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 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
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NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 10, 2003
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The Annual Meeting of the Shareholders of VICOM, INCORPORATED will be
held at the Radisson Hotel, 3131 Campus Drive, Plymouth, Minnesota 55441 on
Thursday July 10, 2003, at 3:00 p.m. Minneapolis time, for the following
purpose, as more fully described in the accompanying Proxy Statement.
1. To elect eight 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 2002.
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 May 14, 2003 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 10, 2003
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, 2003.
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, 2002, 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.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on May 14, 2003
(the "Record Date") will be entitled to vote at this meeting. On the Record
Date, there were 15,181,700 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 May 14, 2003
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 (1) PERCENT OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIALLY OWNED SHARES OUTSTANDING
------------------------------------- ------------------- ------------------
Steven Bell 526,146 (2) 3.3%
9449 Science Center Drive
New Hope, MN 55428
Frank Bennett 75,000 (3) Less than 1%
301 Carlson Parkway - Suite 120
Minnetonka, Minnesota 55305
CorStar Holdings, Inc. 1,097,000 6.7%
10851 Louisiana Avenue South
Bloomington, Minnesota 55438
Jonathan Dodge 55,500 (4) Less than 1%
715 Florida Avenue South - Suite 402
Golden Valley, Minnesota 55426
David Ekman 1,751,583(5) 10.3%
2000 44th Street SW
Fargo, ND 58103
Marvin Frieman 440,607 2.8%
9449 Science Center Drive
New Hope, MN 55428
James L. Mandel 314,133 (6) 2.0%
9449 Science Center Drive
New Hope, MN 55428
Donald Miller 930,472 (7) 5.6%
1924 Cocoplum Way
Naples, FL 34105
David Weiss 93,716 (8) Less than 1%
10829 Olive Blvd
Suite 203
St. Louis, MO 63141
All Directors and executive officers as a group (eight persons)
---------------
1 The percentages are calculated on the basis of 15,181,700 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 May 14, 2003 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 vested options to acquire 3,833 shares of common stock. Mr. Bell's
Beneficial Ownership does not include 31,250 shares of common stock owned
by his spouse as to which Mr. Bell disclaims his beneficial ownership.
3 Includes vested options to purchase 55,000 shares of common stock.
4 Includes vested options to purchase 55,000 shares of common stock.
5 Includes vested options to purchase 150,500 shares of common stock.
6 Includes vested options to purchase 150,500 shares of common stock.
7 Includes warrants and vested options to purchase 549,500 shares of common
stock.
8 Includes vested options to purchase 55,000 shares of common stock.
3
ELECTION OF DIRECTORS
Eight persons have been nominated for election at the 2003 Annual
Meeting as directors for a one year term expiring at the 2004 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............... 44 President & CFO, Vicom Incorporated 1994
Frank Bennett............. 46 President, Artesian Capital 2002
Jonathan Dodge............ 52 Partner, Dodge & Fox C.P.A. Firm 1997
David Ekman............... 42 President, Corporate Technologies USA, Inc. 1999
Marvin Frieman............ 71 Chairman emeritus of the Board, Vicom, Incorporated 1983
James L. Mandel........... 46 Chief Executive Officer, Vicom, Incorporated 1998
Donald Miller............. 63 Chairman, Vicom, Incorporated 2001
David Weiss............... 40 Principal, Rangeline Capital, LLC 2002
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 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,
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$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.
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. Mr. Miller
is also Chairman of Vicom's Audit Committee.
FRANK BENNETT has been a director of Vicom, Inc. since 2002 and is currently on
the Audit Committee. Since 1988 he has also been President of Artesian Capital,
a private equity investment company. From 1996 through 1999, he was co-founder,
Chairman and Chief Executive Officer of One Call Telecom, Inc., a private
telecom carrier. He has served as a director of various private companies from
1990 through 2001, including Waycrosse, Inc., and Integ, Incorporated, which was
privately held from 1992 through 1996 and publicly held from 1996 through 2001.
Beginning in 1996, he served on the Audit Committee of Integ, Incorporated until
its merger in 2001 with Inverness Medical, Inc. He has also held various
executive level positions at Mayfield Corp. and Piper, Jaffray Companies, Inc.
DAVID WEISS has been a Director of Vicom since 2002. He is currently Managing
Principal for Rangeline Capital, LLC, a real estate investing banking company.
Prior to forming Rangeline in 2002, Mr. Weiss was Managing Director for the St.
Louis office of Northland/Marquette Capital Group.
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 2002. As
permitted by Minnesota Law, the Board of Directors also acted from time to time
during 2002 by unanimous written consent in lieu of conducting formal meetings.
Last year, there were four such actions and accompanying Board Resolutions
passed. The Board has designated an audit committee consisting of Jon Dodge,
Donald Miller and Frank Bennett. The Board also designated a compensation
committee consisting of Frank Bennett and David Weiss.
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
5
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.
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, 2002, 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
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, 2002 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, 2002 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 $100,000 during the
Company's last three fiscal years ending December 31, 2002.
6
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- ----------------------
NAME AND PRINCIPAL YEAR SALARY($) 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 2002 $149,874 $100,000 -0- -0- -0- -0- -0-
Chief Executive Officer 2001 $131,346 -0- -0- -0- 500 -0- -0-
2000 $132,000 -0- -0- -0- 225,000 -0- -0-
Steven Bell 2002 $99,014 -0- -0- -0- 10,500 -0- -0-
Chief Financial Officer 2001 $108,365 -0- -0- -0- 500 -0- -0-
2000 $99,000 -0- -0- -0- -0- -0- -0-
Dave Ekman 2002 $93,695 $750 -0- -0- -0- -0- -0-
President, Corporate 2001 $100,614 -0- -0- -0- 500 -0- -0-
Technologies USA, Inc. 2000 $108,269 -0- -0- -0- -0- -0- -0-
DIRECTORS FEES
There were no cash fees paid to Directors in 2002. 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, 2002, 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 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VICOM, INC.
GRAPH OMITTED
8
COMPARISON OF FIVE YEAR - CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
VICOM, INC.
PREPARED BY THE RESEARCH DATAGROUP, INC.
VICOM, INC.
12/98 12/99 12/00 12/01 12/02
------ ------ ------ ------ ------
VICOM, INC 300.00 800.00 900.00 344.00 180.00
NASDAQ STOCK MARKET (U.S.) 140.99 261.49 157.77 125.16 86.53
RUSSELL 2000 97.45 118.17 114.60 117.45 93.39
NASDAQ TELECOMMUNICATIONS 165.05 295.01 125.74 84.16 38.77
CHASE H & Q COMMUNICATIONS 147.64 462.05 293.82 136.84
S & P COMMUNICATION SERVICES 152.38 181.54 111.08 97.48 64.23
STOCK OPTION GRANTS DURING 2002
THE FOLLOWING TABLE PROVIDES INFORMATION REGARDING STOCK OPTIONS
GRANTED DURING FISCAL 2002 TO THE NAMED EXECUTIVE OFFICERS IN THE SUMMARY
COMPENSATION TABLE.
NUMBER OF SHARES PERCENT OF TOTAL EXERCISE OR
UNDERLYING OPTIONS GRANTED TO BASE PRICE
OPTIONS EMPLOYEES IN PER EXPIRATION
NAME GRANTED FISCAL YEAR SHARE DATE
---- ---------------- ------------------------ ------------- -------------
James L. Mandel -0- -0- -- --
Steven M. Bell -0- -0- -- --
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. 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 2002 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 2002
and the number and value of options at December 31, 2002.
SHARES ACQUIRED VALUE (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXCERSIABLE
ON EXERCISE REALIZED ------------------------- -------------------------
----------------- --------- NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME DECEMBER 31, 2002 DECEMBER 31, 2002
---- ----------------- -----------------
James L. Mandel -0- -0- 150,500 -0- $45,000 $0
Steven M. Bell -0- -0- 3,833 6,667 $0 $0
David Ekman -0- -0- 150,500 -0- $0 $0
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(1) Value is calculated on the basis of the difference between the option
exercise price and $ .90, the fair market value of the Company's Common
Stock at December 31, 2002 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 2003.
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 between $ 125,000
and $135,000 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 had 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. A contract renewal With Mr. Ekman is
currently being negotiated.
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. During 2001, Vicom issued 67,655 shares of Class A
Preferred for $676,556.
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
10
as otherwise required by law) and convertible into two and one-half shares of
Vicom Common Stock, subject to adjustment in certain circumstances.
In the second quarter of 2002, Preferred Class D stocks were redeemed;
$100,000 converted to Common Stock, and $300,000 converted to a Note Payable.
In the fourth quarter of 2002, Vicom issued 70,000 shares of Class E
Preferred for $700,000, with $600,000 related to conversion of a note payable
from a director of the Company into Preferred Stock.
The holders of the Class A Preferred, Class B Preferred, Class C
Preferred, Class D Preferred and Class E 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,
fourteen percent (14%) for the Class D Preferred and fifteen percent (15%) in
the Class E Preferred, to be paid in kind. 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, Class D Preferred and Class E 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, Class D Preferred and
Class E 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, 2002.
Vicom and its subsidiaries lease principal offices located at 2000 44th
Street SW, Fargo, ND 58013 and 9449 Science Center Drive, New Hope, Minnesota
55428. The Fargo office lease expires in 2017 and covers approximately 22,500
square feet. The Fargo base rent ranges from $21,577 to $24,360 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, including property taxes, related to the facilities.
Both offices have office, warehouse and training facilities. The main Fargo
property is owned in part by David Ekman. The New Hope property is owned jointly
by Steven Bell and Marvin Frieman.
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Interest expense paid by Vicom to related parties was approximately
$228,000 in 2002, $3,000 in 2001 and $153,000 in 2000. 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,
2002.
FEES BILLED TO THE COMPANY BY VIRCHOW, KRAUSE & COMPANY, LLP DURING FISCAL 2002
Audit Fees:
Audit fees billed to the Company by Virchow, Krause & Company, LLP for
review of the Company's annual 2002 consolidated financial statements and those
consolidated financial statements included in the Company's quarterly reports on
Form 10-Q totaled $62,715.
Audit fees billed to the Company by Lurie Besikof Lapidus & Company,
LLP for review of those consolidated financial statements included in the
Company's annual 2002 report and quarterly reports on Form 10-Q total $7,145.
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, 2002.
All Other Fees:
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 totaled $16,121.
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 2002 fiscal year for all other non-audit services rendered to the
Company, including tax related services, totaled $13,720. 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.
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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.
SHAREHOLDERS PROPOSALS
Proposals submitted to be presented at the 2004 annual meeting of
shareholders must be received by the Company by December 30, 2003 to be
considered for inclusion in the Company proxy materials relating to that
meeting.
Vicom, Incorporated
by Steve Bell
Secretary
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VICOM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, July 10, 2003
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 Hotel, 3131 Campus Drive,
Plymouth, Minnesota 55441 on Thursday, July 10, 2003 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 Frank Bennett 03 Jonathan Dodge
04 David Ekman 05 Marvin Frieman 06 James Mandel
07 Donald Miller 08 David Weiss
(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 / / For / / Against / / Abstain
as independent auditors of the Company for Fiscal Year 2002.
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 proxies relating
to the Indicate changes below: shares covered hereby and
acknowledge receipt of the Notice and Proxy Statement
relating to the Annual Meeting.
Dated: , 2003
------------------------------------
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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