a total of 3.1 million shares of common stock reserved for
future issuance. As of December 31, 2005, approximately 1.5 million options and
other incentive stock awards were available for future grants under the 2003
Omnibus Plan. In addition, 2,542 options were available under the 2001 Plan as
of December 31, 2005. No options were available under the 1998 Plan as of
December 31, 2005.
On December 16, 2005, our board of directors determined to accelerate the
vesting of those of our unvested stock options previously awarded to the
directors, officers and employees pursuant to the 2003 Omnibus Plan, 2001 Plan
and 1998 Plan with an exercise price greater than $4.00 per share. The closing
price of our common stock on the American Stock Exchange on that date was $1.90.
As a result of this acceleration, we will recognize no compensation expense for
options to acquire approximately 574,000 shares of common stock representing
approximately 3% of the common stock outstanding on December 16, 2005 which
would have vested during the fiscal years ended December 31 2006 and 2007.
The board accelerated the vesting of these outstanding stock options
pursuant to its authority under the plans. The board's decision to accelerate
the vesting of these outstanding stock options was made in light of the issuance
by the Financial Accounting Standards Board of Statement of Financial Accounting
Standard No. 123 (revised in 2004), entitled "Share-Based Payment" ("SFAS No.
123R"). By accelerating the vesting of these options, we believe that pursuant
to SFAS No. 123R, we will not be required to recognize any compensation expense
in the current year or in the future periods associated with these options. Had
the board not accelerated the vesting of these stock options, we estimate that
we would have to recognize approximately $1,143,000 and $514,000 in additional
compensation expense for the fiscal years ended December 31, 2006 and 2007,
respectively.
EMPLOYMENT AGREEMENTS
Chief Executive Officer
Effective January 10, 2003, we entered into an employment agreement with
James A. Wylie, Jr. as president and chief executive officer. Mr. Wylie became a
director as of that date. Mr. Wylie's employment agreement was for an initial
term of two years and provided for an annual base salary of $300,000 (payable
commencing March 1, 2003), an award of options to purchase up to 32,000 shares
(figure adjusted for 1:25 reverse stock split effective on June 17, 2004) of
common stock and certain bonus compensation, including a discretionary bonus as
determined by the board of directors and a bonus for the consummation of certain
financings (including the equity financing), mergers or similar transactions. If
we terminated Mr. Wylie's employment other than for cause, we would have been
obligated to pay his salary and provide benefits to him for the remainder of his
two-year employment term. From December 2, 2002 until the effective date of his
employment agreement, Mr. Wylie acted as a consultant to us and an advisory
board member, pursuant to a management services agreement. Under the management
services agreement, we paid Mr. Wylie a consulting fee of $125,000 for the
period December 2, 2002 through February 28, 2003, and agreed to pay a success
fee for the consummation of certain financing, merger or similar transactions
(excluding the December 27, 2002 bridge financing transaction). The management
services agreement was terminated upon the effective date of Mr. Wylie's
employment agreement and was superseded by his employment agreement.
-16-
Effective December 28, 2003, we entered into a second employment agreement
with James A. Wylie, Jr. This agreement superseded our January 10, 2003
employment agreement with Mr. Wylie, and extended his employment by one year
from December 31, 2004 until December 31, 2005. Mr. Wylie's new agreement
provided for an annual base salary of $330,000 (commencing January 1, 2004), an
award of options to purchase up to 108,000 shares (figure adjusted for 1:25
reverse stock split effective on June 17, 2004) of common stock and certain
bonus compensation. If we terminated Mr. Wylie's employment other than for
cause, we would have been obligated to pay his salary and provide benefits to
him for the remainder of his two-year employment term.
Effective February 15, 2005, the terms of Mr. Wylie's employment were
modified by (i) extending the term of employment through December 31, 2007
(formerly, the term was through December 31, 2005 at an effective annual base
salary of $355,000), (ii) providing that in the event of termination by us
without cause or by Mr. Wylie for good reason, we will pay an amount equal to
either his base compensation for the remainder of the term or 12 months,
whichever is greater and (iii) clarifying that Mr. Wylie will be able to
terminate his employment agreement upon not less than 90 days' notice for
reasons other than good reason, in which case we will not be required to pay
severance.
Effective January 11, 2006, Mr. Wylie's annual salary was increased to
$367,425, and he was awarded 50,000 options.
Chief Financial Officer
Effective September 1, 2003, we entered into a consulting agreement with
David B. Swank, as chief financial officer. Mr. Swank's agreement provided for
us to pay him a monthly fee of $12,500, and entitled him to receive options to
purchase shares of common stock and bonus compensation. Effective March 1, 2004,
we increased Mr. Swank's monthly fee to $16,667. Mr. Swank's agreement was for
six-month automatically renewable periods, and was cancelable upon six months
notice. Effective September 1, 2004, Mr. Swank's agreement was automatically
extended for a second six-month period until March 1, 2005, at a monthly fee of
$16,667.
Effective February 15, 2005, we modified the terms of Mr. Swank's
employment by (i) providing a term through December 31, 2005, renewable annually
thereafter unless either party gives notice of non-renewal by November 30, (ii)
providing that we may terminate Mr. Swank's employment for cause upon written
notice, (iii) providing that in the event of termination by us without cause or
by Mr. Swank for good reason, we will pay an amount equal to either his base
compensation for the remainder of the term or 12 months, whichever is greater,
(iv) providing that Mr. Swank will not use or disclose proprietary information
or confidential information, that all proprietary information is our property
and that all inventions of Mr. Swank during the term of his employment that are
related to our business are our property and (v) providing that Mr. Swank will
not compete with us or solicit our customers, suppliers or employees during the
term or for 12 months thereafter. Mr. Swank's monthly fee for 2005 was $17,917.
In accordance with this agreement, Mr. Swank's employment was automatically
renewed for the term ending December 31, 2006.
Our executive officers (Messrs. Stearn, Welch, Paulette and Geberth) have
agreements which provide that upon termination of their respective employment
without cause, we will pay their annual base salary for a period of twelve
months. These agreements also provide that these executive officers are eligible
to receive annual bonuses based on performance. These employment agreements also
prohibit our executive officers from directly or indirectly competing with us
for a period of one-year following termination of their employment.
There have been no adjustments or amendments to the exercise price of
stock options for our executive officers or directors, other than adjustments to
then-outstanding stock options that correspond with the 1:25 reverse split
effective June 17, 2004, which decreased the number of option shares and
increased the option exercise price, in each case by a factor of 25.
-17-
STOCK OPTION PLANS
(Figures throughout this section for number of common stock, price per
share of common stock, options and warrants are adjusted
to give effect to the 1:25 reverse stock split effective on June 17, 2004)
In November 2003, our stockholders approved a new incentive plan, the 2003
Omnibus Plan. The 2003 Omnibus Plan provides for grants or awards of stock
options, restricted stock awards, restricted stock units, performance grants,
stock awards, and stock appreciation rights. Only present and future employees
and outside directors and consultants are eligible to receive incentive awards
under the 2003 Omnibus Plan. We obtained stockholder approval of the 2003
Omnibus Plan at our annual meeting on November 25, 2003, after which we reserved
1.6 million shares of common stock for issuance pursuant to this plan. At our
annual meeting of stockholders held on May 17, 2005, our stockholders approved
an increase of 1.5 million shares providing for a total of 3.1 million shares of
common stock reserved for future issuance. As of December 31, 2005, 1,504,644
options and other incentive stock awards were available for future grants under
the 2003 Omnibus Plan. In addition, 2,542 options were available under the 2001
Plan as of December 31, 2005. No options were available under the 1998 Plan as
of December 31, 2005.
OPTION GRANTS IN LAST FISCAL YEAR
(Figures throughout this section are adjusted to give effect to the
1:25 reverse stock split effective June 17, 2004 for number of shares
of common stock, price per share of common stock, options and warrants)
The following table sets forth certain information regarding stock options
that we granted in 2005 to all Named Executive Officers:
Options Granted in 2005
Percent of
Named Executive No. Options Total Granted Exercise Expiration
Officer Granted in 2005(1) Price Date
------- ------- ---------- ----- ----
James Wylie(2) 182,000 25.6% $4.20 1/10/15
David Swank(3) 56,800 8.0% $4.20 1/10/15
John Welch(4) 39,400 5.5% $4.20 1/10/15
Kevin Stearn(5) 43,600 6.1% $4.20 1/10/15
Cary Paulette(6) 50,000 7.0% $4.20 1/10/15
Christopher Geberth(7) 10,000 1.4% $4.20 1/10/15
Total 381,800 53.7%
(1) Based on a total of approximately 710,953 options granted to all
employees, directors and consultants during 2005. Rounded to nearest
one-tenth of one percent.
(2) Mr. Wylie was also awarded 110,000 options on January 11, 2006 at an
exercise price of $2.24 per share.
(3) Mr. Swank was also awarded 15,000 options on January 6, 2006 at an
exercise price of $2.06 per share and 40,000 option on January 11, 2006 at
an exercise price of $2.24 per share.
(4) Mr. Welch was also awarded 30,000 options on January 11, 2006 at an
exercise price of $2.24 per share.
(5) Mr. Stearn was also awarded 30,000 options on January 11, 2006 at an
exercise price of $2.24 per share.
(6) Mr. Paulette was also awarded 35,000 options on January 11, 2006 at an
exercise price of $2.24 per share.
(7) Mr. Geberth was also awarded 40,000 options on January 11, 2006 at an
exercise price of $2.24 per share.
-18-
OPTIONS HELD AT END OF PRIOR FISCAL YEAR
(Figures throughout this section are adjusted to effect to
the 1:25 reverse stock split effective June 17, 2004)
The following table sets forth certain information regarding stock options
that the Named Executive Officers held as of December 31, 2005:
NUMBER OF UNEXERCISED VALUE OF "IN THE MONEY"
NAME AND OPTIONS AT OPTIONS AT
PRINCIPAL DECEMBER 31, 2005 DECEMBER 31, 2005
POSITION EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------------------------------------------------------------------------------------------------------
James A. Wylie Jr. 501,412 / 0 $0 / $0
President and Chief Executive Officer
David B. Swank, 129,800 / 5,000 $10,100 / $10,100
Chief Financial Officer, Secretary
Christopher J. Geberth 25,000 / 15,000 $0 / $0
VP, Finance
John J. Welch 75,000 / 0 $0 / $0
VP, North American Marketing
Cary Paulette 66,667 / 33,333 $0 / $0
VP, North American Sales
Kevin Stearn 90,000 / 0 $0 / $0
VP, Operations (General Manager Diomed Limited)
(1) Based on the closing price of $2.03 on the American Stock Exchange on
December 31, 2005 and the respective exercise prices of the options held.
No adjustments to the exercise price of any outstanding options were made
during the fiscal year ended December 31, 2005.
On December 16, 2005, our board of directors determined to accelerate the
vesting of our unvested stock options previously awarded to our directors,
officers and employees pursuant to our 2003 Omnibus Incentive Plan, 2001 Stock
Option Plan and 1998 Stock Option Plan with an exercise price greater than $4.00
per share. The closing price of our common stock on the American Stock Exchange
on that date was $1.90. As a result of this acceleration, we will recognize no
compensation expense for options to acquire approximately 574,000 shares of
common stock (representing approximately 3% of the common stock outstanding on
December 16, 2005) which would have vested during the fiscal years ended
December 31, 2006 and 2007 had we not accelerated vesting of these options. As a
result of these actions, we eliminated approximately $1,657,000 of future
after-tax compensation expense relating to employee stock options after January
1, 2006.
PROPOSAL 2
APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK IN EXCHANGE FOR
PREFERRED STOCK WE ISSUED ON SEPTEMBER 30, 2005
AT AN EXCHANGE RATE OF LESS THAN $2.17 PER SHARE
IF THE ANTIDILUTON PROVISIONS OF THE PREFERRED STOCK SO REQUIRE.
On September 30, 2005, we entered into and completed a financing
transaction pursuant to which we issued and sold 4 million shares of preferred
stock at a purchase price of $2.50 per share, resulting in aggregate gross
proceeds of $10 million. We also issued warrants to purchase common stock in
connection with this preferred stock financing. Proposal 3 seeks stockholder
approval of a similar Proposal regarding these warrants.
In connection with the preferred stock financing, we entered into a share
exchange agreement with the investors who purchased preferred stock, pursuant to
which the investors may exchange shares of preferred stock for shares of common
stock. Each share of preferred stock may be exchanged for that number of shares
of common stock that equals the issue price of the preferred stock ($2.50)
divided by an exchange rate, initially set at $2.50 and subject to reduction in
the case of dilutive issuances.
-19-
The antidilution adjustment provides that if we sell common stock (or the
right to acquire common stock) for a price lower than the then-current exchange
rate, the exchange rate will be reduced to the amount paid for the shares of
common stock, subject to a floor of $2.17, unless the stockholders of the
Company approve the elimination of the floor price. We included the $2.17 floor
price so that the transaction would comply with an American Stock Exchange
("AMEX") rule that requires stockholder approval prior to the issuance of 20% or
more of our outstanding shares of common stock at a price which is less than the
market price of the shares at the time of issuance. The market price of our
common stock at the time of the financing transaction was $2.12 per share, which
was below the $2.50 initial exchange rate of the preferred stock. AMEX rules
require that we obtain stockholder approval to issue shares of common stock upon
exchange of preferred stock at a price $2.12 per share.
Purpose of Proposal to Eliminate Floor Price
We are now proposing to eliminate the floor price applicable to the
exchange of preferred stock so that we can obtain stockholder approval to the
issuance of securities at a price below the market price, in the event that a
future dilutive issuance at a price per share below the floor price of $2.17 per
share triggers antidilution rights under the preferred stock. Stockholder
approval is required for the exchange rate of the preferred stock to be reduced
below the respective floor price, according to AMEX rules. We believe it is
appropriate to eliminate the floor price of the exchange of preferred stock in
consideration of the risk undertaken by the preferred stock investors in
relation to the reward available to them.
We are proposing to eliminate the floor price at this time because we
agreed to seek stockholder approval of the elimination of the floor price as a
term of the September 30, 2005 financing transaction. If our stockholders do not
approve the elimination of the floor price, the exchange price of the preferred
stock will remain subject to the floor price of $2.17 per share (subject to
adjustment for splits and other adjustments unrelated to antidilution
provisions).
Effect of Elimination of Floor Price
If our stockholders approve this Proposal, then the exchange rate of the
preferred stock will no longer be subject to a floor price, and as a result, if
we issue shares in the future at a price less than $2.17 per share, the exchange
rate will be reduced to the same price as the effective price in the future
dilutive issuance. Accordingly, a larger number of shares would be issuable upon
the exchange of preferred stock than if the floor price remained. The issuance
of a larger number of shares will be dilutive to our existing stockholders.
For example, as of March 31, 2006, there 3,975,000 shares of preferred
stock outstanding (25,000 shares had already been exchanged for common stock, at
the current exchange rate of $2.50 per share). If these shares of preferred
stock were exchanged for common stock at the floor price of $2.17 per share, we
would issue approximately 1,832,000 shares of common stock to the preferred
stock holders. If the floor price were eliminated and we subsequently issued
shares in a dilutive issuance at a share price of $1.50 per share, the exchange
rate of the preferred stock would be reduced to $1.50 per share and, if the
preferred stock was subsequently exchanged, we would issue approximately
2,650,000 shares of common stock to the preferred stockholders, 818,000
additional shares than the number of shares had the floor price not been
eliminated). Assuming that immediately prior to the exchange of preferred stock
we had 20,000,000 shares of common stock outstanding, and without giving effect
to the dilutive issuance that triggered the antidilution provisions of the
debentures, then the impact on our other stockholders of the elimination of the
floor price would be to dilute their respective ownership percentage of the
Company after conversion from approximately 91.6% to approximately 88.3%. This
example is illustrated as follows:
Impact of Exchange of Preferred Stock at Existing Floor Price
-------------------------------------------------------------
No. of Shares Outstanding prior to Exchange: 20,000,000
Number of Shares Issued upon Exchange at Floor Price:
(3,975,000 divided by $2.17, the floor price of the
exchange rate) 1,831,798
Number of Shares Outstanding after Exchange: 21,831,798
Percentage of Shares Outstanding after Exchange held
by Stockholders prior to Exchange:
(20,000,000 divided by 21,831,798) 91.6%
-20-
Impact of Exchange without Floor Price
--------------------------------------
Number of Shares Issued upon Exchange at Adjusted Price:
(3,975,000 divided by $1.50, the adjusted exchange
rate after giving effect to antidilution provisions) 2,650,000
Number of Shares Outstanding after Exchange: 22,650,000
Percentage of Shares Outstanding after Exchange held
by Stockholders prior to Exchange:
(20,000,000 divided by 22,650,000) 88.3%
If a future dilutive issuance is at an effective price less than $1.50 per
share, the dilutive effect of eliminating the floor price would be even greater
to our existing stockholders.
Interests of Certain Stockholders
As discussed under "General Information - Interests of Certain
Stockholders" in this proxy statement, above, stockholders who hold preferred
stock are interested in the outcome of the stockholders' vote on this Proposal,
and, as discussed under "Related Transactions," we believe that holders of
preferred stock may cast approximately 4.48 million votes in favor of this
Proposal. These stockholders will benefit from approval of this Proposal because
eliminating the floor price on the exchange of preferred stock will require us
to issue more shares to these holders than we would be required to issue on
exchange of preferred stock for common stock had the floor price not been
eliminated, but only if future transactions trigger the antidilution adjustment
to the exchange rate of the preferred stock that require us to reduce the
exchange rate below $2.17 per share.
Required Vote
The affirmative vote of a majority of the outstanding shares of our common
stock and preferred stock, voting together as a single class, which are present
at the meeting and entitled to vote is required to approve this Proposal. If
approved by the stockholders, immediately after stockholder approval, the
exchange rate of the preferred stock we issued on September 30, 2005 will no
longer have a floor price of $2.17 in the event of dilutive issuances.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK IN EXCHANGE FOR SHARES OF
PREFERRED STOCK AT AN EXCHANGE RATE BELOW $2.17 PER SHARE IF THE ANTIDILUTON
PROVISIONS OF THE PREFERRED STOCK SO REQUIRE.
PROPOSAL 3
APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UNDERLYING THE WARRANTS
ISSUED ON SEPTEMBER 30, 2005 AT AN EXERCISE PRICE OF LESS THAN
$2.12 PER SHARE IF THE ANTIDILUTON PROVISIONS OF THE WARRANTS SO REQUIRE.
On September 30, 2005, in connection with our $10 million preferred stock
financing transaction, we also issued to the preferred stock investors warrants
to purchase an aggregate of 1.6 million shares of common stock, at an exercise
price of $2.50 per share (subject to antidilution adjustments). In addition to
the warrants we issued to these investors, we also issued warrants to purchase
up to an aggregate of 200,000 shares of common stock to the three holders of our
convertible debentures we issued in October 2004, as an inducement to, and in
consideration for, the debenture holders' waiver of certain negative covenants
that would have been violated by the financing had the debenture holders not
waived them. Proposal 2 seeks stockholder approval of a similar Proposal
regarding the preferred stock. See Proposal 2, above.
-21-
The warrants were fully vested upon issuance and are exercisable for five
years from the date of listing of the underlying shares of common stock with the
AMEX (January 6, 2006) at an exercise price of $2.50 per share, subject to
reduction in the case of dilutive issuances. The antidilution adjustment
provides that if we sell common stock (or the rights to acquire common stock)
for a price lower than the then-current exercise price, the exercise price will
be reduced to the amount paid for the shares of common stock we issued at such
lower price, subject to a floor of $2.12, unless the stockholders of the Company
approve the elimination of the floor price. AMEX rules require that we obtain
stockholder approval to issue shares of common stock upon exercise of the
warrants below the $2.12 per share floor price. We agreed to propose to our
stockholders that the floor price be eliminated.
If the stockholders approve this Proposal and we make a dilutive issuance,
then the exercise price of the warrants will be decreased, first to the $2.12
floor price and then to the weighted average price of the securities issued
after giving effect to the dilutive issuance, determined by the following
formula:
(No. Shares Outstanding before Dilutive Issuance x $2.12) +
Proceeds of Dilutive Issuance
-----------------------------------------------------------
No. Shares Outstanding After Dilutive Issuance
For example, absent a floor price, if there were 20 million shares of
common stock outstanding (on a fully diluted basis) and we entered into a
dilutive issuance wherein we sold 1 million shares of common stock at a price
per share of $1.50, then the exercise price of the warrants would be reduced to
$2.09, determined as follows:
(20,000,000 X $2.12) + $1,500,000 = $2.09
---------------------------------
21,000,000
If the exercise price of the warrants is so adjusted, then there will
concurrently be an adjustment to the number of shares for which the warrant will
be exercisable, determined by the following formula:
Old Exercise Price X No. Shares underlying Warrants
---------------------------------------------------
Adjusted Exercise Price
Hence, in the above example, assuming there were no interim adjustments to
the exercise price, the number of shares underlying the warrants would increase
from 1,800,000 to 2,153,110, determined as follows:
$2.50 X 1,800,000 = 2,153,110 shares
-----------------
$2.09
Purpose of Proposal to Eliminate Floor Price
We are now proposing to eliminate the floor price applicable to the
exercise price of the warrants we issued on September 30, 2005 so that we can
obtain stockholder approval to the issuance of securities at a price below the
market price, in the event that a future dilutive issuance at a price per share
below the floor price of $2.12 per share triggers antidilution rights under the
warrants. Stockholder approval is required for the exercise price of the
warrants to be reduced below the floor price, according to AMEX rules. We
believe it is appropriate to eliminate the floor price of the warrants in
consideration of the risk undertaken by the investors holding these warrants in
relation to the reward available to them.
We are proposing to eliminate the floor price at this time because we
agreed to seek stockholder approval of the elimination of the floor price as a
term of the September 30, 2005 financing transaction. If our stockholders do not
approve the elimination of the floor price, the exercise price of the warrants
will remain subject to the floor price of $2.12 per share (subject to adjustment
for splits and other adjustments unrelated to antidilution provisions).
Effect of Elimination of Floor Price
If our stockholders approve this Proposal, then the exercise price of the
warrants we issued on September 30, 2005 will no longer be subject to a floor
price, and as a result, if we issue shares in the future at a price less than
$2.12 per share, the exercise price will be reduced to the weighted average
price of the securities issued after giving effect to the dilutive issuance. As
a result, following a dilutive issuance, although we will receive the same
proceeds with or without a floor price, upon exercise of the warrants we will
issue more shares if there is no floor price then we would if we had not
eliminated the floor price. The issuance of a larger number of shares will be
dilutive to our existing stockholders.
-22-
For instance, as described in the above example, if there were 20 million
shares of common stock outstanding (on a fully diluted basis) and we entered
into a dilutive issuance wherein we sold 1 million shares of common stock at a
price per share of $1.50, then, if the stockholders vote to eliminate the floor
price of the warrants, the exercise price of the warrants would be reduced to
$2.09 and the number of shares of common stock underlying the warrants would
increase to 2,153,110. If the stockholders do not vote to eliminate the floor
price of the warrants, then, assuming there were no interim adjustments to the
exercise price, the exercise price will be reduced to $2.12, and the number of
shares of common stock underlying the warrants will be increase from 1,800,000
to 2,122,642, determined as follows:
$2.50 X 1,800,000 = 2,122,642 shares
-----------------
$2.12
In either event, if all of these warrants were exercised for cash, we
would we would receive gross proceeds of $4.5 million (from the issuance of
2,153,110 shares of common stock upon exercise of the warrants after adjustment
to the floor price of $2.09 per share or from the issuance of 2,122,642 shares
of common stock upon exercise of the warrants at an adjusted exercise price of
$2.12, as the case may be). We would also receive gross proceeds of $4.5 million
if there is no antidilution adjustment to the exercise price and the warrants
are exercised for cash (from the issuance of 1.8 million shares of common stock
upon exercise of the warrants at the current exercise price of $2.50 per share).
Interests of Certain Stockholders
As discussed under "General Information - Interests of Certain
Stockholders" in this proxy statement, above, stockholders who hold preferred
stock are interested in the outcome of the stockholders' vote on this Proposal,
and, as discussed under "Related Transactions," we believe that holders of
preferred stock may cast approximately 4.534 million votes in favor of this
Proposal. These stockholders will benefit from approval of this Proposal because
eliminating the floor price on the exchange of preferred stock will require us
to issue more shares to these holders than we would be required to issue on
exchange of preferred stock for common stock had the floor price not been
eliminated, but only if future transactions trigger the antidilution adjustment
to the exchange rate of the preferred stock that require us to reduce the
exchange rate below $2.17 per share.
Required Vote
The affirmative vote of a majority of the outstanding shares of our common
stock and preferred stock, voting together as a single class, which are present
at the meeting and entitled to vote is required to approve this Proposal. If
approved by the stockholders, immediately after stockholder approval the
exercise price of the warrants we issued on September 30, 2005 will no longer
have a floor price of $2.12 in the event of dilutive issuances.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK IN EXCHANGE FOR SHARES OF
PREFERRED STOCK AT AN EXCHANGE RATE BELOW $2.17 PER SHARE IF THE ANTIDILUTON
PROVISIONS OF THE PREFERRED STOCK SO REQUIRE.
PROPOSAL 4
RATIFICATION OF THE COMPANY'S SELECTION OF BDO SEIDMAN, LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2006 FISCAL YEAR.
The board of directors has selected BDO Seidman, LLP, independent
registered public accounting firm, as our independent accountants and auditors
for the current fiscal year, subject to ratification or rejection by the
stockholders. Representatives of BDO are expected to be present at the annual
meeting and will have an opportunity to make a statement if they so desire and
are expected to be available to respond to appropriate questions from
stockholders. In the event the stockholders do not ratify the selection of BDO,
the selection of other accountants and auditors will be considered by the board
of directors.
-23-
Our independent registered public accounting firm for 2005 and 2004 was
BDO Seidman, LLP. We paid BDO fees for services during 2005 and 2004 as follows:
AUDIT FEES
BDO's fees were $296,000 in the aggregate for 2005 and $244,000 in the
aggregate for 2004 for professional services rendered to us for the audit of our
annual financial statements and review of our quarterly financial statements
(including our quarterly financial statements and other reports filed with the
SEC on Forms 10-QSB and SB-2).
AUDIT-RELATED FEES
We paid BDO $8,000 in the aggregate for 2005 and $1,000 in the aggregate
for 2004 for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statement, which amounts are
not included under "Audit Fees," above.
TAX FEES
We paid BDO $21,000 in the aggregate for 2005 and $21,000 in the aggregate
for 2004 for professional services rendered to us for tax compliance, tax advice
and tax planning.
ALL OTHER FEES
We paid BDO $0 in the aggregate for 2005 and 2004 for products and
services provided to us, other than as reported above under "Audit Fees,"
"Audit-Related Fees" or "Tax Fees."
AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
The audit committee's procedure is to review any proposed engagement of
its independent registered public accounting firm, whether for auditing or other
services, and to give its prior approval of such engagement, considering, among
other things, whether the proposed engagement would impact the independence of
our auditors. All (100%) of the services described under Audit-Related Fees, Tax
Fees and all other Fees were approved by the audit committee.
Required Vote
The affirmative vote of a majority of the outstanding shares of our common
stock and preferred stock, voting as a single class, present at the meeting is
required to approve this Proposal.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE SELECTION OF BDO SEIDMAN, LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE COMPANY FOR THE 2006 FISCAL YEAR.
OTHER MATTERS
If any other matters are properly brought before the annual meeting, your
proxy may be voted by the proxies in such manner as they deem proper. At this
time, we do not know of any other matters that will be presented at the annual
meeting.
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PROPOSALS BY STOCKHOLDERS FOR PRESENTATION
AT THE 2006 ANNUAL MEETING OR THE 2007 ANNUAL MEETING
Section 5 of Article II of our by-laws provides that, in addition to other
applicable requirements, for business to be properly brought before an annual
meeting by a stockholder, the stockholder must give timely written notice to the
Secretary or an Assistant Secretary at the principal executive office of the
Company. Any such notice must be received (i) not less than 30 nor more than 90
days prior to the annual meeting, if clause (ii) is not applicable, or (ii) not
less than 10 days before the date of the meeting if less than 40 days' notice of
the date of the meeting is given by the Company. The stockholder's notice shall
set forth as to each matter the stockholder proposes to bring before the
meeting: (a) a brief description of the business desired to be brought before
the meeting, and in the event that such business includes a proposal to amend
either the certificate of incorporation or the by-laws of the Company, the
language of the proposed amendment, (b) the name and address of the stockholder
proposing such business, (c) the number of shares of common stock that are owned
by such stockholder and (d) any material personal interest of the stockholder in
such business. The proxies will have discretionary authority to vote on any
matter that properly comes before the meeting if the stockholder has not
provided timely written notice as required by the by-laws.
Any proposal that a stockholder desires to have included in the proxy
statement for the 2007 annual meeting of stockholders must be received by us no
later than December 26, 2006 and must comply with the other applicable
requirements of Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
A copy of the Company's Annual Report on Form 10-KSB/A for the year ended
December 31, 2005, as filed with the Securities and Exchange Commission, may be
obtained by any stockholder, free of charge, upon written request to the
Secretary, Diomed Holdings, Inc., One Dundee Park, Andover, MA 01810, or by
calling (978) 475-7771.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following portions of our Annual Report on Form 10-KSB/A for the year
ended December 31, 2005 are incorporated herein by reference: Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations; Item 7. Financial Statements; and Item 8. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure.
-25-
Appendix A
Audit Committee Charter
DIOMED HOLDINGS, INC.
AUDIT COMMITTEE CHARTER
Purposes
o Overseeing that management has maintained the reliability and
integrity of the accounting policies and financial reporting and
disclosure practices of the Company;
o Overseeing that management has established and maintained processes
to assure that an adequate system of internal control is functioning
within the Company; and
o Overseeing that management has established and maintained processes
to assure compliance by the Company with all applicable laws,
regulations and Company policies.
Powers and Duties
1. Holding such regular meetings as may be necessary and such special
meetings as may be called by the chairman of the Audit Committee or at the
request of the independent accountants or the General Auditor;
2. Creating an agenda for the ensuing year;
3. Reviewing the performance of the independent accountants and making
recommendations to the board of directors regarding the appointment or
termination of the independent accountants;
4. Conferring with the independent accountants and the internal auditors
concerning the scope of their examinations of the books and records of the
Company and its subsidiaries; reviewing and approving the independent
accountants' annual engagement letter; reviewing and approving the
Company's internal audit charter, annual audit plans and budgets;
directing the special attention of the auditors to specific matters or
areas deemed by the Committee or the auditors to be of special
significance; and authorizing the auditors to perform such supplemental
reviews or audits as the Committee may deem desirable;
5. Reviewing with management, the independent accountants and internal
auditors significant risks and exposures, audit activities and significant
audit findings;
6. Reviewing the range and cost of audit and non-audit services performed by
the independent accountants;
7. Reviewing the Company's audited annual financial statements and the
independent accountants' opinion rendered with respect to such financial
statements, including reviewing the nature and extent of any significant
changes in accounting principles or the application therein;
8. Reviewing the adequacy of the Company's systems of internal control;
9. Obtaining from the independent accountants and internal auditors their
recommendations regarding internal controls and other matters relating to
the accounting procedures and the books and records of the Company and its
subsidiaries and reviewing the correction of controls deemed to be
deficient;
A-1
10. Providing an independent, direct communication between the board of
directors, internal auditors and independent accountants;
11. Reviewing the adequacy of internal controls and procedures related to
executive travel and entertainment;
12. Establishing, reviewing and updating periodically a Code of Ethical
Conduct and ensuring that management has established a system to enforce
this Code;
13. Reviewing management's monitoring of the Company's compliance with the
organization's Ethical Code, and ensuring that management has the proper
review system in place to ensure that Company's financial statements,
reports and other financial information disseminated to governmental
organizations, and the public satisfy legal requirements;
14. Reviewing, with the organization's counsel, legal compliance matters
including corporate securities trading policies;
15. Reviewing, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements;
16. Reporting through its chairman to the board of directors following the
meetings of the Audit Committee;
17. Maintaining minutes or other records of meetings and activities of the
Audit Committee;
18. Reviewing the powers of the Committee annually and reporting and making
recommendations to the board of directors on these responsibilities;
19. Conducting or authorizing investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee shall be
empowered to retain independent counsel, accountants, or others to assist
it in the conduct of any investigation;
20. Considering such other matters in relation to the financial affairs of the
Company and its accounts, and in relation to the internal and external
audit of the Company as the Audit Committee may, in its discretion,
determine to be advisable; and
21. Performing any other activities consistent with this Charter, the
Corporation's by-laws and governing law, as the Committee or the board
deems necessary or appropriate.
A-2
Appendix B
Nominating Committee Charter
DIOMED HOLDINGS, INC.
NOMINATING - CORPORATE GOVERNANCE COMMITTEE CHARTER
Purpose. The primary function of the Nominating - Corporate Governance
Committee (the "Committee") of Diomed Holdings, Inc. (the "Company") is to (i)
identify individuals who are qualified to serve on the Company's Board of
Directors (the "Board"), (ii) recommend to the Board to select, the director
nominees for the next annual meeting of stockholders and (iii) develop and
recommend to the Board corporate governance principles with respect to the
Company.
Composition.
(a) Appointment. The Committee shall consist of three (3) or more
independent directors, as determined by the Board in accordance with Section
121A of the rules of the American Stock Exchange.
The Board shall appoint the members of the Committee at the meeting not
less than annually. If a vacancy occurs on the Committee, the Board shall
appoint a member to fill such vacancy at such time. In appointing members to
serve on the Committee, the Board shall consider all of the facts,
circumstances, and such other qualifications as the Board may determine, in its
reasonable judgment, to be relevant to serving on the Committee.
The Board shall determine, in its discretion, the term of membership of
the Committee. Unless the Board elects a Chair of the Committee, the Committee
may, in its discretion, designate a Chair by an affirmative vote of the majority
of the members of the Committee.
(b) Evaluation. The Board shall perform and conduct an annual
performance evaluation of the Committee to determine and assess whether the
Committee is fulfilling all of its duties and responsibilities hereunder and
under all applicable laws and listing standards.
(c) Term of Service. Subject to removal as provided in 1(d) and
provided that a member is serving as a member of the Board, each member of the
Committee shall serve for a term of three(3) years, the terms of the members to
be staggered at the time Committee is established.
(d) Removal. The Board may remove any member of the Committee at any
such time as the Board determines, in its reasonable judgment, that (i) such
member no longer meets the qualification standard set forth in Section 2(a) of
this Charter, or (ii) it is in the best interests of the Company or its
shareholders to remove such member from the Committee; provided, that the basis
set forth in Clause (ii) shall not be available as grounds for removal of any
member within three (3) years after a change in control of the Company has
occurred..
(e) Authority. The Committee shall have the sole and direct
authority to engage, retain, approve payment of compensation to, and terminate
any director search firm retained to identify and recommend possible candidates
for Board membership.
Meetings. The Committee shall meet at least twice annually or more
frequently, as may be necessary or appropriate.
Duties and Responsibilities. The Committee shall have the duty and
responsibility to:
(i) Establish the criteria for Board membership;
B-1
(ii) Consider and recommend candidates, and review candidates
recommended by shareholders, to serve on the Board and to recommend the
director nominees selected by the Committee for approval by the Board and
the shareholders of the Company;
(iii) Conduct, or engage one or more third parties to conduct, the
appropriate and necessary inquires into the backgrounds, experience and
qualifications of possible candidates to serve on the Board;
(iv) Recommend to the Board directors to serve on other Board
committees, review the functions of such committees, and make
recommendations to the Board regarding the functions of such other
committees;
(v) Review and recommend, on a regular basis, changes to the
Company's Corporate Governance Guidelines, including a Conflict of
Interest Policy and Related Party Transaction Policy, Code of Conduct for
Financial Officers, and Code of Business Conduct and Ethics;
(vi) Review, periodically, with the Chairman and the Chief Executive
Officer the succession plans for senior executive officers and to make
recommendations to the Board regarding the selection of individuals to
occupy these positions;
(vii) Review and update this Charter, periodically, at least
annually, as may be necessary or appropriate;
(viii) Report, on a periodic basis, to the Board regarding
compliance with this Charter, the activities of the Committee and any
issues with respect to the duties and responsibilities of the Committee;
and
(ix) Perform any other activities consistent with this Charter, the
Company's Bylaws and all applicable laws and listing standards, as the
Committee deems necessary or appropriate.
B-2
DIOMED HOLDINGS, INC. VOTE BY INTERNET - www.proxyvote.com
ONE DUNDEE PARK SUITE 5
P.O. BOX 97 Use the Internet to transmit your voting
ANDOVER, MA 01810 instructions and for electronic delivery
of information up until 11:59 P.M. Eastern
Time the day before the cut-off date or
meeting date. Have your proxy card in hand
when you access the web site and follow
the instructions to obtain your records
and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
P.M. Eastern Time the day before the
cut-off date or meeting date. Have your
proxy card in hand when you call and then
follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope we
have provided or return to it Diomed
Holdings, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER
COMMUNICATIONS
If you would like to reduce the costs
incurred by Diomed Holdings, Inc. in
mailing proxy materials, you can consent
to receiving all future proxy statements,
proxy cards and annual reports
electronically via e-mail or the Internet.
To sign up for electronic delivery, please
follow the instructions above to vote
using the Internet and, when prompted,
indicate that you agree to receive or
access shareholder communications
electronically in future years.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DIOMD1 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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DIOMED HOLDINGS, INC.
Vote on Directors
1. To elect nine directors to serve For Withhold For All To withhold authority to vote for
until the next annual meeting of All For All Except any individual nominee, mark "For
stockholders, or until their All Except" and write the nominee's
successors are duly elected and |_| |_| |_| name on the line below.
qualified.
NOMINEES:
01) Geoffrey Jenkins 06) Peter Klein
02) Sidney Braginsky 07) Edwin Snape, Ph. D.
03) Gary Brooks 08) David Swank
04) A. Kim Campbell 09) James A.Wylie, Jr.
05) Joseph Harris
For Against Abstain For Against Abstain
Vote on Proposals
2. To appove the issuance of shares of |_| |_| |_| 4. To ratify the selection of BDO |_| |_| |_|
common stock in exchange for Seidman, LLP as the Company's
preferred stock we issued on independent registered public
September 30, 2005 at an exchange accounting firm for 2006.
rate less than $2.17 per share if
the antidiultion provisions of the 5. To transact such other business as |_| |_| |_|
preferred stock so require. may properly 0 0 0 come before the
meeting. PLEASE SIGN EXACTLY AS NAME
3. To approve the issuance of shares |_| |_| |_| APPEARS ON THIS PROXY. WHEN SIGNING
underlying the warrants we issued on AS ATTORNEY, EXECUTOR,
September 30, 2005 at an exercise ADMINISTRATOR, TRUSTEE, GUARDIAN,
price of less than $2.12 per share ETC., GIVE FULL TITLE AS SUCH.
if the antidilution provisions of
the warrants so require.
Yes No
Please indicate if you plan to attend |_| |_|
this meeting.
HOUSEHOLDING ELECTION - Please indicate if
you consent to receive certain future
investor communications in a single
package per household.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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As a stockholder of DIOMED HOLDINGS, INC., a Delaware corporation (the
"Company"), you are cordially invited to be present, either in person or by
proxy, at the annual meeting of stockholders of the Company to be held at the
offices of our counsel, McGuireWoods LLP, 1345 Avenue of the Americas, 7th
Floor, New York, NY 10105 at 9:00 a.m., local time, on May 23, 2006, for the
purposes indicated on the reverse side.
Your board of directors recommends that you vote in favor of each of the
proposals described in this proxy statement.
Only stockholders of record at the close of business on April 3, 2006 will
be entitled to receive notice of, and to vote, either in person or by proxy, at
the annual meeting and any adjournment or postponement thereof. The transfer
books will not be closed.
We hope you can attend the annual meeting in person. Even if you plan to
attend, however, we ask that you MARK, SIGN, DATE and RETURN the enclosed proxy
promptly in the enclosed self-addressed envelope, so that we may be assured of a
quorum to transact business. If you receive more than one proxy because you own
shares registered in different names or addresses, each proxy should be
completed and returned. Your proxy is revocable and will not affect your right
to vote in person if you are able to attend the meeting. Your attention is
directed to the attached proxy statement.
If you plan to attend the annual meeting, please note that this is a
stockholders' meeting and attendance will be limited to stockholders of the
Company or their qualified representatives. Each stockholder may be asked to
present valid picture identification, such as a driver's license or passport.
Stockholders holding stock in brokerage accounts ("street name" holders) must
bring a copy of a brokerage statement reflecting stock ownership as of the
record date. A qualified representative of a stockholder must have
identification as well as a properly executed proxy from the stockholder he or
she is representing. Cameras, recording devices and other electronic devices
will not be permitted at the annual meeting.
By Order of the Board of Directors,
/s/ David B. Swank
-----------------------------------
Secretary
Andover, Massachusetts
April 24, 2006
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DIOMED HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 23, 2006
The stockholder(s) hereby appoint(s) James A. Wylie and David B. Swank, or
either of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of Common Stock of Diomed Holdings, Inc.
that the stockholder(s) is/are entitled to vote at the Annual Meeting of
Stockholders to be held at 9:00 a.m., local time, on May 23, 2006, at the
offices of our counsel, McGuireWoods LLP, 1345 Avenue of the Americas, 7th
Floor, New York, NY 10105, and any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. UNLESS A CONTRARY DIRECTION IS INDICATED, THIS
PROXY WILL GRANT THE PERSONS NAMED AS PROXIES HEREIN DISCRETIONARY AUTHORITY TO
CUMULATE VOTES IN CONNECTION WITH THE ELECTION OF DIRECTORS. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR ALL" DIRECTOR NOMINEES UNDER PROPOSAL 1 AND
"FOR" EACH OF THE OTHER PROPOSALS.
The undersigned acknowledges receipt of the Notice of said Annual Meeting and of
the Proxy Statement attached thereto.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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