UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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 [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
VICOM, INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(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)(4) 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
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NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 16, 2002
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The Annual Meeting of the Shareholders of VICOM, INCORPORATED will be
held at the Sheraton Minneapolis West, 12201 Ridgedale Drive, Minnetonka,
Minnesota, Tuesday, July 16, 2002, at 3:00 p.m. Minneapolis time, for the
following purpose, as more fully described in the accompanying Proxy Statement.
1. To elect six directors for a term of one year.
2. To vote upon the ratification of Virchow, Krause and Company, LLP as
independent auditors of the Company for Fiscal Year 2001.
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 June 5, 2002 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
Steven Bell
Secretary
1
VICOM, INCORPORATED
9449 SCIENCE CENTER DRIVE
NEW HOPE, MINNESOTA 55428
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
JULY 16, 2002
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 June 17, 2002.
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.
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.
The Company is including with this Proxy Statement its Annual Report to
shareholders for the year ended December 31, 2001, which includes a copy of the
Company's Form 10-K registration 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.
2
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on June 5, 2002
(the "Record Date") will be entitled to vote at this meeting. On the Record
Date, there were 11,908,294 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 June 5, 2002
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
------------------ ------------------
CorStar Holdings, Inc. 2,690,800(2) 19.5%
7450 Flying Cloud Drive
Eden Prairie, MN 55344
Steven Bell 1,074,303(3) 8.3%
9449 Science Center Drive
New Hope, MN 55428
David Ekman 3,300,500(4) 21.7%
1402 42nd Street SW
Fargo, ND 58103
Marvin Frieman 969,714(5) 7.5%
9449 Science Center Drive
New Hope, MN 55428
James L. Mandel 441,683(6) 3.6%
9449 Science Center Drive
New Hope, MN 55428
Donald Miller 732,000(7) 5.7%
1924 Cocoplum Way
Naples, FL 34105
Jonathan Dodge 30,500(8) Less than 1%
715 Florida Avenue South - Suite 402
Golden Valley, Minnesota 55426
All Directors and executive officers as a group (six persons) 6,486,967 35.3%
------------------------------
(1) The percentages are calculated on the basis of 11,908,294 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
June 5, 2002 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 to be
issued or yet to be exercised.
(2) Includes 193,800 shares of Common Stock owned by Americable, Inc., an
affiliated company. Includes vested warrants to acquire 1,400,000 shares of
Common Stock.
(3) Includes vested options to acquire 33,000 shares of Common Stock. Includes
vested warrants to acquire 521,490 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 100,500 shares of Common Stock.
(5) Includes vested options to acquire 88,000 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 150,500 shares of Common Stock.
(7) Includes vested warrants to acquire 410,000 shares of Common Stock and
vested options to acquire 37,000 shares of Common Stock.
(8) Includes vested options to acquire 30,000 shares of Common Stock.
3
1. ELECTION OF DIRECTORS
Six persons have been nominated for election at the 2002 Annual Meeting
as directors for a one-year term expiring at the 2003 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 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........... 43 President & CFO, Vicom Incorporated 1994
Jonathan Dodge........ 51 Partner, Dodge & Fox C.P.A. Firm 1997
David Ekman........... 41 President, Corporate Technologies USA, Inc. 1999
Marvin Frieman........ 70 Chairman emeritus of the Board, Vicom, Incorporated 1983
James L. Mandel....... 45 Chief Executive Officer, Vicom, Incorporated 1998
Donald Miller......... 62 Chairman, Vicom, Incorporated 2001
The Board of Directors recommends a vote for the election each of the nominees
named above.
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.
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.
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DONALD MILLER worked for Schwan's enterprises between 1962 and 2001, primarily
as Chief Financial Officer. He is currently employed by Schwan's as Special
Assistant to the CEO. He was appointed to Vicom's Board of Directors in
September 2001 and was elected Chairman of the Board in April 2002.
The Company knows of no arrangements or understandings between a director or
nominee and any other person pursuant to which any person has been selected as a
director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the company.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times on a regular basis in 2001. As
permitted by Minnesota Law, the Board of Directors also acted from time to time
during 2001 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 in 2001 of Jon
Dodge, Donald Miller and Mark Mekler. The Board also designated a compensation
committee consisting in 2001 of Pierce McNally and Paul Knapp.
Our audit committee,
* recommends to our board of directors the independent auditors to conduct the
annual audit of our books and records;
* review the proposed scope and results of the audit;
* approves the audit fees to be paid;
* review accounting and financial controls with the independent public
accountants and our financial and accounting staff; and
* review and approves transactions between us and our directors, officers and
affiliates.
Our compensation committee,
* reviews and recommends the compensation arrangements for management,
including the compensation for our chief executive officer; and
* 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.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing, and financial reporting practices of the Company. During the year
ended December 31, 2001, the Committee met four times, and Donald Miller, as the
Audit Committee chair and representative of the Audit Committee, discussed the
interim financial information contained in quarterly earnings announcement with
the Company's Chief Financial Officer and the Company's independent auditors
prior to public release.
In discharging its oversight responsibility as to the audit process,
the Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may affect their objectivity
and independence and satisfied itself as to the auditors' independence. The
5
Audit Committee also discussed with management and the independent auditors the
quality and adequacy of the Company's internal controls. The Audit Committee
reviewed with both the independent auditors their audit plans, audit scope, and
identification of audit risks.
The Audit Committee discussed and reviewed with the Company's
independent auditors all communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees" and, both with and without
management present, discussed and reviewed the results of the independent
auditors' examination of the Company's financial statements. The Audit Committee
reviewed the audited consolidated financial statements of the Company as of and
for the fiscal year ended December 31, 2001 with management and the independent
auditors. Management has the responsibility for the preparation of the Company's
consolidated financial statements and the Company's independent auditors have
the responsibility for the examination of those statements.
Based on the review referred to above and discussions with management
and the independent auditors, the Audit Committee recommended to the Board of
Directors that the Company's audited consolidated financial statements be
included in its Annual Report on Form 10-K for the fiscal year ended December
31, 2001 for filing with the Securities and Exchange Commission. The Audit
Committee also recommended the reappointment, subject to shareholder approval,
of the independent auditors and the Board of Directors concurred in such
recommendation.
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 $100,000 during the
Company's last three fiscal years ending December 31, 2001.
6
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
NAME AND PRINCIPAL YEAR SALARY($) BONUS OTHER RESTRICTED SECURITIES LTIP ALL OTHER
POSITION ---- --------- ($) ANNUAL STOCK UNDERLYING PAYOUTS COMPENSATION
-------- --- COMPENSATION AWARD OPTIONS/ ($) ($)
($) (S) SARS(#) --- ---
--- ($) -------
---
(a) (b) (c) (d) (e) (f) (g) (h) (i)
AWARDS PAYOUTS
------ -------
James L. Mandel 2001 $131,346 -0- -0- -0- 500 -0- -0-
Chief Executive Officer 2000 $132,000 -0- -0- -0- -0- -0- -0-
1999 $133,117 -0- -0- -0- 225,000 -0- -0-
Steven Bell 2001 $108,365 -0- -0- -0- 10,500 -0- -0-
President 2000 $99,000 -0- -0- -0- -0- -0- -0-
1999 $108,392 -0- -0- -0- -0- -0- -0-
Marvin Frieman 2001 $64,714 -0- -0- -0- 500 -0- -0-
Director 2000 $82,665 -0- -0- -0- -0- -0- -0-
1999 $98,582 -0- -0- -0- -0- -0- -0-
-
Dave Ekman 2001 $100,614 -0- -0- -0- 500 -0- -0-
President* 2000 $108,269 -0- -0- -0- -0- -0- -0-
1999 $48,775 -0- -0- -0- 150,000 -0- -0-
* Mr. Ekman became President of Corporate Technologies USA, Inc. in November
1999.
DIRECTORS FEES
There were no cash fees paid to Directors in 2001. Outside Directors
receive a stock option of 30,000 shares at market price upon joining the Vicom
Board.
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, 2001, 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.
7
COMPARISON OF FIVE YEAR - CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
VICOM, INC.
PREPARED BY THE RESEARCH DATAGROUP, INC.
[PLOT POINTS CHART]
VICOM, INC.
-------------------------------------- ----------- ---------- ----------- ---------- ----------
12/97 12/98 12/99 12/00 12/01
-------------------------------------- ----------- ---------- ----------- ---------- ----------
-------------------------------------- ----------- ---------- ----------- ---------- ----------
VICOM, INC. 72.73 218.18 581.82 654.55 250.18
-------------------------------------- ----------- ---------- ----------- ---------- ----------
NASDAQ STOCK MARKET (U.S.) 122.48 172.68 320.89 193.01 153.15
-------------------------------------- ----------- ---------- ----------- ---------- ----------
RUSSELL 2000 122.36 119.25 144.60 140.23 143.71
-------------------------------------- ----------- ---------- ----------- ---------- ----------
NASDAQ TELECOMMUNICATIONS 145.97 241.58 431.01 183.57 122.90
-------------------------------------- ----------- ---------- ----------- ---------- ----------
CHASE H & Q COMMUNICATIONS 94.67 139.77 437.43 278.16 129.55
-------------------------------------- ----------- ---------- ----------- ---------- ----------
S & P COMMUNICATION SERVICES 141.22 215.13 256.28 156.82 137.60
-------------------------------------- ----------- ---------- ----------- ---------- ----------
STOCK OPTION GRANTS DURING 2001
THE FOLLOWING TABLE PROVIDES INFORMATION REGARDING STOCK OPTIONS
GRANTED DURING FISCAL 2001 TO THE NAMED EXECUTIVE OFFICERS IN THE SUMMARY
COMPENSATION TABLE.
NAME NUMBER OF SHARES PERCENT OF TOTAL EXERCISE OR EXPIRATION DATE
---- UNDERLYING OPTIONS GRANTED TO BASE PRICE ---------------
OPTIONS GRANTED EMPLOYEES IN FISCAL YEAR PER SHARE
--------------- ------------------------ ---------
James L. Mandel.......... -0- -0- - -
Steven M. Bell........... 10,500 1.0% $4.40 1/31/11
Marvin Frieman........... -0- -0- - -
Dave Ekman............... -0- -0- - -
(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.
Bell become exercisable with respect to 33.3% of such shares each 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 stocks of Vicom, a sale of
substantially all the assets, or a dissolution or liquidation, of
Vicom.
AGGREGATED OPTION EXERCISES IN 2001 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 2001
and the number and value of options at December 31, 2001.
8
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, 2001 DECEMBER 31, 2001
----------------- -----------------
James L. Mandel............ -0- -0- 150,500 -0- $168,110 $0
Steven M. Bell............. -0- -0- 29,667 10,500 $25,792 $110
Marvin Frieman............. -0- -0- 88,000 -0- $77,485 $0
David Ekman................ -0- -0- 50,000 100,000 $110 $0
(1) Value is calculated on the basis of the difference between the option
exercise price and $1.72, the fair market value of the Company's Common
Stock at December 31, 2001 as quoted on the NASDAQ, multiplied by the
number of shares underlying the option.
OTHER COMPENSATION AND LONG-TERM INCENTIVE PLANS
The Company has no long-term incentive plans and issued no long-term
incentive awards during 2001.
The Company has an employment agreement with Mr. Steven Bell,
President, for the term beginning January 2002 and expiring December 2004. Mr.
Bell's compensation is not directly tied to the Company's performance. The
agreement states that annual base salary for Mr. Bell will be $125,000 per year.
Other key provisions of the contract include an agreement by 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. The contract also provides Mr. Bell with 75,000 stock
options at market price, 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.
The Company also has a three year employment agreement, from January
2002 to December 2004, with James L. Mandel, Chief Executive Officer, the terms
of which involve an annual base salary of $200,000 and a stock option of 300,000
shares at $1.50 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.
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 (class a 2001) 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.
9
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.
In 2001, at various times, Vicom issued 67,655 shares of Class A
Preferred for $676,556.
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.
RELATED PARTY TRANSACTIONS
The following is a summary of all significant related party
transactions for the three years ended December 31, 2001.
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.
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 ranges from $16,000 to $17,653 per month. Both the New Hope and main Fargo
leases have provisions that call for the tenants to pay net operating expenses,
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including property taxes, related to the facilities. Both offices have office,
warehouse and training facilities. The main Fargo property is owned personally
by David Ekman. The New Hope property is owned jointly by Steven Bell and Marvin
Frieman.
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
$2,749 in 2001, $157,000 in 2000 and $142,000 in 1999. Related parties include
the Company's Chairman, Chief Executive Officer, President, and the President's
mother.
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 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.
2. INDEPENDENT PUBLIC ACCOUNTANTS
It is proposed that Virchow, Krause & Company, LLP Independent Public
Accountants, be ratified as auditors for the Company for the prior Fiscal Year,
2001.
FEES BILLED TO THE COMPANY BY VIRCHOW, KRAUSE & COMPANY, LLP DURING FISCAL 2001
Audit Fees:
Audit fees billed to the Company by Virchow, Krause & Company, LLP for
review of the Company's annual 2001 consolidated financial statements and those
consolidated financial statements included in the Company's quarterly reports on
Form 10-Q totaled $49,791.
Audit fees billed to the Company by Lurie Besikof Lapidus & Company,
LLP for review of those consolidated financial statements included in the
Company's quarterly reports on Form 10-Q totaled $19,260.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Virchow, Krause & Company, LLP or Lurie
Besikof Lapidus & Company, LLP to provide advice to the Company regarding
financial information systems design and implementation for the year ended
December 31, 2001.
All Other Fees:
No fees billed to the Company by Virchow, Krause & Company, LLP during
the Company's 2001 fiscal year for all other non-audit services rendered to the
Company.
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The Company's Audit Committee has considered whether provision of the
above non-audit services is compatible with maintaining Virchow, Krause &
Company, LLP's independence and has determined that such services are compatible
with maintaining Virchow, Krause & Company, LLP's independence.
Fees billed to the Company by Lurie Besikof Lapidus & Company, LLP for
the Company's 2001 fiscal year for all other non-audit services rendered to the
Company, including tax related services, totaled $45,770. The Company's Audit
Committee has considered whether provision of the above non-audit services is
compatible with maintaining Lurie Besikof Lapidus & Company, LLP's independence
and has determined that such services are compatible with maintaining Lurie
Besikof Lapidus & Company, LLP's independence.
It is expected that a representative of Virchow, Krause & 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.
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.
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SHAREHOLDERS PROPOSALS
Proposals submitted to be presented at the 2003 annual meeting of
shareholders must be received by the Company by December 30, 2002 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, July 16, 2002
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 Sheraton Minneapolis West, 12201
Ridgedale Drive, Minnetonka, Minnesota on Tuesday, July 16, 2002 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 James Mandel 06 Donald Miller
(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 Virchow, Krause & Company, LLP as independent auditors of
the Company for Fiscal Year 2001.
/ / 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 the shares covered
hereby and acknowledge receipt of the Notice
and Proxy Statement relating to the Annual
Meeting.
Dated: _______________________, 2002
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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