SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Vicom, Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
VICOM, INCORPORATED
9449 SCIENCE CENTER DRIVE
NEW HOPE, MINNESOTA 55428
July 15, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Vicom, Incorporated to be held at the corporate offices of the Company located
at 9449 Science Center Drive, New Hope, Minnesota, 55428 on July 28, 1999 at
10:00 a.m.
The notice of Annual Meeting and the Proxy Statement that follow describe the
formal business to be transacted at the meeting. During the meeting we will also
review the activities of the past year and items of general interest about
Vicom, Incorporated. Shareholders will also be given the opportunity to ask
questions.
Sincerely,
James L. Mandel
Chief Executive Officer
1
V I C O M
I N C O R P O R A T E D
9449 SCIENCE CENTER DRIVE
NEW HOPE, MINNESOTA 55428
- -------------------------------------------------------------------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 28, 1999
- -------------------------------------------------------------------------------
The Annual Meeting of the Shareholders of VICOM, INCORPORATED will be
held at Vicom headquarters, 9449 Science Center Drive, New Hope, MN 55428, on
Wednesday, July 28, 1999 at 10:00 a.m. Minneapolis time, for the following
purposes, as more fully described in the accompanying Proxy Statement.
1. To elect seven directors for a term of one year.
2. To vote upon the ratification of Vicom, Inc.'s 1999 Stock Compensation
Plan.
3. To vote upon the ratification of Lurie, Besikof, Lapidus & Co, LLP as
independent auditors of the Company for the prior year.
4. 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 June 1, 1999 will be
entitled to receive notice of and vote 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 the meeting, please mark, sign, date and mail the
enclosed proxy.
By Order of the Board of Directors
Pierce McNally
Secretary
2
VICOM, INCORPORATED
9449 SCIENCE CENTER DRIVE
NEW HOPE, MN 55428
- ------------------------------------------------------------------------------
PROXY STATEMENT
- ------------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
JULY 28, 1999
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 July 15, 1999.
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 favor
of the proposals to be acted upon at the Annual Meeting. If any other 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.
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 sign 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
3
reasonable out-of-pocked expenses incurred by them in connection therewith.
All expenses incurred in connection with this solicitation will be borne by
the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on June 1, 1999
(the "Record Date") will be entitled to vote at this meeting. On the Record
Date, there were 3,506,236 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 the holders of a majority of the 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 June 1, 1999
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.
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING STOCK
- ------------------------------------ ------------------ -----------------
Marlyce Sause 239,000 6.8%
9414 Woodbridge Road
Bloomington, MN 55438
Marvin Frieman 458,000 13.1%
5725 West 25 1/2 Street
St. Louis Park, MN 55426
Steven Bell 460,257 13.1%
4455 West Branch Road
Mound, MN 55364
Americable, Inc. 1,350,000 38.5%
7450 Flying Cloud Drive
Eden Prairie, MN 55344
All Officers and Directors 916,907 26.2%
as a Group (seven persons)
4
ELECTION OF DIRECTORS
Seven persons have been nominated for election at the 1999 Annual
Meeting as directors for a one-year term expiring at the 2000 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 case pursuant to the enclosed proxy
for the election of the nominees listed 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 OF NOMINEE AGE DIRECTOR SINCE
- --------------- --- --------------
Marvin Frieman 67 1983
Chairman
Vicom, Incorporated
Steven Bell 40 1994
President
Vicom, Incorporated
Jonathan B. Dodge 48 1997
Partner in the C.P.A. Firm of Dodge & Fox
James Mandel 43 1998
Chief Executive Officer
Vicom, Incorporated
Pierce McNally 50 1999
Chairman of the Board
Minnesota American
Mark Mekler 45 1999
Regional Director
Piper Jaffray, Inc.
Peter Flynn 39 1999
President
Americable, Inc.
5
MARVIN FRIEMAN was Vice President and Sales Manager of the Company since
its inception 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. Prior to
joining the Company in 1975, Mr. Frieman was a founder of Commpro, Inc.,
which sold and installed commercial sound and intercom systems.
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 named President in July 1997. He is a graduate of the William
Mitchell College of Law.
JONATHAN B. DODGE is the Senior Partner of the C.P.A. firm of Dodge &
Fox. Mr. Dodge is a member of both the AICPA and the Minnesota Society of
CPA's.
JAMES MANDEL has been the Chief Executive Officer and a Director of the
Company since October 1, 1998. He was co-founder of Call 4 Wireless, LLC, a
telecommunications company specializing in wireless communication, 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 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 Minnesota American, Inc. and is a trustee of the Boys and
Girls Club of Minneapolis.
PIERCE MCNALLY is Chairman of the Board and Chief Executive Officer of
Minnesota American and formerly an officer and director of Midwest
Communications, Inc. He also serves on the board of Imaging Institute, Inc.,
Agricultural Financial Services, Inc. and Rainy River Resources, Inc. He is a
graduate of Stanford University and University of Wisconsin Law School.
MARK MEKLER, a registered representative, is a Regional Director of
Piper Jaffray, Inc., responsible for overseeing branch offices in Minnesota.
He has eighteen 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).
PETER FLYNN is Executive Vice President of ENStar, Inc. Effective
December 31st, 1998, Vicom acquired the Midwest region of ENStar's network
integration business. Flynn is also President of Americable, Inc., and a
director of CorVel Corporation. He also serves on the board of the Minnesota
chapter of The March of Dimes.
6
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met informally on a regular basis during 1998. As
permitted by Minnesota Law, the Board of Directors acted from time to time
during 1998 by unanimous written consent in lieu of conducting formal
meetings. Last year, there were three such actions and accompanying Board
Resolutions passed. The Board has designated an audit committee consisting of
Peter Flynn and Jon Dodge. The Board has also designated a compensation
committee consisting of Pierce McNally and Mark Mekler.
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, 1998.
LONG-TERM
NAME OF PRINCIPAL ANNUAL COMPENSATION
INDIVIDUAL POSITION YEAR COMPENSATION STOCK OPTIONS (#)
---------- --------- ---- ------------ -----------------
Marvin Frieman Chairman 1998 $103,095 -
1997 $101,269 87,500
1996 $106,550 -
Steven M. Bell President 1998 $101,076 -
1997 $102,337 87,500
1996 $106,942 -
James L. Mandel CEO 1998 $36,114 225,000
1997 - -
1996 - -
DIRECTORS FEES
The Company does not pay directors fees to its directors.
1997 STOCK OPTION PLAN
The Company has an Employee Stock Option Plan, effective January 15,
1997, pursuant to which 700,000 shares of common stock are reserved for
issuance pursuant to options granted and to be granted to key employees and
agents. Since the Plan's inception options for 690,500 share of common stock
have been granted to Company employees. Of those shares, options for 400,000
shares have been granted to Vicom executive officers. Options are granted by
the Company's Board of Directors. Options granted under the Plan may be
non-qualified stock options or incentives stock options pursuant to Section
422A of the Internal Revenue Code.
7
1999 STOCK COMPENSATION PLAN
The Company's Board of Directors is recommending and seeking shareholder
approval of its 1999 Stock Compensation Plan. The total number of shares of
stock reserved for awards under the plan is 1,500,000 shares. This includes
the 700,000 authorized under the Company's 1997 stock option plan. Once the
1999 plan is approved, no further stock options shall be granted or awarded
under the 1997 plan.
The purpose of the plan is to promote the interest of the Company and
its shareholders and by providing employees of the company with an
opportunity to be given a proprietary interest in the Company, and thereby
develop a stronger incentive to contribute to the Company's continued success
and growth. Awards pursuant to the proposed 1999 plan may be in the form of
either a restricted stock grant, which means a three year vesting period, or
stock options.
The exercise price of the options granted under the Plan is required to
be not less than the fair market value of the Common Stock on the date of
grant, and in the case of any shareholder owning 10 percent or more of the
Common Stock to whom an incentive stock option has been granted under the
Plan, the exercise price thereof is required to be not less than 110 percent
of the fair market value of the Common Stock on the date the option is
granted. Options are not transferrable. An optionee, or his or her personal
representative, may exercise his or her option for a period of ninety (90)
days following termination of employment, disability, or death. The term of
each option, which is fixed by the Committee, may not exceed 10 years from
the date the option is granted, or 5 years in the case of incentive stock
options granted to shareholders owning 10 percent or more of the Common Stock
to whom options have been granted. Options may be made exercisable in whole
or in installments as determined by the Committee or Board. The Committee or
Board may cancel an option of an employee who has terminated for cause or
takes employment with a competitor.
STOCK OPTION GRANTS DURING 1998
The following table sets forth individual grants of stock options made
to the named executive officers during the year ended December 31, 1998.
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OPTIONS EXERCISE PRICE ASSUMED ANNUAL RATE OF STOCK
UNDERLYING GRANTED TO OR BASE PRICE APPRECIATION
OPTIONS GRANTED EMPLOYEES IN PRICE/SHARE EXPIRATION FOR OPTION TERM (2)
(#)(1) FISCAL YEAR (%) ($) DATE
NAME 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------------------
Marvin Frieman - - - - - -
Steven Bell - - - - - -
James Mandel 225,000 50% $.60 1/15/2007 $84,900 $215,155
- ----------------------------------------------------------------------------------------------------------------------
8
(1) Each option represents the right to purchase one share of common stock.
The options shown in this table are all non-qualified stock options.
The options to purchase shares of Common Stock of Vicom granted to Mr.
Mandel become exercisable with respect to 33.3% of such shares each
year over a period of three years from the date of grant and have a
term of ten years. To the extent not already exercisable, the options
generally become exercisable in the event of a merger in which Vicom is
not the surviving corporation, a transfer of all the stock of Vicom, a
sale of substantially all the assets, or a dissolution or liquidation,
of Vicom.
(2) The compounding assumes a ten year exercise period for all option
grants. The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent Vicom's estimate or projection of
future common stock prices. These amounts represent certain assumed
rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on the future performance of the common stock
of Vicom, and overall stock market conditions. The amounts represented
in the table may not necessarily be achieved.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------
SHARES
ACQUIRED VALUE NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
ON EXERCISE REALIZED UNEXERCISED IN-THE-MONEY
(#) ($) OPTIONS AT YEAR END (#) AT YEAR END ($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------
Marvin Frieman - - 29,167 58,333 $19,375 $38,750
Steven Bell - - 29,167 58,333 $19,375 $38,750
James Mandel - - - 225,000 - $202,500
- ----------------------------------------------------------------------------------------------------------------------
OTHER COMPENSATION AND LONG-TERM INCENTIVE PLANS
The Company has no long-term incentive plans and issued no long-term
incentive awards during 1998.
The Company has employment agreements with Mr. Marvin Frieman, Chairman
of the Board, and Mr. Steven Bell, President, beginning, October, 1996 and
expiring July, 2001. Mssrs. Frieman's and Bell's compensation is not directly
tied to the Company performance. Their agreements call for special
compensation to him of a lump sum amount equal to two and one-half times his
annual base 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
Mssrs. 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 in
event such special compensation is triggered. Other key provisions of the
contract include an agreement by Frieman and 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 agreement is defined as
the acquisition by any corporation or group of more than 20 percent of the
outstanding shares of voting stock of Vicom, Inc. coupled with or followed by
the election as Directors if Vicom, Inc. 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, Inc.
9
The Company also has a three year employment agreement with James L.
Mandel, 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.
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.
PREFERRED STOCK
In December 1998, the Company authorized 275,000 shares of 8% Class A
Cumulative Convertible Preferred, no par value, and 60,000 shares of 10% Class B
Cumulative Convertible Preferred, no par value. The Class B preferred was
offered to certain notes payable holders at a conversion of $10.00 per Class B
share. Each share of Class A Preferred and Class B Preferred is nonvoting and
convertible into five shares of common stock. Issuance of a share of preferred
stock gives the holder a five year warrant to purcase one share of common stock
at $3.00 per share, subject to adjustment. Dividends on Class A are payable
quarterly at 8% per annum. Dividends on Class B Preferred are payable monthly at
10% per annum.
In December 1998, James Mandel, CEO, converted notes payable of $40,000
into 4,000 units of Class B Preferred Stock. In January 1999, Pierce McNally,
Director, converted notes payable of $25,000 into 2,500 units of Class B
Preferred Stock.
RELATED PARTY TRANSACTIONS
The following is a summary of all significant related party transactions
during fiscal year 1998.
The Company leases facility space from Marbell Realty, a limited
liability corporation owned in equal shares by Steven Bell and Marvin
Frieman, Executive Officers and Directors pursuant to lease, expiring in
2006. Total facilities rent expense paid under said lease was approximately
$181,000 in 1998. The Company believes that the rental amounts being paid
under the lease are equal to or less than the Company would be paying to
another landlord. The lease was ratified by the Company's Board of Directors.
During 1998, the Company purchased equipment of approximately $645,000
from Tadiran Telecommunications, Inc. a shareholder of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
It is proposed that Lurie, Besikof, Lapidus & Co., L.L.P., Independent
Public Accountants, be ratified as auditors for the Company for the prior
year.
It is expected that a representative of Lurie, Besikof, Lapidus & Co.,
L.L.P. will be present at the meeting. The representative will have an
opportunity to make a statement and will be available to respond to
appropriate questions.
10
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.
SHAREHOLDER PROPOSALS
Proposals submitted to be presented at the 2000 annual meeting of
shareholders must be received by the Company by December 30, 1999 to be
considered for inclusion in the Company proxy materials relating to that
meeting.
Vicom, Incorporated
by Pierce McNally
Secretary
11
VICOM, INCORPORATED THIS PROXY IS SOLICITED ON
9449 SCIENCE CENTER DRIVE BEHALF OF THE BOARD OF
NEW HOPE, MN 55428 DIRECTORS
PROXY The undersigned hereby appoints Pierce
McNally proxy, and hereby appoints him
to represent and to vote for any or all of
the nominees for election as directors, as
designated below, all the shares of stock of
Vicom, Incorporated held on record by the
Undersigned June 1, 1999 at the Annual
Meeting of Shareholders to be held on
July 28, 1999.
1. ELECTION OF DIRECTORS / / For all nominees listed below / / Withhold Authority
(except as marked to the (to vote for all nominees
contrary below) listed below)
Steven Bell, Marvin Frieman, James Mandel, Jonathan Dodge, Pierce McNally,
Mark Mekler, Peter Flynn
(INSTRUCTION: To withhold authority to vote for any individual nominees, write
the nominee's name in the space provided below.)
2. PROPOSAL TO RATIFY THE COMPANY'S 1999 STOCK COMPENSATION PLAN.
/ / For / / Against / / Abstain
3. PROPOSAL TO RATIFY THE APPOINTMENT OF LURIE, BESIKOF, LAPIDUS &
CO., L.L.P. AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR
FISCAL YEAR 1998.
/ / For / / Against / / Abstain
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, the proxy will be voted for proposals
1, 2 & 3.
Please sign exactly as the name appears on the proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign corporate in full by the executive or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Date: , 1999
----------------------
---------------------------
Signature
---------------------------
Signature if jointly held