SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 Materials Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
FIRECOM, INC.
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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:
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2) Aggregate number of securities to which
transaction applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
FIRECOM, INC.
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Firecom, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders (the "Meeting") of FIRECOM, INC., a New York
corporation (the "Company"), will be held on Thursday, September
24, 1998 at 2:00 P.M., at Thelen Reid & Priest LLP, 40 West 57th
Street, 28th floor, New York, New York 10019 for the following
purposes:
1. To elect three of the Company's six directors to serve
until the 2000 Annual Meeting of Shareholders and until their
successors have been duly elected and qualified;
2. To act upon a proposal to approve an amendment to the
Company's 1986 Stock Option Plan to (i) increase the number of
shares to be issued thereunder and (ii) extend the expiration
date of the Plan until April 30, 2008; and
3. To transact such other business as may properly come
before the Meeting or at any adjournment thereof.
Only holders of record of the Company's Common Stock and
Class A Common Stock, $.01 par value, at the close of business on
August 20, 1998, which has been fixed as the record date for the
Meeting, shall be entitled to notice of, and to vote at, the
Meeting and any adjournments thereof.
Shareholders are cordially invited to attend the Meeting in
person. Whether or not you plan to attend the Meeting, please
sign, date and return the enclosed proxy card to ensure that your
shares are represented at the Meeting. Shareholders who attend
the Meeting may vote their shares personally, even though they
have sent in their proxies.
August 24, 1998
Paul Mendez, Chairman of the Board
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
FIRECOM, INC.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 24, 1998
-----------------------
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of FIRECOM,
INC., a New York corporation (the "Company"), to be voted at the
Annual Meeting of Shareholders of the Company (the "Meeting")
which will be held at Thelen Reid & Priest LLP, 40 West 57th
Street, 28th floor, New York, New York 10019 on September 24,
1998, at 2:00 P.M., local time, and at any adjournment or
adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this
Proxy Statement.
The principal executive offices of the Company are located
at 39-27 59th Street, Woodside, New York 11377. The approximate
date on which this Proxy Statement and accompanying Proxy will
first be sent or given to shareholders is August 24, 1998.
VOTING SECURITIES AND VOTE REQUIRED
Only shareholders of record as of the close of business on
August 20, 1998 (the "Record Date") will be entitled to notice
of, and to vote at, the Meeting and at any adjournments thereof.
On the Record Date, there were outstanding (a) 7,211,583 shares
of the Company's common stock, $.01 par value (the "Common
Stock"), and (b) 6,666,793 shares of the Company's Class A
common stock, $.01 par value. Each holder of Common Stock is
entitled to one vote for each share held by such holder. Each
holder of the Company's Class A common stock is entitled to ten
votes for each share held by such holder.
Under the New York Business Corporation Law (the "BCL") and
the Company's By-Laws, the presence, in person or by proxy, of
the holders of a majority of the outstanding shares of Common
Stock entitled to vote is necessary to constitute a quorum for
the transaction of business at the Meeting. Proxies that are
marked "abstain" will be treated as present for purposes of
determining a quorum for the Meeting. Proxies returned by
brokers as "non-votes" on behalf of shares held in street name
because beneficial owners have withheld discretion as to one or
more matters on the agenda for the Meeting will not be treated as
present for purposes of determining a quorum for the Meeting,
unless such proxies vote on at least one matter on the agenda.
The election of directors requires the affirmative vote of
a plurality of the vote present and voting at the Meeting or at
any adjournment thereof. The approval of the amendments to the
Company's 1986 Stock Option Plan requires the affirmative vote of
the holders of a majority of the vote entitled to vote at the
Meeting or at any adjournment thereof. Abstentions and broker
non-votes will not be treated as shares that are voted with
respect to a specific proposal.
VOTING OF PROXIES
A Proxy, in the accompanying form, which is properly
executed, duly returned to the Company and not revoked will be
voted in accordance with the instructions contained therein. If
no specification is indicated on the Proxy, the shares
represented thereby will be voted FOR the election of the three
directors and the approval of the amendments to the 1986 Stock
Option Plan. Each such Proxy granted may be revoked at any time
thereafter by execution and delivery of a subsequent Proxy or by
attendance and voting in person at the Meeting, except as to any
matter or matters upon which, prior to such revocation, a vote
shall have been cast pursuant to the authority conferred by such
Proxy. Mr. Paul Mendez, Chairman of the Board, President and
Chief Executive Officer of the Company, controls more than a
majority of the vote with respect to the matters scheduled to
come before the Meeting (see "Security Ownership" and "Related
Transactions"). Mr. Mendez has advised the Company that he
intends to vote all shares controlled by him for the proposals
stated herein, thereby assuring the election of the three
directors and the amendments of the 1986 Stock Option Plan of the
Company.
SECURITY OWNERSHIP
The following table sets forth certain information as of
June 30, 1998 (except for employee stock option information which
is as of April 30, 1998) regarding (i) the ownership of each
class of common stock of the Company by each person who is known
to the management of the Company to have been the beneficial
owner of more than 5% of the outstanding shares of each class of
the Company's common stock, (ii) the ownership interests of each
present director, (iii) the ownership interests of the Chief
Executive Officer and other executive officers of the Company
whose total annual salary and bonus exceeded $100,000 during the
fiscal year ended April 30, 1998 and (iv) the ownership interests
of all directors and executive officers of the Company as a
group.
Amount and
Title Position Nature of
of Name and Address of with Beneficial % of
Class Beneficial Owner Company Ownership Class
----- ------------------- ------- ----------- -----
Common Paul Mendez Chairman of 2,930,479(1) 47.5%
Stock 13 Coventry Road the Board (2)
$.01 Livingston, NJ Chief
par Executive
value Officer and
Director
Ildar Idris None 353,354(1) 5.7%
15 Horvath
Strasse
Grfeling 8032
West Germany
Carol Mendez None 1,164,250 18.9%
13 Coventry Road
Livingston, NJ
Howard L. Kogen Executive 366,500(3) 6.0%
Vice
President
Antoine J. Senior Vice 269,900(4) 4.4%
Sayour President
Orhan I. Sadik- Director 1(1) 0%
Khan
Hilary B. Miller Director 12,000(5) 0.2%
Ronald A. Levin Director 0 -
Peter Barotz Director 0(1) -
Harry B. Levine Director 0 -
All executive 3,578,880(1) 58.0%
officers (2)
and directors as (3)
a (4)
group (5 (5)
persons)
Amount and
Nature of
Title of Name and Address of Position Beneficial % of
Class Beneficial Owner with Company Ownership Class
--------- ------------------- -------------- ------------ -----
Class A Paul Mendez Chairman of 2,930,479(1) 51.9%
Common 13 Coventry Road the Board (2)
Stock Livingston, NJ Chief
$.01 par Executive
value Officer and
Director
Ildar Idris None 353,354(1) 6.3%
15 Horvath
Strasse
Grfeling 8032
West Germany
Carol Mendez None 1,164,250 20.6%
13 Coventry Road
Livingston, NJ
Howard L. Kogen Executive Vice 19,300(3) 0.3%
President
Antoine J. Senior Vice 20,300(4) 0.4%
Sayour President
Orhan I. Sadik- Director 1(1) -
Khan
Hilary B. Miller Director 12,000(5) 0.2%
Ronald A. Levin Director 0 -
Peter Barotz Director 0(2) -
Harry B. Levine Director 0 -
All executive 2,982,080(1) 52.8%
officers (2)
and directors as (3)
a (4)
group (5 (5)
persons)
(1) Pursuant to a voting agreement with certain shareholders of
the Company, Paul Mendez, Carol Mendez and the other parties
thereto agreed that all shares of Common Stock held by Naomi
Pollack, Nathan Barotz, Celia Barotz and Lam Investment Co. (the
"Barotz Group"), Orhan Sadik-Khan, Dr. Ildar Idris, Karim
Sadik-Khan, Janette Sadik-Khan, Karen Sadik-Khan, Jan Sadik-Khan
and Kadria Sadik-Khan (the "Sadik-Khan Group"), Carol Mendez and
Mr. Mendez shall be voted so that the Board of Directors of the
Company shall consist of six persons elected by the holders of
the Common Stock as follows: Mr. Sadik-Khan (or his designee),
Mr. Barotz (or his designee), Mr. Mendez and three persons
designated by Mr. Mendez.
(2) Includes 536,495 shares of Common Stock and 536,495 shares of
Class A Common Stock (the "Option Shares") for which Paul Mendez
has an irrevocable proxy to vote pursuant to an Option and Escrow
Agreement, dated as of July 18, 1995 (the "Option and Escrow
Agreement") between the Company and certain members of the May
family (the "Selling Shareholders"). Under the terms of the
Option and Escrow Agreement, each Selling Shareholder has the
right, but not the obligation, to require the Company to
purchase, on September 1, 1998, his or her Option Shares at a
price of $.55 per share. This option is not exercisable at
September 1, 1998 unless the Company waives a condition that
certain financial targets be made for Fiscal 1998; if the Company
decides not to waive this condition, the option will be deferred
for one year. At any time under the Option and Escrow Agreement,
the Company shall have the right, but not the obligation, to
purchase all of the Option Shares at a purchase price of $.625
per share. Under the terms of the Option and Escrow Agreement,
Mr. Mendez has an irrevocable proxy to vote the Option Shares
until the termination of the agreement. See "Related
Transactions."
(3) Includes 19,300 shares of Common Stock beneficially owned by
Mr. Kogen with his wife as joint tenants and 347,200 shares of
Common Stock underlying presently exercisable options.
(4) These shares include 20,300 shares of Common Stock
beneficially owned by Mr. Sayour with his wife as joint tenants
and 249,600 of Common Stock underlying presently exercisable
options.
(5) These shares include 2,000 shares of Common Stock and 2,000
shares of Class A Common Stock which are owned by Mr. Miller's
wife, as to which he disclaims beneficial ownership.
PROPOSAL I
ELECTION OF DIRECTORS
---------------------
A total of three directors (Class B Directors) are to be
elected at the Meeting to serve until the 2000 Annual Meeting of
Shareholders. Three other directors (Class A Directors) namely,
Paul Mendez, Peter Barotz and Hilary B. Miller, will be up for
re-election at the 1999 Annual Meeting of Shareholders.
There were three (3) meetings of the Board of Directors of
the Company held during the fiscal year ended April 30, 1998.
All directors attended 75% or more of the meetings of the Board.
Directors of the Company who are not also executive officers of
the Company receive an annual retainer of $12,000 plus $1,000 for
each Board meeting they attend. In addition, each director,
other than Mr. Mendez, is granted the right to receive a cash
payment equal to the increase in value of 40,000 shares of the
Company's Common Stock from the date of their first election or
appointment to the Board, and payable upon, the earliest to occur
of various qualifying events. The Company may, at its sole
option, defer payment for a maximum of 24 months from the date of
a valid notice of exercise of these rights.
Directors shall be elected by a plurality of the votes cast
at the Meeting. The names of the nominees and certain
information with regard to each nominee follows:
CLASS B DIRECTORS (TO SERVE UNTIL THE 2000
ANNUAL MEETING OF SHAREHOLDERS)
HAS SERVED
AS DIRECTOR POSITION(S) WITH THE
NAME AGE SINCE COMPANY
---- --- ---------------- ---------------------
Orhan I. Sadik-Kahn 68 1993 Director
Ronald A. Levin 55 1993 Director
Harry B. Levine 62 1996 Director
Orhan I. Sadik-Khan was elected a director of the
Company in April 1993. Mr. Sadik-Khan serves as an advisory
director of Paine Webber Incorporated and as an advisory director
of Russian Partners Management, LLC, a venture capital fund.
Previously he served as a managing director of each of these
companies.
Ronald A. Levin, since 1991, has been a partner in the
certified public accounting firm of Levin, Bartlett & Co.,
Franklin Lakes, New Jersey.
Harry B. Levine has served as President of Levine
Securities, Inc. for more than five years. His firm is a member
of the New York Stock Exchange.
Other Directors and Executive Officers
Set forth below is certain information regarding the
other directors and executive officers of the Company:
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
Paul Mendez 55 Chairman of the Board, President,
Chief Executive Officer and Director
Howard L. Kogen 58 Executive Vice President
Antoine P. Sayour 48 Senior Vice President
Jeffrey Cohen 41 Vice President--Finance
Peter Barotz 69 Director
Hilary B. Miller 47 Director
Paul Mendez was elected a director, Chairman of the
Board and President of the Company on July 19, 1991. He is also
employed as Vice President of Multiplex Electrical Services,
Inc., a company which is engaged in the business of
manufacturing, installing and servicing fire alarm systems in New
York City.
Howard L. Kogen joined the Company as Vice President--
Sales and Marketing in March 1984. He was appointed Executive
Vice President and Chief Operating Officer in 1990.
Antoine P. Sayour joined the Company as Chief Engineer
in 1984. He is now Senior Vice President of the Company and
President of the Fire Service Subsidiary.
Jeffrey Cohen joined the Company as Vice President--
Finance in September 1997. Prior to joining the Company, Mr.
Cohen had been the Chief Financial Officer, for more than eight
years, of an apparel manufacturing company headquartered in New
Jersey.
Peter Barotz was elected a director of the Company in
April 1993. For more than the last five years, he has been
engaged primarily as a private investor. Mr. Barotz has also
served as President of Panda Capital Corp., a New Rochelle, New
York-based business engaged in the export business.
Hilary B. Miller has been President of Stranger,
Miller, Inc., since 1987. His company is a private investment
firm located in Greenwich, Connecticut.
There are no family relationships between any present
director or officer and any other present director or officer.
The Board of Directors of the Company has no standing
committees.
The Company is not aware of any Section 16(a) filing
deficiencies.
COMPENSATION AND OTHER BENEFITS
Summary Compensation Table
The following table sets forth certain information
with respect to cash compensation and other benefits paid or
accrued by the Company for services rendered to the Company
during the Company's last three fiscal years to each of the
executive officers of the Company whose aggregate remuneration
exceeds $100,000.
Annual Compensation
-------------------
Long-Term
Compensation
Name and Principal Fiscal Options/SAR
Position Year Salary Bonus Awards
------------------ ------ ------ ----- ------------
Paul Mendez 1998 $200,000 $ 49,794 0
Chairman and 1997 200,000 184,031 0
President 1996 150,000 223,731 0
Howard L. Kogen 1998 $140,000 $ 19,313 0
Executive Vice 1997 138,000 47,186 0
President 1996 132,000 54,203 0
Antoine J. Sayour 1998 $122,955 $ 13,201 0
Senior Vice 1997 118,420 32,267 0
President 1996 110,430 36,694 0
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTION/SAR'S OPTIONS/SAR'S
ACQUIRED AT FY-END (#) AT FY-END ($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- ------------- -------------
Paul Mendez 0 0 1,000,000/ $281,461/
-0 -0
Howard L. 0 0 347,200/ $113,000/
Kogen 52,800 $ 13,200
Antoine J. 0 0 249,600/ $ 80,100/
Sayour 50,400 $ 12,600
Stock Options
-------------
The Company adopted an Incentive and Non-Qualified
Stock Option Plan (the "Plan") which provided for the granting of
not more than 1,200,000 shares of Common Stock. The Plan is open
to officers, directors and certain employees of the Company and
will expire on April 30, 2001. Subject to the provisions of the
Plan with respect to death, retirement and termination of
employment, the maximum period during which each Option may be
exercised may be fixed by the Board at the time each Option is
granted but shall in no event exceed ten (10) years. Options for
an aggregate of 1,114,000 shares of Common Stock at exercise
prices ranging from $0.15 to $0.625 were outstanding under the
Plan as of April 30, 1998.
Included in the aggregate outstanding were options to
purchase 160,660 shares at $.625 per share issued during the
fiscal year ended April 30, 1998. During the fiscal year, no
options were exercised and 60,000 options expired.
Directors' Compensation and SAR Awards
--------------------------------------
Directors of the Company who are not also executive
officers of the Company receive an annual retainer of $12,000
plus $1,000 for each Board meeting they attend. In addition each
director, other than Mr. Mendez, is granted the right to receive
a cash payment equal to the increase in value of 40,000 shares of
the Company's Common Stock from the date of their first election
or appointment to the Board, and payable upon, the earliest to
occur of various qualifying events. The Company may, at its sole
option, defer payment for a maximum of 24 months from the date of
a valid notice of exercise of these rights. The Company recorded
a total liability of approximately $61,000 as of April 30, 1998
(versus a liability of $55,000 at April 30, 1997) in respect of
these rights.
Concurrently with the execution of Mr. Mendez'
Employment Agreement, and as additional consideration thereunder,
Mr. Mendez and the Company entered into a stock appreciation
rights agreement pursuant to which Mr. Mendez was granted the
right to receive, in cash, the appreciation value (the
"Appreciation Rights") with respect to 1,000,000 shares of Common
Stock. The Appreciation Rights are exercisable in pro rata
installments over a five-year period and have initial value
prices ("base prices") as follows: 400,000 Appreciation Rights
have a base price of $.125 per share; 200,000 Appreciation Rights
have a base price of $.25 per share; 200,000 Appreciation Rights
have a base price of $.50 per share; and 200,000 Appreciation
Rights have a base price of $.75 per share. Notwithstanding
anything in the above agreement, Mr. Mendez shall not be entitled
to receive any cash payment as a result of the exercise of Rights
under the Agreement prior to May 1, 1996. The Company recorded a
total liability of approximately $281,000 as of April 30, 1998
(versus a liability of $202,000 at April 30, 1997) in respect of
these rights.
Employment Agreements
---------------------
On December 31, 1992, Mr. Mendez and the Company
entered into an employment agreement (the "Mendez Employment
Agreement") which provides, among other things, that Mr. Mendez,
in consideration for his services as Chairman of the Board and
Chief Executive Officer of the Company, will be paid a base
salary at the rate of $150,000 per annum and incentive
compensation equal to a percentage of the annual earnings, before
interest and taxes (as adjusted by the Board of Directors for
certain extraordinary and other non-recurring events and as more
fully described in the Mendez Employment Agreement)("Adjusted
EBIT") of the Company. Generally, Mr. Mendez will be entitled to
receive an amount equal to 6% of Adjusted EBIT if the Company's
Adjusted EBIT for any fiscal year is between $500,000 and $1
million and 8% of the Adjusted EBIT if the Company's Adjusted
EBIT for any fiscal year is greater than $1 million. In
addition, Mr. Mendez is entitled to participate, at no cost or
expense to him, in all employee benefit programs maintained by
the Company to the extent that such programs are available
generally to executive officers, provided that the aggregate
annual value to Mr. Mendez of such benefits does not exceed
$30,000. To the extent that the aggregate value of such benefits
does not exceed $30,000, Mr. Mendez may elect to receive the
differential in cash or applied to other fringe benefits of his
selection.
The Mendez Employment Agreement also provides that Mr.
Mendez' employment is terminated by him for "Good Reason"(as
defined below) or by the Company without Mr. Mendez' consent and
without Cause (as defined in the Mendez Employment Agreement) and
not due to death or disability of Mr. Mendez. Mr. Mendez shall
be entitled to receive (in addition to continuation of his
executive benefits) his base salary for the greater of two full
years from the date of termination or the remainder of the Mendez
Employment Agreement and whatever incentive compensation he would
otherwise been entitled to receive for the fiscal year during
which his employment is terminated. Good Reason is defined as
the occurrence, without Mr. Mendez' prior consent of (i) a
reduction in rank or an assignment of duties materially
inconsistent with Mr. Mendez' positions as Chairman of the Board
and Chief Executive Officer of the Company, without any
substantial failure of Mr. Mendez to perform such duties properly
and effectively; (ii) a reduction by the Company in Mr. Mendez'
annual base salary or a material reduction or elimination of his
perquisites of office or a substantial reduction or elimination
of his aggregate available employee benefits as in effect at
December 31, 1992 or as the same may be increased from time to
time; (iii) a change in the location at which Mr. Mendez'
services are to be regularly performed to a location out of the
30-mile radius of the Empire State Building, New York, New York,
without a comparable change for other executive officers of the
Company, or any willful, material breach by the Company of any
provision of Mr. Mendez' Employment Agreement not cured within a
period of ten business days after receipt by the Company of
written notice from Mr. Mendez of his intention to resign for
Good Reason because of such breach; or (iv) the merger or
consolidation of the Company with or into any other entity as a
result of which Mr. Mendez is reduced in rank or is assigned
duties with the surviving entity that are materially inconsistent
with his then present position(s) with the Company. In addition.
the Mendez Employment Agreement provides that in the event of
termination of Mr. Mendez' employment thereunder due to death or
disability (as defined therein), the Company shall pay Mr. Mendez
(or his estate, as the case may be) his annual base salary for
one year following his termination of employment and whatever
incentive compensation Mr. Mendez would otherwise been entitled
to receive for the fiscal year during which his employment is
terminated. The Mendez Employment Agreement expires on April 30,
2000.
The Mendez Employment Agreement acknowledges Mr.
Mendez' beneficial ownership and involvement in Multiplex and
permits Mr. Mendez to devote reasonable periods of time to the
business of Multiplex, provided that his involvement with
Multiplex' business does not interfere with the performance of
his duties and obligations under the Mendez Employment Agreement
and that Mr. Mendez at all times complies with the guidelines for
limiting conflicts of interest between the Company and Multiplex
as previously adopted by the Board of Directors of the Company
and accepted by Mr. Mendez.
On March 28, 1995, the Mendez Employment Agreement was
amended to (i) extend the term of the Agreement through April 30,
2000, (ii) increase Mr. Mendez's annual base salary to $200,000,
effective May 1, 1995, and (iii) to increase Mr. Mendez's annual
benefit value threshold from $30,000 to $37,000.
The Company entered into a new employment agreement
with Mr. Kogen effective May 1, 1994 and expiring April 30, 1999.
In consideration of his services as Executive Vice President and
Chief Operating Officer of the Company, (i) Mr. Kogen is to
receive an annual salary of $129,000 effective May 1, 1994 and
(ii) is entitled to annual increases of approximately 3% to a
total of $145,000 effective on May 1, 1998 and (iii) will receive
a bonus based on the Operating Income of the Company. Kogen's
employment agreement also contains a six-month non-competition
provision following the term of the agreement or any extension
thereof.
The Company entered into a new employment agreement
with Mr. Sayour effective May 1, 1994 and expiring April 30,
1999. In consideration of his services as Senior Vice President
of the Company, (i) Mr. Sayour is to receive an annual salary of
$106,430 effective May 1, 1994 and (ii) is entitled to annual
increases of approximately $4,000 per year to a total of $122,857
effective on May 1, 1998 and (iii) will receive a bonus based on
the Operating Income of the Company. Mr. Sayour's employment
agreement also contains a six-month non-competition provision
following the term of the agreement or any extension thereof.
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE COMPANY'S
1986 STOCK OPTION PLAN
----------------------
On July 23, 1998, the Board of Directors amended the 1986
Stock Option Plan (the "Plan"), subject to shareholder approval,
to (1) increase the number of shares to be issued thereunder from
1,200,000 shares to 1,700,000 shares as presently, there remain
approximately 86,000 shares available to be issued under the
Plan, and (2) extend the expiration date of the Plan from April
30, 2001 until April 30, 2008 so as to continue to provide
incentives to existing and future directors, officers and other
employees of the Company to promote and further the Company's
business. The shareholders are being asked to approve this
amendment.
At the 1987 Annual Meeting of Shareholders, the shareholders
approved the Plan and at the 1994 Annual Meeting of Shareholders,
the shareholders approved an amendment to the Plan increasing the
number of shares of Common Stock authorized to be issued
thereunder to 600,000 shares (1,200,000 shares after giving
effect to the stock split by way of stock dividend which took
place in December 1997). At the 1995 Annual Meeting of
Shareholders, the shareholders approved an amendment to the Plan
extending the expiration date of the Plan from April 30, 1996
until April 30, 2001. The Plan covers all directors, officers
and certain other employees of the Company and its subsidiaries.
Currently the Plan expires April 30, 2001 and provides that the
maximum aggregate number of shares to be delivered upon exercise
of all options under the Plan be 1,200,000. The Board of
Directors has determined that (1) additional shares of Common
Stock should be made available for the purpose of making option
grants and providing incentives to existing and future directors,
officers and other employees of the Company to promote and
further the Company's business, and (2) the Plan provides
incentive to existing and future directors, officers and other
employees of the Company to promote and further the Company's
business and, therefore, should be extended until April 30, 2008.
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENTS ARE
IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND
THEREFORE UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS
VOTE FOR THE ADOPTION OF THE AMENDMENTS TO THE 1986 STOCK OPTION
PLAN.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
On June 21, 1995, the Company signed a Stock Purchase
Agreement to purchase 1,072,988 shares of the Company's $.01 par
Value Common Stock held by certain members of the May family (the
"Shareholders") at $.45 per share. Terms of the agreement
provide for a cash payment in the amount of $174,448 and a five
(5) year note in the amount of $308,397 bearing interest at 12%
per annum. Interest is to be paid monthly. The principal is to
be paid in five equal annual installments of $61,679. The
Company's obligation under the note is collateralized by a pledge
by the Company to the noteholder of 685,326 shares of the
Company's Common Stock.
At the same time, the Company and the Shareholders entered
into an Option and Escrow Agreement relative to the Option
Shares. Under the terms of this agreement, on September 1, 1998
each Shareholder has the right, but not the obligation, to
require the Company to purchase, in whole or in part, his Option
Shares at a price of $.55 per share. The Put Option is
conditional upon the Company meeting certain financial targets
(see note 2 to tables appearing under "SECURITY OWNERSHIP,"
above). At any time under this agreement, the Company shall have
the right, but not the obligation, to purchase all of the Option
Shares, in whole or in part, at a purchase price of $.625 per
share. Payment for the Option Shares upon exercise of the Put or
Call Option shall be one-half (1/2) in cash and one-half (1/2)
with a five (5) year note bearing interest at prime plus 3%. The
notes issued upon purchase of the Option Shares will be secured
by a pledge by the Company of shares of its Common Stock. The
Shareholders executed irrevocable proxies to permit Mr. Paul
Mendez, Chairman of the Company, to vote the Option Shares until
the expiration of this agreement.
This agreement was entered into because management believed
it represented a good value for the Company. Taking into
consideration the Company's financial condition and the thinly
traded nature of the stock, management believes that the price
paid for the stock was reasonable. The Board of Directors
secured a fairness opinion from an independent investment banker
supporting the fairness of the transaction from the Company's
point of view.
Multiplex Electrical Services, Inc. ("Multiplex"), which is
owned by the family of Paul Mendez, is one of 72 distributors of
the LSN 2000. During the fiscal year the Company had sales of
approximately $147,000 to Multiplex. Sale of the products to
Multiplex was on the same terms as other distributors. The
Company also purchased approximately $74,000 of product and
engineering services from Multiplex. The Company believes the
terms and conditions of such transactions were fair and
reasonable.
ANNUAL REPORT
All shareholders of record as of August 30, 1998 have either
been sent or are concurrently being sent a copy of the Company's
1998 Annual Report to Shareholders for the fiscal year ended
April 30, 1998 which contains audited financial statements of the
Company for the fiscal years ended April 30, 1998 and 1997.
SHAREHOLDERS PROPOSALS FOR 1999 ANNUAL MEETING
Shareholders who desire to submit proposals for inclusion in
the Company's proxy statement for the 1999 Annual Meeting of
Shareholders of the Company must submit such proposals to the
Secretary of the Company at the Company's principal office at 39-
27 59th Street, Woodside, New York 11377 no later than June 24,
1998.
OTHER MATTERS
Pursuant to the Company's By-Laws, as amended, nominations
or other business may be properly brought before an annual
meeting by a shareholder provided that the shareholder gives
timely notice thereof in writing to the Secretary of the Company.
To be timely, a shareholder's notice shall be delivered to the
Secretary at the principal executive offices of the Company not
less than sixty (60) days nor more than ninety (90) days prior to
the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is advanced by more than thirty (30) days or delayed by
more than sixty (60) days from such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier
than the ninetieth (90th) day prior to such annual meeting and
not later than the close of business on the later of the sixtieth
(60th) day prior to such annual meeting or the tenth (10th) day
following the day on which public announcement of the date of
such meeting is first made.
As of the date of this Proxy Statement, the Board of
Directors of the Company does not know of any other matters to be
brought before the Meeting other than as set forth in this Proxy
Statement and the time for such matters to be presented by
shareholders expired on July 24, 1998. However, if any other
matters not mentioned in the Proxy Statement are properly brought
before the Meeting or any adjournments thereof, the persons named
in the enclosed Proxy or their substitutes will have
discretionary authority to vote proxies given in said form, or
otherwise act, in respect of such matters in accordance with
their best judgment.
The Company has selected Rothstein, Kass & Company, P.C.,
the Company's auditors for the fiscal year ended April 30, 1998,
to continue as independent certified public accountants of the
Company. Representatives of Rothstein, Kass & Company, P.C. are
expected to attend the Meeting and will be available to respond
to appropriate questions raised orally. Such representatives
will also be given an opportunity to make a statement if they so
desire.
All of the costs and expenses in connection with the
solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by use of mails, directors,
officers and employees (who will receive no compensation therefor
in addition to their regular remuneration) of the Company may
solicit the return of proxies by telephone, telegram or personal
interview.
It is important that proxies be returned promptly.
Shareholders are, therefore, urged to fill in, date, sign and
return the Proxy immediately. No postage need be affixed if
mailed in the enclosed envelope in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
PAUL MENDEZ
Chairman of the Board
August 24, 1998
<PAGE>
PROXY CARD
FIRECOM, INC.
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 24, 1998
The undersigned hereby appoints Paul Mendez and Howard L.
Kogen, and each of them, proxies with powers of substitution
each, for and in the name of the undersigned to vote all shares
of stock of FIRECOM, INC., a New York corporation (the
"Company"), that the undersigned would be entitled to vote at the
Company's 1998 Annual Meeting of Shareholders (the "Meeting"),
and at any adjournments thereof, upon the matters set forth in
the Notice of Meeting as stated below, hereby revoking any proxy
heretofore given. In their discretion, the proxies are further
authorized to vote upon such other business as may properly come
before the Meeting.
The undersigned acknowledges receipt of the Notice of Meeting
and the accompanying Proxy Statement and Annual Report.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS. THE
BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 1 AND PROPOSAL 2.
1. Election of Class B Directors for all nominees
listed below (except as indicated).
[ ] FOR [ ] WITHHOLD AUTHORITY
The nominees of the Board of Directors are:
Orhan I. Sadik-Khan, Ronald A. Levin and Harry B.
Levine
INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name on the space provided
below:
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2. Amendment of the Company's 1986 Stock Option Plan
to (i) increase the number of shares to be issued
thereunder from 1,200,000 to 1,700,000 shares and
(ii) extend the expiration date of the Plan from
April 30, 2001 until April 30, 2008.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is given, this Proxy, when properly executed and returned, will
be voted "FOR" the election of the three named individuals as
directors and the amendment of the 1986 Stock Option Plan.
Dated:
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Signature
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Name
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON. IF THE STOCK
IS REGISTERED IN MORE THAN ONE NAME, EACH JOINT OWNER SHOULD SIGN
PERSONALLY. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, GIVE YOUR FULL TITLE AS IT APPEARS HEREON.
ONLY AUTHORIZED OFFICERS SHOULD SIGN FOR A CORPORATION.
PLEASE SIGN, DATE AND
MAIL THIS PROXY
IMMEDIATELY IN THE
ENCLOSED ENVELOPE.
