VICOM
INCORPORATED
9449 SCIENCE CENTER DRIVE
NEW HOPE, MINNESOTA 55428
- --------------------------------------------------------------------------------
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 2001
- --------------------------------------------------------------------------------
The Annual Meeting of the Shareholders of VICOM, INCORPORATED will be
Held at The Radisson South Hotel, 7800 Normandale Boulevard, Bloomington,
Minnesota, Wednesday, May 30, 2001, at 3:00 p.m. Minneapolis time, for the
following purposes, as more fully described in the accompanying Proxy Statement.
1. To elect nine directors for a term of one year.
2. To vote upon the ratification of Lurie, Besikof, Lapidus &
Company, LLP as independent auditors of the Company for Fiscal
Year 2000.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only Shareholders of record at the close of business April 17, 2001,
will be entitled to receive notice of and vote at the meeting. The Company's
Board of Directors recommends a vote in favor of all the proposals, which will
be submitted at the meeting.
Shareholders are urged to fill in and sign the enclosed proxy and mail
it promptly in the accompanying envelope to which no postage need be affixed if
mailed in the United States.
Shareholders who are present at the meeting may revoke their proxies
and vote in person.
If you cannot attend this meeting, please mark, sign, date and mail the
enclosed proxy.
By Order of the Board of Directors
Pierce McNally
Secretary
1
VICOM, INCORPORATED
9449 SCIENCE CENTER DRIVE
NEW HOPE, MINNESOTA 55428
- --------------------------------------------------------------------------------
PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
MAY 30, 2001
SOLICITATION, EXECUTION AND REVOCATION OF PROXIES
The mailing address of the principal corporate office of the Company is
9449 Science Center Drive, New Hope, MN 55428. This Proxy Statement and the form
of proxy, which is enclosed, are being mailed to the Company's shareholders
commencing on or about May 15, 2001.
Proxies in the accompanying form are solicited on behalf, and at the
direction, of the Board of Directors of the Company. All shares of Common Stock
represented by properly executed proxies, unless such proxies have previously
been revoked, will be voted in accordance with the direction of the proxies. If
no direction is indicated, the shares will be voted in accordance with the
direction of the proxies. If any others matters are properly presented at the
meeting for action, including a question of adjourning the meeting from time to
time, the persons named in the proxies and acting thereunder will have
discretion to vote on such matters in accordance with their best judgement.
Abstentions and broker non-votes will be counted as present or
represented at the meeting for purposes of determining whether a quorum exits.
However, broker non-votes with respect to any matter brought to a vote will be
treated as shares not voted for purposes of determining whether the requisite
vote has been obtained and, therefore, will have no effect on the outcome of any
such matter. A majority of the shares present or represented at the meeting is
required for approval of the proposals requiring a shareholder vote.
When stock is in the name of more than one person, each such person
should sign the proxy. If the shareholder is a corporation, the proxy should be
signed in the name of such corporation by an executive or other authorized
officer. If signed as attorney, executor, administrator, trustee, guardian or in
any other representative capacity, the signer's full-title should be given and,
if not previously furnished, a certificate or other evidence of appointment
should be furnished.
A shareholder executing and returning a proxy has the power to revoke
it at any time before it is voted. A shareholder who wishes to revoke a proxy
can do so by executing a late dated proxy relating to the same shares and
delivering it to the Secretary of the Company prior to the vote at the Annual
Meeting, by written notice of revocation received by the Secretary prior to the
vote at the Annual Meeting, or by appearing in person at the Annual Meeting,
filing a written notice or revocation and voting in person the shares to which
the proxy relates.
In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by the directors, officers and
regular employees of the Company. Such persons will receive no additional
compensation for such services. Arrangements will also be made with certain
brokerage firms and certain other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed for their reasonable out-of-pocket expenses
incurred by them in connection therewith will be borne by the Company. All
expenses incurred in connection with this solicitation will be borne by the
Company.
2
The Company is including with this Proxy Statement its Annual Report to
shareholders for the year ended December 31, 2000, which includes a copy of the
Company's Form 10-K registration, containing the Company's audited financial
statements, as filed with the Securities and Exchange Commission. Shareholders
may receive, without charge, additional copies of the Form 10-K registration, by
writing to Vicom, Inc. at its principal corporate office.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on April 17, 2001,
(the "Record Date") will be entitled to vote at this meeting. On the Record
Date, there were 7,994,193 shares of Common Stock issued and outstanding. Each
holder of Common Stock is entitled to one vote, exercisable in person or by
proxy, for each share of common stock held of record on the Record Date. The
affirmative vote of holders of a majority of shares of Common Stock outstanding
on the Record Date is required for approval of the proposals to be voted upon at
the Annual Meeting.
The following table sets forth certain information as of April 17,
2001, with respect to each person known by the Company to be the beneficial
owner of more than 5 percent of its Common Stock, each director of the Company,
and all officers and directors of the Company as a group. Except as indicated,
each of the persons listed in the following table has sole voting and investment
power with respect to the shares set forth opposite his name.
NAME AND ADDRESS OF BENEFICIAL OWNERS NUMBER OF SHARES(1) PERCENT OF COMMON
------------------------------------- BENEFICIALLY OWNED SHARES OUTSTANDING
------------------ ------------------
Americable, Inc. 2,800,000(2) 29.8%
7450 Flying Cloud Drive
Eden Prairie, MN 55344
Steven Bell 1,071,347(3) 12.5%
9449 Science Center Drive
New Hope, MN 55428
David Ekman 3,250,000(4) 33.7%
1402 42nd Street SW
Fargo, ND 58103
Marvin Frieman 969,714(5) 11.4%
9449 Science Center Drive
New Hope, MN 55428
James L. Mandel 355,800(6) 4.3%
9449 Science Center Drive
New Hope, MN 55428
Pierce McNally 128,236(7) 1.6%
14853 DeVeau Place
Minnetonka, MN 55345
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1 The percentages are calculated on the basis of 7,994,193 shares of
Vicom Common Stock outstanding. Shares of Common Stock not outstanding
but deemed beneficially owned by virtue of the individual's right to
acquire them as of April 17, 2001 or within 60 days of such date are
treated as outstanding when determining the number of shares owned by
each person and the group and the percent of the class owned by each
individual and the group. Unless otherwise indicated, each person named
or included in the group has sole vesting and investment power with
respect to the shares of Common Stock set forth opposite his or her
name. Unless otherwise indicated, the information in the table does not
include any effects for stock options and warrants outstanding, yet be
issued or yet to be exercised.
2 Includes 50,000 shares of Common Stock owned by CorStar Holdings, Inc.,
the parent company of Americable, Inc. Includes vested warrants to
acquire 1,400,000 shares of Common Stock.
3 Includes vested options to acquire 29,167 shares of Common Stock.
Includes vested warrants to acquire 521,090 shares of Common Stock. Mr.
Bell's beneficial ownership does not include 31,250 shares of Common
Stock owned by Mr. Bell's spouse as to which Mr. Bell disclaims his
beneficial ownership.
4 Includes vested warrants to acquire 1,600,000 shares of Common Stock
and vested options to acquire 50,000 shares of Common Stock.
5 Includes vested options to acquire 87,500 shares and vested warrants to
acquire 441,107 shares of Common Stock.
6 Includes vested warrants to acquire 140,400 shares of Common Stock and
vested options to acquire 7,500 shares of Common Stock.
7 Includes vested warrants to acquire 56,636 shares of Common Stock and
vested options to acquire 30,000 shares of Common Stock.
3
Paul Knapp 101,300(8) Less than 1%
2501 Cleveland Avenue North
Roseville, MN 55113-2717
Jonathan Dodge 30,500(9) Less than 1%
715 Florida Avenue South - Suite 402
Golden Valley, Minnesota 55426
Mark Mekler 30,000(10) Less than 1%
800 Nicollet Mall
Minneapolis, Minnesota 55402
Manuel A. Villafana 30,000(11) 0
3905 Annapolis Lane - Suite 105
Plymouth, Minnesota 55447
All Directors and executive officers 8,746,897 52.2%
as a group (nine persons)
1. ELECTION OF DIRECTORS
Nine persons have been nominated for election at the 2001 Annual
Meeting as directors for a one-year term expiring at the 2002 Annual Meeting.
The directors will hold office for the term for which elected and will serve
until their successors have been duly elected and qualified.
It is intended that votes will be cast pursuant to the enclosed proxy
for the election of the nominees in the table below, except for those proxies,
which withhold such authority. In the event that the proxy will be voted for the
election of such other person or persons as the management may recommend in the
place of such nominee. The management has no reason to believe that any of the
nominees will not be candidates or will be unable to serve.
INFORMATION ABOUT NOMINEES
The following information has been furnished to the Company by the respective
nominees for director.
NAME AGE POSITION DIRECTOR
- ---- --- -------- --------
SINCE
-----
Steven Bell............... 42 President, Vicom Incorporated 1994
Jonathan Dodge............ 50 Partner, Dodge & Fox C.P.A. Firm 1997
David Ekman............... 40 President, Corporate Technologies, USA, Inc. 1999
Marvin Frieman............ 69 Chairman of the Board, Vicom Incorporated 1983
Paul Knapp................ 42 President and Chief Executive Officer, Space Center Ventures, Inc. 2000
James L. Mandel........... 44 Chief Executive Officer, Vicom, Incorporated 1998
Pierce McNally............ 51 Chairman of the Board, Lockermate Corporation 1999
Mark Mekler............... 46 Regional Director, U.S. Bancorp Piper Jaffray 1999
Manuel A. Villafana...... 60 Chairman and Chief Executive Officer ATS Medical 2000
The Board of Directors recommends a vote for the election each of the nominees
named above.
- --------
8 Includes vested warrants to acquire 50,650 shares of Common Stock.
9 Includes vested options to acquire 30,000 shares of Common Stock.
10 Includes vested options to acquire 30,000 shares of Common Stock.
11 Includes vested options to acquire 30,000 shares of Common Stock.
4
STEVEN BELL was general counsel and Vice President of the Company from June 1985
through October 1994, at which time he became Chief Financial Officer. He was
also named President in July 1997. He is a graduate of the William Mitchell
College of Law.
JONATHAN DODGE has been the Senior Partner of the C.P.A. firm of Dodge & Fox
since its inception in March 1997. Prior to that, he was a partner in the CPA
firm of Misukanis and Dodge from 1992 to March 1997. Mr. Dodge is a member of
both the AICPA and the Minnesota Society of CPA's.
DAVID EKMAN is President of Corporate Technologies, USA, Inc. He has worked
continuously in the computer business since 1981, initially as a franchisee of
Computerland, a personal computer dealer and subsequently from 1996 to December
1999 as President of Ekman, Inc., a value-added computer reseller and the
predecessor company to Corporate Technologies, USA, Inc
MARVIN FRIEMAN was Vice President and Sales Manager of the Company since its
inception in 1975 until October 1994. He was named Chief Executive Officer of
the Company in November 1994 and served in that position until he became
Chairman in October 1998. He has been a director since September 1983.
PAUL KNAPP has been President and CEO of Space Center Ventures, Inc. since April
1998. He is Sr. Vice President of Space Center, Inc. From February, 1993 to
March, 1998, he was Vice President and Director of Operations for Space Center
Ventures, Inc. Mr. Knapp also serves on the Board of Directors for Devnet, LLC;
Atrix International, Inc.; Viamedics and Square Roots.
JAMES MANDEL has been the Chief Executive Officer and the Director of the
Company since October 1, 1998. He was co-founder of Call 4 Wireless, LLC, a
telecommunications company specializing in wireless communications, and served
as its Chairman and a member of the Board of Directors from December 1996 until
October 1998 and as its interim Chief Executive Officer from December 1996 until
December 1997. From October 1991 to October 1996, he was Vice President of
Systems for Grand Casinos, Inc., where his duties included managing the design,
development, installation and on-going maintenance for the 2,000 room, $507
million Stratosphere Hotel, Casino and Tower in Las Vegas. Mr. Mandel also
managed the systems development of Grand Casino Mille Lacs, in Onamia,
Minnesota, Grand Casino Hinckley in Hinckley, Minnesota and six other casinos
nationwide. He also serves on the board of CorVu Corporation and is a trustee of
the Boys and Girls Club of Minneapolis.
PIERCE MCNALLY currently serves as Chairman, Secretary and Director of
Lockermate Corporation of Minnetonka, Minnesota, a company that provides locker
systems to schools. He served as Minnesota American's Chairman of the Board,
Chief Executive Officer and Secretary from October 1994 until January 2000 when
Minnesota American merged with CorVu Corporation. He practiced corporate law at
Oppenheimer, Wolff & Donnelly, LLP from 1979 to 1985. He served as Chairman and
Director of Corporate Development of Nicollet Process Engineering, Inc. from May
1995 until April 1999, when he retired from the board.
MARK K. MEKLER, a registered representative, is a Regional Director of U.S.
Bancorp Piper Jaffray responsible for overseeing branch officers in Minnesota.
He has nineteen years experience in the financial services industry. He is also
a member of the Board of Directors of the Business Education and Economics
Foundation (BEEF).
MANUEL A. VILLAFANA currently serves as Chairman and Chief Executive Officer of
ATS Medical, which he has headed since 1987. Prior to his current position, Mr.
Villafana was Chairman of GV Medical, Inc. from 1983 to 1987. Mr. Villafana also
served as President and Chairman of St. Jude Medical, Inc. from 1976 to 1982
where he co-developed the St. Jude heart valve.
5
EXECUTIVE OFFICERS
Steven Bell, David Ekman and James Mandel, directors, are the only executive
officers of the Company.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met three times on a regular basis in 2000. As
permitted by Minnesota Law, the Board of Directors also acted from time to time
during 2000 by unanimous written consent in lieu of conducting formal meetings.
Last year, there were five such actions and accompanying Board Resolutions
passed. The Board has designated an audit committee consisting in 2000 of Jon
Dodge, Manuel Villafana, and Mark Mekler. NASDAQ listing standards require that
by June, 2001 all NASDAQ-listed companies have audit committees composed of
three outside, independent directors. Our Audit Committee is composed of three
outside, independent directors. The Board also designated a compensation
committee consisting in 2000 of Pierce McNally and Paul Knapp. The audit and
compensation committees both met twice in 2000.
Our audit committee,
o recommends to our board of directors the independent auditors to
conduct the annual audit of our books and records;
o review the proposed scope and results of the audit;
o approves the audit fees to be paid;
o review accounting and financial controls with the independent public
accountants and our financial and accounting staff; and
o review and approves transactions between us and our directors, officers
and affiliates.
Our compensation committee,
o reviews and recommends the compensation arrangements for management,
including the compensation for our chief executive officer; and
o establishes and reviews general compensation policies with the
objective to attract and retain superior talent, to reward individual
performance and to achieve our financial goals.
6
EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the
remuneration paid by the Company to its executive officers whose aggregate cash
and cash-equivalent remuneration approximated or exceeded $100,000 during the
Company's last three fiscal years ending December 31, 2000.
SUMMARY COMPENSATION TABLE
--------------------------
NAME AND PRINCIPAL YEAR SALARY($) BONUS OTHER RESTRICTED SECURITIES LTIP ALL OTHER
------------------- ---- --------- ----- ANNUAL STOCK UNDERLYING PAYOUTS COMPENSATION
POSITION ($) COMPENSATION AWARD(S) OPTIONS/ ($) ($)
-------- --- ($) ($) SARS(#) --- ---
--- --- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
LONG TERM COMPENSATION
----------------------
James L. Mandel 2000 $132,000 -0- -0- -0- -0- -0- -0-
Chief Executive Officer 1999 $133,117 -0- -0- -0- 225,000 -0- -0-
1998 $36,114* -0- -0- -0- -0- -0- -0-
Steven Bell 2000 $99,000 -0- -0- -0- -0- -0- -0-
President 1999 $108,392 -0- -0- -0- -0- -0- -0-
Vicom, Incorporated 1998 $101,076 -0- -0- -0- -0- -0- -0-
Marvin Frieman 2000 $82,665 -0- -0- -0- -0- -0- -0-
Chairman of the Board 1999 $98,582 -0- -0- -0- -0- -0- -0-
1998 $103,095 -0- -0- -0- -0- -0- -0-
Dave Ekman 2000 $108,269 -0- -0- -0- -0- -0- -0-
President* 1999 $48,775 -0- -0- -0- 150,000 -0- -0-
Corporate Technologies
USA, Inc.
* Mr. Mandel became Chief Executive Officer of Vicom, Inc. in October 1998.
* Mr. Ekman became President of Corporate Technologies USA, Inc. in November
1999.
DIRECTORS COMPENSATION
Effective June 30, 2000, Vicom added a policy of paying its outside
(non-management) Board Members a fee of $500.00 for each board meeting attended.
The Company paid a total of $4,000 in such fees in Fiscal Year 2000. The
Company's directors Knapp, Mekler, McNally, Dodge and Villafana each received a
30,000 share option grant in November, 2000 at an option exercise price of $4.75
per share, pursuant to the terms and conditions of the Company's 2000
non-employee director stock compensation plan.
7
PERFORMANCE GRAPH
The following performance graph compares cumulative total shareholder
returns on the Company's common stock over the last five fiscal years, ended
December 31, 2000, with The Nasdaq Stock Market (U.S. Companies) Index and other
leading industry indices, assuming initial investment of $100 at the beginning
of the period and the reinvestment of all dividends.
[graph]
COMPARISON OF FIVE YEAR - CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
VICOM, INC.
PREPARED BY THE RESEARCH DATAGROUP, INC.
VICOM, INC. CUMULATIVE TOTAL RETURN
--------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00
VICOM, INC. 275.00 200.00 600.00 1600.00 1800.00
NASDAQ STOCK MARKET (U.S.) 173.90 213.07 300.43 557.58 237.36
RUSSELL 2000 154.73 203.91 190.76 187.92 163.36
NASDAQ TELECOMMUNICATIONS 133.86 195.40 323.51 573.43 187.79
CHASE H & Q COMMUNICATIONS 182.84 173.10 255.56 799.78 319.13
S & P COMMUNICATION SERVICES 102.34 144.52 220.16 262.27 160.49
2. INDEPENDENT PUBLIC ACCOUNTANTS
8
It is proposed that Lurie, Besikof, Lapidus & Company, LLP Independent
Public Accountants, be ratified as auditors for the Company for the prior Fiscal
Year, 2000. The Company paid total fees of $199,084 to Lurie, Besikof, Lapidus &
Company, LLP in 2000 for the Annual Audit and quarterly reviews of the Company's
consolidated financial statements, including the Company's Forms 10-K and 10-Q;
this amount also included fees for reviewing various SEC registration
statements. Fees for non-audit services totaled an additional $5,902.00 in the
year 2000.
It is expected that a representative of Lurie, Besikof, Lapidus &
Company, LLP will be present at this meeting. The representative will have an
opportunity to make a statement and will be available to respond to appropriate
questions.
STOCK OPTION GRANTS DURING 2000
THE FOLLOWING TABLE PROVIDES INFORMATION REGARDING STOCK OPTIONS
GRANTED DURING FISCAL 2000 TO THE NAMED EXECUTIVE OFFICERS IN THE SUMMARY
COMPENSATION TABLE.
NAME NUMBER OF PERCENT OF TOTAL EXERCISE EXPIRATION DATE
---- SHARES OPTIONS GRANTED TO OR ---------------
UNDERLYING EMPLOYEES IN FISCAL BASE PRICE
OPTIONS YEAR PER SHARE
GRANTED(1) ---- ---------
---------
James L. Mandel.......... -0- -0- - -
Steven M. Bell........... -0- -0- - -
Marvin Frieman........... -0- -0- - -
Dave Ekman............... -0- -0- - -
AGGREGATED OPTION EXERCISES IN 2000 AND YEAR END OPTION VALUES
--------------------------------------------------------------
The following table provides information as to options exercised by the
named executive officers in the Summary Compensation Table during fiscal 2000
and the number and value of options at December 31, 2000.
- ----------------------
1 Each option represents the right to purchase one share of common stock.
The options shown in this table are all non-qualified stock options. To
the extent not already exercisable, the options generally become
exercisable in the event of a merger in which Vicom is not the
surviving corporation, a transfer of all stocks of Vicom, a sale of
substantially all the assets, or a dissolution or liquidation, of
Vicom.
9
NAME SHARES ACQUIRED VALUE(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXCERSIABLE
- ---- ON EXERCISE REALIZED ------------------------- -------------------------
--------------- --------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2000 DECEMBER 31, 2000(2)
----------------- ------------------
James L. Mandel............ 75,000 $714,375 75,000 75,000 $292,500 $292,500
Steven M. Bell............. 58,333 $512,705 12,500 10,000 $43,375 $38,100
Marvin Frieman............. -0- -0- 30,000 30,000 $114,300 $114,300
David Ekman................ -0- -0- 50,000 100,000 $125,000 $250,000
- -----------
OTHER COMPENSATION AND LONG-TERM INCENTIVE PLANS
The Company has no long-term incentive plans and issued no long-term
incentive awards during 2000.
The Company has employment agreements with Mr. Marvin Frieman, Chairman
of the Board, and Mr. Steven Bell, President, for the term beginning October
1996 and expiring October 2001. Messrs. Frieman's and Bell's compensation is not
directly tied to the Company's performance. Their agreements call for special
compensation payable to each of them in an amount equal to two and one-half
times his annual salary upon his termination if other than for cause and a
change in control in the Company. The agreements state that annual base salary
for Messrs. Frieman and Bell will be $95,000 per year. This base salary is set
and subject to approval by the Company's entire Board of Directors. Thus, the
aforementioned lump sum compensation could equal $237,500 for Mr. Frieman if
such special compensation is triggered. Other key provisions of the contracts
include an agreement by Mr. Frieman and Mr. Bell to keep confidential
information secret both during and after employment by the Company and covenants
not to compete with the Company for one year from the date of termination of
employment. A change in control in the agreements is defined as the acquisition
by any corporation or group of more than 20 percent of the outstanding shares of
voting stock of Vicom coupled with or followed by the election as Directors of
Vicom of persons who were not directors at the time of such acquisition, if such
persons shall become a majority of the Board of Directors of Vicom.
The Company maintains key man life insurance policies in the amount of
$1,000,000 each on the lives of Steven Bell and Marvin Frieman. The Company is
the beneficiary of these policies and has adopted a plan to pay fifty percent of
all life insurance proceeds to the spouse or surviving children of each such
officer.
The Company also has a three year employment agreement, from October
1998 to September 2001, with James L. Mandel, Chief Executive Officer, the terms
of which involve an annual base salary of $132,000 and a stock option of 225,000
shares at $0.60 cents per share, vested over a three year period. Mr. Mandel's
job responsibilities involve developing company business plans, developing
expansion and growth opportunities and directing other executive officers.
- ----------------------
1 Value is calculated on the basis of the difference between the option
exercise price and the fair market value of the Company's Common Stock
as quoted on the NASDAQ on the date of exercise, multiplied by the
number of shares underlying the option. These values represent certain
assumed rates of appreciation. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock
of Vicom, and overall stock market conditions. The values represented
in the table may not necessarily be achieved.
2 Value is calculated on the basis of the difference between the option
exercise price and $4.50, the fair market value of the Company's Common
Stock at December 31, 2000 as quoted on the NASDAQ, multiplied by the
number of shares underlying the option. These values represent certain
assumed rates of appreciation. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock
of Vicom, and overall stock market conditions. The values represented
in the table may not necessarily be achieved.
10
The Company has a three-year employment agreement, from December 1999
to November 2002, with David Ekman as President of CTU. The terms of the
agreement pay Mr. Ekman an annual salary $110,000 per year. Mr. Ekman also has a
warrant to purchase 100,000 shares of Vicom Common Stock at a price of $2.00 per
share and a stock option for 150,000 shares, vested over a three-year period at
a price of $2.00 per share. Mr. Ekman's job responsibilities involve direct
supervision of CTUs daily operations.
PREFERRED STOCK
In December 1998, Vicom issued 2,550 shares of Class A Preferred for
$23,638 and 37,550 shares of Class B Preferred for $359,893. The Class B
Preferred was offered to certain note holders at a conversion rate of $10.00 per
share of Class B Preferred. Each share of Class A Preferred and Class B
Preferred is non-voting (except as otherwise required by law) and convertible
into five shares of common stock, subject to adjustment in certain
circumstances. Each holder of a share of Class A Preferred or Class B Preferred
has a five-year warrant to purchase one share of common stock at $3.00 per
share, subject to adjustment.
In June 2000, Vicom issued 80,500 shares of Class C Preferred for
$805,000. The Class C Preferred was offered to certain note holders at a
conversion rate of $10.00 a share. In September 2000, Vicom issued an additional
72,810 shares of Class C Preferred for $728,100. Each share of Class C Preferred
is non-voting (except as otherwise required by law) and convertible into two
shares of Vicom common stock, subject to adjustment in certain circumstances.
In November 2000, Vicom issued 72,500 shares of Class D Preferred for
$490,332. The Class D Preferred was sold to eight accredited investors at $10.00
per share. Each share of Class D Preferred is non-voting (except as otherwise
required by law) and convertible into two and one-half shares of Vicom Common
Stock, subject to adjustment in certain circumstances.
The holders of the Class A Preferred, Class B Preferred, Class C
Preferred and Class D Preferred (collectively, "Preferred Stock") are entitled
to receive, as and when declared by the Board, out of the assets of the Company
legally available for payment thereof, cumulative cash dividends calculated
based on the $10.00 per share stated value of the Preferred Stock. The per annum
dividend rate is eight percent (8%) for the Class A Preferred and ten percent
(10%) for the Class B Preferred and Class C Preferred and fourteen percent (14%)
for the Class D Preferred. Dividends on the Class A Preferred, Class C Preferred
and Class D Preferred are payable quarterly on March 31, June 30, September 30,
and December 31 of each year. Dividends on the Class B Preferred are payable
monthly on the first day of each calendar month. Dividends on the Preferred
Stock accrue cumulatively on a daily basis until the Preferred Stock is redeemed
or converted.
In the event of any liquidation, dissolution or winding up of Vicom,
the holders of the Class A Preferred and Class B Preferred will be entitled to
receive a liquidation preference of $10.50 per share, and the holders of the
Class C Preferred and Class D Preferred will be entitled to receive a
liquidation preference of $10.00 per share, each subject to adjustment. Any
liquidation preference shall be payable out of any net assets of Vicom remaining
after payment or provision for payment of the debts and other liabilities of
Vicom.
Vicom may redeem the Preferred Stock, in whole or in part, at a
redemption price of $10.50 per share for the Class A Preferred and the Class B
Preferred and $10.00 per share for the Class C Preferred and Class D Preferred
(subject to adjustment, plus any earned and unpaid dividends) on not less than
thirty days' notice to the holders of the Preferred Stock, provided that the
closing bid price of the common stock exceeds $4.00 per share (subject to
adjustment) for any ten consecutive trading days prior to such notice. Upon
Vicom's call for redemption, the holders of the Preferred Stock called for
redemption will have the option to convert each share of Preferred Stock into
shares of common stock until the close of business on the date fixed for
redemption, unless extended by Vicom in its sole discretion. Preferred Stock not
so converted will be redeemed. No holder of Preferred Stock can require Vicom to
redeem his or her shares.
11
RELATED PARTY TRANSACTIONS
The following is a summary of all significant related party transactions for the
three years ended December 31, 2000.
Vicom and its subsidiaries lease principal offices located at 1700 42nd
Street SW, Fargo, ND 58013 and 9449 Science Center Drive, New Hope, Minnesota
55428. Vicom also leases a satellite office in Fargo consisting of approximately
3,800 square feet of space under a lease with a term that expires in July 2002.
Vicom also has offices staffed with five or fewer employees in Sioux Falls,
South Dakota, Omaha, Nebraska, and Bismarck, North Dakota We have no foreign
operations. The main Fargo office lease expires in 2001 and covers approximately
20,000 square feet. The Fargo base rent is $18,550 per month. The New Hope
office lease expires in 2006 and covers approximately 47,000 square feet. The
New Hope base rent is $14,440 per month. Both the New Hope and main Fargo leases
have provisions that call for the tenants to pay net operating expenses,
including property taxes, related to the facilities. Both offices have office,
warehouse and training facilities.
Vicom considers its current facilities adequate for its current needs
and believes that suitable additional space would be available as needed.
In December 1999, James Mandel and Pierce McNally, directors of Vicom,
and Enstar, Inc., a Vicom shareholder, guaranteed a note payable by Vicom to
David Ekman in the amount of $1,250,000 pursuant to the purchase of Ekman, Inc.
They were given warrants to purchase Vicom's stock at $2.00 per share in
exchange for the guarantee.
The number of warrants issued were Enstar, Inc. 50,000 shares, Messrs.
Mandel and McNally, 25,000 shares each.
Interest expense paid by Vicom to related parties was approximately
$157,000 in 2000, $142,000 in 1999, $47,000 in 1998. Related parties include the
Company's Chairman, Chief Executive Officer, President, and the President's
mother.
Subsequently, in April 2000, Vicom advanced loans to the following
Directors in the amounts stated by their names: David Ekman, $200,000; James
Mandel, $132,000; Paul Knapp, $68,750; Pierce McNally, $57,500. All loans are
due to Vicom on October 15, 2001 and bear an annual interest rate of 8%,
evidenced by Promissory Notes. All loans were incurred for the purpose of
purchasing Vicom stock and the loans are collateralized by the Director/Borrower
granting Vicom a security interest in said stock. The loans were repaid by all
directors as of September 30, 2000.
3. OTHER MATTERS
The management of the Company is unaware of any other matters that are
to be presented for action at the meeting. Should any other matter come before
the meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgement.
SECTION 16(a) - BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than 10% of Vicom's
common stock to file reports of ownership and reports of changes in
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ownership with the Securities and Exchange Commission and to furnish Vicom with
copies of such reports. To Vicom's knowledge, based on such reports furnished to
Vicom, all Section 16(a) filing requirements were satisfied.
SHAREHOLDERS PROPOSALS
Proposals submitted to be presented at the 2002 annual meeting of
shareholders must be received by the Company by December 30, 2001 to be
considered for inclusion in the Company proxy materials relating to that
meeting.
Vicom, Incorporated
by Pierce McNally
Secretary
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VICOM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 30, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be voted on
the matters set forth on this form as directed by the shareholder, but if no
direction is made in the space provided, it will be voted FOR the election of
all nominees to the Board of Directors, and FOR the ratification of all
proposals submitted herewith to Vicom shareholders.
The undersigned, a shareholder of Vicom, Inc. (the "Company") hereby appoints
James Mandel and Steven Bell, and each of them as proxies, with full power of
substitution, to vote on behalf of the undersigned the number of shares which
the undersigned is then entitled to vote, at the Annual Meeting of the
Shareholders of Vicom, Inc. to be held at The Radisson South Hotel, 7800
Normandale Boulevard, Bloomington, Minnesota on Wednesday, May 30, 2001 at 3:00
p.m., and any adjournments or postponements thereof upon matters set forth
below, with all the powers which the undersigned would possess if personally
present.
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Vicom, Inc., c/o Steven Bell, 9449 Science Center
Drive, New Hope, Minnesota 55428.
1. Election of directors: For all nominees listed below
(except as marked to the contrary below)
01 Steven Bell 02 Jonathan Dodge 03 David Ekman
04 Marvin Frieman 05 Paul Knapp 06 James Mandel
07 Pierce McNally 08 Mark Mekler
09 Manuel A. Villafana
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE WRITE THE
NUMBER(S) OF THE NOMINEE(S) IN THE SPACE PROVIDED BELOW.)
2. Proposal to ratify Lurie, Besikof, Lapidus & Co., LLP
as independent auditors of the Company for Fiscal Year 2000.
/ / For / / Against / / Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL PROPOSALS CONTAINED IN
THIS PROXY.
Address Change? Mark Box / / The undersigned hereby revokes all previous
Indicate changes below: proxies relating to theshares covered
hereby and acknowledge receipt of the
Notice and Proxy Statement relating to the
Annual Meeting.
Dated: , 2001
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Signature(s) in Box
(SHAREHOLDERS MUST SIGN EXACTLY AS
THE NAME APPEARS AT LEFT, WHEN SIGNED
AS A CORPORATE OFFICER, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN,
ETC., PLEASE GIVE FULL TITLE AS SUCH.
BOTH JOINT TENNANTS MUST SIGN.)
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