SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(c)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VIDEOLABS, INC
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(I)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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,(1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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 of schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registrant Statement No:
3) Filing Party:
4) Date Filed:
<PAGE>
VIDEOLABS, INC.
----------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2000
TO THE SHAREHOLDERS OF VIDEOLABS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of VideoLabs,
Inc., a Delaware corporation (the "Company"), will be held on Monday, May 22,
2000, at 3:30 p. m., local time, at The Radisson Hotel, 3131 Campus Drive,
Plymouth, MN 55441 for the following purposes:
1. To elect four Directors to serve for the ensuing year and
until their successors are duly elected and qualified.
2. To consider and act upon a proposal to ratify and approve an
amendment to Article FIRST of the Company's Certificate of
Incorporation to change the name of the Company from
VideoLabs, Inc. to E.mergent, Inc.
3. To consider and act upon a proposal to amend the Company's
Incentive Stock Option Plan by increasing the number of shares
reserved for issuance under the Plan by 75,000 shares to an
aggregate of 575,000 shares of Common Stock, plus ten percent
of any increase in the number of issued shares of stock above
the number of outstanding shares as of the date of this
amendment.
4. To transact such other business as may properly come before
the meeting and any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 24, 2000
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. Any shareholder attending the Annual Meeting may vote in person even if
such shareholder previously signed and returned a Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jill R. Larson
------------------------
Jill R. Larson
Secretary
Golden Valley, Minnesota
April ___, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
VIDEOLABS, INC.
-------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2000
The enclosed Proxy is solicited on behalf of the Board of Directors of
VideoLabs, Inc., a Delaware Corporation (the "Company"), for use at the
Company's Annual Meeting of Shareholders ("Annual Meeting") to be held Monday,
May 22, 2000, at 3:30 P.M., local time, or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at The Radisson
Hotel, 3131 Campus Drive, Plymouth, MN 55441.
The Company's principal executive offices are located at 5960 Golden
Hills Drive, Minneapolis, Minnesota 55416. The telephone number at that address
is (612) 542-0061.
These Proxy solicitation materials and the Company's Annual Report to
Shareholders for its fiscal year ended December 31, 1999 were mailed on or about
April 14, 2000, to all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on March 24, 2000, are
entitled to notice of, and to vote at, the Annual Meeting. At the record date
5,747,940 shares of the Company's Common Stock were issued, outstanding and
entitled to vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed Proxy bearing a
later date or by attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
The enclosed Proxy is solicited on behalf of the Board of Directors of
the Company.
Every shareholder voting for the election of Directors shall be
entitled to one vote for each share of Common Stock standing in such
shareholder's name on the books of the Company for each Director separately on a
non-cumulative basis. On all other matters each share is entitled to one vote on
each proposal or item that comes before the Annual Meeting.
Proxy statements delivered to brokers who are prohibited from
exercising discretionary authority over beneficial owners who have not provided
voting instructions (commonly referred to as "broker non-votes") will not be
included in these vote totals. The Company will include abstentions and broker
non-votes as present or represented for purposes of establishing a quorum for
transaction of business, but will exclude abstentions and broker non-votes from
the calculation of shares entitled to vote with respect to any proposal for
which authorization to vote was withheld.
The cost of this solicitation will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
Directors, officers and regular employees, without compensation, personally or
by telephone or telegram.
1
<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be
presented by such shareholders at the Company's 2000 Annual Meeting must be
received by the Secretary of the Company no later than December 18, 2000, in
order to be included in the Proxy soliciting material relating to that Annual
Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of March 1, 2000, certain information
concerning those persons known by the Company to be the beneficial owners of
more than five percent (5%) of the outstanding shares of Common Stock of the
Company; the number of shares of Common Stock owned by all directors of the
Company, individually; and all Directors and all executive officers of the
Company as a group.
SHARES BENEFICIALLY OWNED(1)
NAME NUMBER PERCENT(2)
- ---- ------ ----------
James W. Hansen 637,484(3) 10.3%
26 Hwy 96E
Dellwood, Minnesota 55110
Richard Craven 647,448(4) 10.5%
5200 Willson Road Suite 200
Edina, Minnesota 55424-1343
Robin Sheeley 1,239,678(5) 20.1%
4724 South Lake Sarah Drive
Maple Plain, Minnesota 55359
Peter McDonnell 20,000(6) 0.3%
310 Judson Street, #5
Toronto, Ontario
Canada M8Z 5T6
Jill R. Larson 98,410(7) 1.6%
14228 Shore Lane
Prior Lake, Minnesota 55372
All Directors and officers as a group (5 persons) 2,643,020 42.9%
(1) Unless otherwise noted, all shares are beneficially owned and the sole
voting and investment power is held by persons indicated based upon
there being 5,747,940 Common Shares outstanding.
(2) Includes shares of Common Stock issuable upon the exercise of warrants
or options. (See below for an analysis of officer's and director's
warrants and options.)
(3) Includes employee stock options to purchase 95,000 shares of the
Company's Common Stock and non-qualified stock options to purchase
150,000 shares of the Company's Common Stock.
(4) Includes non-qualified options to purchase 22,000 shares of the
Company's Common Stock.
(5) Includes employee stock options to purchase 30,000 shares of the
Company's Common Stock and 1,209,678 restricted shares of the Company's
common stock received as part of the acquisition of Acoustic
Communication Systems, Inc. see "Certain Transactions".
(6) Includes non-qualified options to purchase 20,000 shares of the
Company's Common Stock.
(7) Includes employee stock options to purchase 95,000 shares of the
Company's Common Stock.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Company's Board of Directors currently has four (4) members. All
four directors are to be elected at the Annual Meeting. Unless otherwise
instructed, the Proxy Holders will vote the Proxies received by them for the
four nominees named below. In the event that any nominee is unable or declines
to serve as a Director at the time of the Annual Meeting, the Proxies shall be
voted for any nominee who shall be designated by the current Board of Directors
to fill the vacancy. In the event that additional persons are nominated for
election as Directors, the Proxy holders intend to vote all Proxies received by
them in such a manner as will ensure the election of the nominees listed below.
The term of office of each person elected as a Director will continue until the
next Annual Meeting of the Shareholders and until his successor has been duly
elected and qualified. It is not expected that any nominee will be unable or
will decline to serve as a Director.
The following named persons have been nominated for election to the
Company's Board of Directors:
Name of Nominee Age Positions Held With The Company
--------------- --- -------------------------------
Richard F. Craven 56 Director of the Company.
James W. Hansen 45 President, Treasurer and CEO
Chairman of the Board
Robin Sheeley 44 Chief Technical Officer and
Director of the Company.
Peter McDonnell 62 Director of the Company
The Board of Directors recommends a vote FOR each nominee.
Richard F. Craven has been a Director of the Company since 1992. He
holds a bachelor of science degree in business from the University of Minnesota.
Mr. Craven has been in the real estate and insurance business since 1965,
managing, owning and developing several business ventures. Mr. Craven is also a
Director of RSI, Inc.
James W. Hansen has been President, CEO , and Treasurer of the Company
since November 1996 and Chairman of the Board of Directors since May 29, 1997.
Mr. Hansen holds bachelor degrees in Physiology and Physics Education from the
University of Minnesota and an MBA in Finance from the University of St. Thomas.
From 1979 - 1983 Mr. Hansen was a teacher and management consultant. From 1983 -
1986 he was a Vice President of the Apache Corporation, a NYSE traded oil and
gas exploration company. From 1986 - 1992 he was a Senior Vice President and
General Manager of the pension division of Washington Square Capital, a
Reliastar Company, a NYSE traded financial services company. Since 1992 Mr.
Hansen has served as an investor, Director, President or Vice President of
several private companies in medical services and technology. He serves as a
Director of Medtox Scientific (AMEX) and UBIQ, Inc. and has taught in the MBA
program at the University of St. Thomas since 1984.
Robin Sheeley has been the Chief Technical Officer and Director of the
Company since August 1999. Mr. Sheeley owned and operated Acoustic Communication
Systems (ACS), since 1987. From 1982 - 1986 he was the National Account Manager
of the Communication Division of Honeywell. Prior to Honeywell, Mr. Sheeley was
employed at RCA and Team Electronics. Mr. Sheeley holds an Associate Degree from
North Hennipen Community College in Marketing Management.
Peter McDonnell has been a Director of the Company since February 2000.
Mr. McDonnell is the CEO of AdCom Videoconferencing, Canada's largest provider
of videoconferencing and visual communications solutions. Mr. McDonnell is a
graduate of the University of Toronto with a degree in Physics. Prior to forming
AdCom Electronics Limited in 1974, he was responsible for export sales for
broadcast products of GE Canada.
3
<PAGE>
OTHER OFFICERS AND SIGNIFICANT EMPLOYEES
Jill R. Larson, age 33, has been Secretary of the Company since
February 1994, and has been the Business Manager of the Company since its
inception in July 1992 and was promoted to Vice President of Administration in
November 1996. Ms. Larson is in the process of completing her bachelor of arts
degree in business management from Bethel College. From 1988 through 1992 she
was Business Manager for Foundation Publishing which developed a desktop
publishing application and distributed other Macintosh software applications.
There is no family relationship between any directors or officers of
the Company.
COMPLIANCE OF OFFICERS AND DIRECTORS WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission (the "SEC") and the National Association of
Security Dealers, Inc. Such officers, directors and ten percent (10%)
shareholders are also required by SEC rules to furnish the Company with copies
of all section 16(a) forms that they file.
Based solely on its review of copies of such reports received or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1999, all Section 16(a) filing
requirements applicable to its officers, directors and ten percent (10%)
shareholders were complied with.
BOARD MEETINGS AND COMMITTEES
James W. Hansen serves as Chairman of the Board of Directors of the
Company. The Board of Directors held a total of three (3) meetings during the
fiscal year ended December 31, 1999. No Director attended fewer than
seventy-five (75%) percent of all such meetings of the Board of Directors and of
the committees, if any, upon which such Director served.
The Audit Committee consists of Messrs. McDonnell and Craven. The
principal functions of the Audit Committee are to recommend engagement of the
Company's independent public accountants, to consult with the accountants
concerning the scope of the audit, to review with them the results of their
examination, to review and approve any major accounting policy changes affecting
the Company and to review the Company's financial control procedures and
personnel. The Audit Committee held two (2) meetings during fiscal year 1999.
The Compensation Committee currently consists of Messrs. Hansen and
Craven. The Compensation Committee held two (2) meetings during fiscal year
1999. The function of the Compensation Committee is to make salary, bonus and
compensation recommendations to the Board of Directors of the Company. The Board
of Directors of the Company has developed a compensation philosophy for all
employees. It is the Company's policy to have most employees serve as employees
at will with no employment contracts and to set base salaries at the midpoint of
a range determined by independent surveys for that position if the incumbent
fully meets the experience and skills necessary for success in that position.
Additional financial compensation is based on performance related to success
factors set by the Company's Board of Directors annually. In 1997 a profit
sharing plan was adopted by the Company's Board of Directors whereas an award
could be made to employees if the Company meets certain pretax return goals. No
payments are made under the plan until shareholders attain a 6% pretax operating
ROE. The plan then begins awarding increasing amounts based on pretax operating
ROE to a pool shared with all employees as shareholder returns increase. In 1998
an Employee Stock Purchase Plan was adopted by the Company's Board of Directors
whereas full-time employees are eligible to purchase shares of common stock on a
quarterly basis at the lesser of 85% of the fair market value on the beginning
or ending dates of the period.
Executives also participate in an additional plan based on annual
objectives of the Company similar to the profit sharing plan with amounts
ranging up to 50% of base compensation. Participants can be awarded qualified
employee stock options to recognize long term contributions to the Company. The
total pool of qualified options is limited to 10% of the Company's outstanding
securities.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by,
or paid for all services rendered to the Company by the Company's Chief
Executive Officer and the other most highly compensated executive officers whose
total compensation exceeded $100,000 at the fiscal year end, for services to the
Company in all capacities during the three fiscal years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
----------------- -----------------------------
Other Restricted Options/SARs
Name and Principal Fiscal Annual Stock No. of
Position Year Salary Bonus Compensation Awards Shares
-------- ---- ------ ----- ------------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
James Hansen 1999 $84,000(1) $46,500(2) $ 0 0 0
President, Chairman, 1998 $84,000(1) $ 0 $ 0 0 30,000(4)
Chief Executive Officer 1997 $85,462(1) $40,019(3) $ 0 0 50,000(5)
& Treasurer
Robin Sheeley 1999 $56,250(6) $26,500(7) $5,594(8) 0 30,000(9)
Chief Technical Officer
& Director
</TABLE>
(1) Includes compensation received as part of a consulting agreement see
"Employment Contracts and Compensatory Arrangements" and compensation
received as part of an employment agreement dated June 1, 1997 see also
"Employment Contracts and Compensatory Arrangements".
(2) Includes a management bonus of $45,000 paid to The Hansen Company
(company wholly owned by Mr. Hansen) and an employee profit sharing
bonus of $1,500. Both earned for 1999, but not paid until February
2000.
(3) Includes a management bonus of $35,000 paid to The Hansen Company
(company wholly owned by Mr. Hansen) and an employee profit sharing
bonus of $5,019. Both earned for 1997, but not paid until January 1998.
(4) Includes qualified employee stock options granted that are vested and
exercisable over three years.
(5) Includes qualified stock options granted that were 100% vested and
exercisable on the date of the grant.
(6) Includes compensation received from August 3, 1999 to December 31, 1999
as part of an employment agreement dated August 3, 1999 see "Employment
Contracts and Compensatory Arrangements"
(7) Includes a management bonus of $25,000 and an employee profit sharing
bonus of $1,500. Both earned for 1999, but not paid until February
2000.
(8) Includes an automobile perquisite of $5,594.
(9) Includes qualified employee stock options granted that are vested and
exercisable over three years.
5
<PAGE>
INDIVIDUAL OPTIONS
The following table sets forth certain information with respect to
individual options granted during 1999 by the Company's Chief Executive Officer
and the other most highly compensated executive officers whose total
compensation exceeded $100,000 at the fiscal year end.
INDIVIDUAL OPTION GRANTS
<TABLE>
<CAPTION>
Number % of Total
Options Options Granted
Name Granted to Employees(1) Exercise Price Expiration Date
---- ------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
James Hansen 15,000(2) 10% $1.00 January 26, 2009
Robin Sheeley 30,000(3) 20% $1.25 August 9, 2002
</TABLE>
(1) During fiscal year 1999, options to acquire an aggregate of 147,000
shares of Common Stock were granted to employees.
(2) Includes qualified employee stock options granted that are vested over
three years from the date of grant.
(3) Includes qualified employee stock options granted that are vested over
three years from the date of grant.
AGGREGATE OPTIONS EXERCISED AND HOLDINGS
The following table sets forth certain information with respect to
aggregate options exercised during 1999 and options held at the end of such year
by the Company's Chief Executive Officer and the other most highly compensated
executive officers whose total compensation exceeded $100,000 at the fiscal year
end.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options
Shares Options at Fiscal Year End at December 31, 1999(1)
Acquired on Value -------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James Hansen 0 0 210,000 35,000 $376,000 $51,250
Robin Sheeley 0 0 0 30,000 0 $45,000
</TABLE>
(1) Based on the December 31, 1999, closing bid price of the Company's
Common Stock of $2.75 per share.
COMPENSATION OF DIRECTORS
On June 3, 1994, the Company's Board of Directors authorized payment to
non-employee Directors of $50.00 per meeting. On May 29, 1997 the Company's
Board of Directors authorized an increase in payments to non-employee Directors
to $250.00 per meeting effective June 1, 1997 and an annual grant of 2,000
non-qualified options pursuant the Company's Nonqualified Stock Option Plan.
6
<PAGE>
EMPLOYMENT CONTRACTS AND COMPENSATORY ARRANGEMENTS
In November of 1996 the Company entered into an agreement with The
Hansen Company and James W. Hansen its principal, to provide executive
leadership to the Company and to develop a strategic plan to optimize
shareholder value. The agreement called for a minimum three-month commitment
ending February 15, 1997 and extended monthly thereafter at the mutual agreement
of both parties. James Hansen received 150,000 non-qualified options at an
exercise price of $0.8125 as an inducement to provide services to the Company
and The Hansen Company received a retainer of $8,000 per month for services of a
minimum of 24 hours per week as well as reimbursement of normal business
expenses. Mr. Hansen continued under this consulting agreement after the minimum
three-month commitment until June 1, 1997. On June 1, 1997 the company entered
into a three-year employment agreement with Mr. Hansen. The agreement calls for
a minimum monthly base salary of $5,000 as well as reimbursement of normal
business expenses. Mr. Hansen received 50,000 qualified employee stock options
at an exercise price of $1.00 per the employment agreement. The consulting
agreement between the Company and The Hansen Company has been terminated and a
consulting provision has been included in Mr. Hansen's employment agreement to
allow for consulting services and assistance as required by the Company for a
monthly retainer of $2,000 payable to The Hansen Company. Mr. Hansen was elected
Chairman of the Board of Directors at the annual meeting dated May 29, 1997.
In May of 1999 and amended on May 25, 1999 and August 3, 1999 the
Company entered into a Merger Agreement with Robin Sheeley and Acoustic
Communication Systems, Inc. (ACS). Pursuant to the Merger Agreement and on the
terms and conditions set forth in the Merger Agreement, ACS was merged with and
into Acquisition Co., with Acquisition Co. as the surviving corporation in the
Merger. As a result of the Merger, ACS became a subsidiary of the Company. The
Merger consideration was equal to the sum of $500,000 cash, a $500,000 note and
1,209,678 shares of the Company's common stock which was equal to $1,500,000 in
value based on the price per share equal to the average of the closing bid and
asked prices of the Company's common stock as reported by Nasdaq during the ten
trading days immediately preceding the Closing Date.
In August of 1999 the Company entered into a three-year employment
agreement with Robin Sheeley as the Chief Technical Officer. The agreement calls
for a minimum monthly base salary of $10,833 per month as well as reimbursement
of normal business expenses. The board of Directors may increase, but not
decrease, such monthly base salary. Mr. Sheeley received 30,000 qualified
employee stock options at an exercise price of $1.25 with vesting of 10,000
shares per year on the annual anniversary of this employment agreement. Mr.
Sheeley is entitled to participate in the Company's management bonus pool and is
also eligible for the Company's profit sharing plan.
In August of 1999 the Company entered into a twelve year Noncompetition
Agreement with Robin Sheeley whereas the agreement precludes Mr. Sheeley from
competing the the Company anywhere within Iowa, Minnesota, Nebraska, North
Dakota, South Dakota or Wisconsin. In consideration of the provisions of this
Agreement, the Company agrees to pay Mr. Sheeley the sum of $750,000 on April 7,
2000. Mr. Sheeley may defer such payment, at his discretion, for up to 12
successive one-year periods, in which event the outstanding balance shall accrue
interest at the Company's short term cost of borrowing. In the event that Mr.
Sheeley breaches the restrictive covenants, Mr. Sheeley shall pay to the Company
as liquidated damages and as full and complete settlement of any damages
incurred by the Company, an amount equal to the then unamortized balance of the
consideration (which will amortize evenly over the on hundred forty-four (144)
months at $5,208.33 per month, plus attorney fees and collection costs).
In August of 1999 the Company entered into a Registration Agreement
with Robin Sheeley. The shares of Company common stock that were issued to Mr.
Sheeley pursuant to the Merger Agreement were not registered under the
Securities Act of 1933 and are therefore constitute as restricted securities.
Under the Registration Agreement, Mr. Sheeley has the right to include the
shares of the Company common stock in a registration statement filed by the
Company in the future. These "piggyback" registration rights apply only if the
Company is independently preparing to file a registration statement. Mr. Sheeley
cannot demand that the Company file a registration statement. In connection with
a "piggyback" registration, Mr. Sheeley must pay his proportionate share of
registration expenses based on the total number of shares registered, and is
also responsible for the fees and expenses of his own legal council.
7
<PAGE>
CERTAIN TRANSACTIONS
RELATED PARTIES
The wife of Mr. Sheeley, Director of the Company, is employed at the
Company as a graphic designer.
PROPOSAL TWO
AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY FROM VIDEOLABS, INC. TO E.MERGENT, INC.
The Board of Directors has approved an amendment to the Company's
Certificate of Incorporation to change the name of the Company. The Company
adopted the name of VideoLabs, Inc. in July of 1992. As a result of the recent
acquisition of Acoustic Communications Systems, Inc. in August 1999, the
Company's focus has expanded. The Company believes that it is necessary to keep
the identities of the individual business units unique. The Company intends to
operate each of its business units as divisions of the Company. Accordingly, the
Board of Directors has chosen the name E.mergent, Inc. for the Company. The
Company's management believes that this new name for the Company reflects its
intent to continue to pursue emerging technologies and services in the area of
collaboration. The VideoLabs and Acoustic Divisions will operate as divisions of
E.mergent, Inc. along with the Company's Internet division, Meeting Room Tools.
Accordingly, the Board of Directors has proposed that article FIRST of
the Company's Certificate of Incorporation be amended to reflect the name of the
Company as E.mergent, Inc.
The affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock entitled to vote at the Annual Meeting is required to
approve the amendment.
The Board of Directors recommends a vote FOR the proposed amendment to
the Certificate of Incorporation.
PROPOSAL THREE
AMENDMENT OF 1993 STOCK OPTION PLAN
In April of 1993 the Board of Directors adopted the VideoLabs, Inc.
1993 Stock Option Plan (the "Plan"), which was subsequently amended and approved
by the Company's shareholders on March 3, 1994. In May of 1995 the "Plan" was
again amended by the Company's shareholders to increase the number of shares
reserved for issuance under the Plan by 100,000 shares to an aggregate of
300,000 shares. The Board of Directors, again amended the Plan and increased the
number of shares reserved for issuance under the Plan by 200,000 shares to an
aggregate of 500,000 shares.
At this time, the Board has approved the increase in the aggregate
number of shares of stock reserved for issuance under the Plan to 575,000
shares, plus ten percent of any increase in the number of shares of stock above
the number of issued and outstanding shares as of the date of the approval of
this amendment, subject to shareholder approval.
PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Company and
its stockholders by enabling the Company to attract and retain persons of
ability to perform services for the Company by providing an incentive to such
persons through equity participation in the Company and by rewarding such
persons who contribute to the achievement by the Company of its economic
objectives.
ELIGIBLE PLAN PARTICIPANTS
The Plan provides for the granting of stock options to key employees of
the Company. All employees are eligible to participate in the Plan and, as of
December 31, 1999, the Company had seventy-seven full-time employees. If the
Plan's amendment is approved by the Company's shareholders, an aggregate of
575,000 shares of the Company's Common Stock will be reserved for issuance upon
exercise of options granted under the Plan.
8
<PAGE>
ADMINISTRATION
The Plan is administered by the Company's Board of Directors, a
majority of whom acting on any matter with regard to the Plan are to be
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act,
or by a committee (the "Committee") composed of not fewer than three members of
the Board of Directors who are "disinterested persons".
TERMS AND CONDITIONS OF OPTIONS
Granting. A participant may be granted one or more Options under the
Plan, and such Options shall be subject to the terms and conditions, consistent
with the other provisions of the Plan, as shall be determined by the Committee
in its sole discretion.
Exercise. An Option shall become exercisable at such times and such
installments, if any, as shall be determined by the Committee at the time the
Option is granted. Unless otherwise determined by the Committee at or after its
date of grant, no Options shall be exercisable prior to six (6) months from its
date of grant. Upon completion of its exercise period, an Option, to the extent
not exercised, shall expire.
Exercise Price. The per share price to be paid by the participant at
the time of an Option is exercised shall be determined by the Committee, in its
discretion, at the date of grant; provided, however, that such price shall not
be less than (i) 100% of the fair market value of one share of Common Stock on
the date the Option is granted; or (ii) 110% of the fair market value of one
share of Common Stock on the date the Option is granted if, at the time the
Option is granted, the Participant owns, directly or indirectly, more than 10%
of the total combined voting power of all the classes of stock of the Company as
determined pursuant to Section 422 of the Internal Revenue Code (the "Code").
Duration. The period during which an Option may be exercised shall be
fixed by the Committee in its sole discretion at such time the Option is
granted; provided, however, that in no event shall such period exceed ten years
from its date of grant, or, in the case of a participant who owns, directly or
indirectly more than 10% of the total combined voting power of all the classes
of stock of the Company as determined pursuant to Section 422 of the Code, five
years from its date of grant.
Manner of Option Exercise. An Option may be exercised by a participant
in whole or in part from time to time, subject to the conditions contained in
the Plan, by delivery, in person or through certified or registered mail, of
written notice of exercise to the Company at its principal executive offices,
and by paying in full the total option exercise price for the shares of Common
Stock to be purchased. If a participant exercises any Option with respect to
some, but not all, of the shares of Common Stock subject to such Option, the
right to exercise such Option with respect to the remaining shares shall
continue until it expires or terminates in accordance with the terms. No Option
shall be exercisable except in whole shares.
Payment of the Exercise Price. The total purchase of the shares to be
purchased upon exercise of an Option shall be paid entirely in cash, including
check, bank draft, or money order.
AMENDMENT
The Plan may be amended by the Board of Directors, subject to approval
by affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present and entitled to vote at a meeting at which a quorum is
present.
TAX CONSEQUENCES
Under the present federal tax regulations, there will be no federal
income tax consequences to either the Company or the participant upon the grant
of an Option, nor will the participants exercise of an Option result in federal
income tax consequences to the Company. Although a participant will not realize
ordinary income upon his exercise of an Option, the excess of the fair market
value of the shares of Common Stock acquired at the time of exercise over the
exercise price will constitute an "item of adjustment" within the meaning of
Section 56 of the Code and, thus, may result in the imposition of the
"alternative minimum tax" pursuant to Section 55 of the Code on the participant.
If a participant
9
<PAGE>
does not dispose of shares of Common Stock acquired through the exercise of
Option within two (2) years from the date of grant and within one (1) year of
the exercise of the Option, any gain realized upon a subsequent disposition of
such shares will constitute long-term capital gain to the participant. If a
participant disposes of such shares within two (2) years from the date of grant
or within one (1) year of the date of exercise of the Option, an amount equal to
the lesser of (i) the excess of the fair market value of such shares on the date
of exercise over the exercise price, or (ii) the actual gain realized upon such
disposition will constitute ordinary income to the participant in the year of
disposition. Any additional gain upon such disposition will be taxed as
short-term capital gain. The Company will receive a deduction in an amount equal
to the amount constituting ordinary income to the participant.
ACCOUNTING TREATMENT
Under accounting rules currently in effect, the grant or exercise of an
option under the Plan does not result in a charge against the earnings of the
Company provided that the exercise price is 100% of fair market value at the
date of the grant.
OUTSTANDING OPTIONS
As of December 31, 1999, the following options were outstanding under
the Option Plan: (i) options for 220,000 shares at $2.13 to $.81 per share to
the current executive officers of the Company, and (ii) options for 162,000
shares at $2.13 to $.81 per share to all eligible employees, including current
officers who are not executive officers, as a group. The exercise period is
determined by the Committee at the date of grant. The exercise period for these
options is ranges from zero to four years.
PROPOSED AMENDMENT
The Company initially reserved 100,000 shares of Common Stock for
issuance under the Plan. The Board of Directors authorized and the shareholders
have approved increases in the number of reserved shares to 500,000. The Board
of Directors have approved an increase in the number of shares reserved by the
Company to 575,000, plus ten percent of any increase in the number of shares of
stock issued and outstanding above the number of outstanding shares as of the
date of this amendment. Approval of this amendment requires the affirmative vote
of a majority of the shares of common stock voting at the annual meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the proposal
to amend the Plan by increasing the number of shares reserved for issuance under
the Plan by 75,000 shares to an aggregate of 575,000 shares of Common Stock,
plus ten percent of any increase in the number of shares of stock issued and
outstanding above the number of outstanding shares as of the date of this
amendment.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the shares they
represent according to their best judgment.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares, which you hold. You are, therefore, urged to
execute and return the accompanying Proxy in the envelope, which has been
enclosed, at your earliest convenience.
THE BOARD OF DIRECTORS
Dated: April 3, 2000
10
<PAGE>
VIDEOLABS, INC.
ANNUAL MEETING OF SHAREHOLDERS
MONDAY, MAY 22, 2000
3:30 PM
RADISSON HOTEL
3131 CAMPAS DR.
PLYMOUTH, MN 55441
VIDEOLABS, INC.
5960 GOLDEN HILLS DR., GOLDEN VALLEY, MN 55416 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated April 14, 2000, hereby appoints James W. Hansen and Jill R.
Larson proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designated on the reverse side, all common shares of VideoLabs, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of
VideoLabs, Inc., to be held at 3:30 pm on Monday, May 22, 2000, at The
Radisson Hotel, 3131 Campas Dr., Plymouth, MN 55441, and any adjournment
thereof.
See reverse for voting instructions.
<PAGE>
THERE ARE THREE WAYS TO VOTE YOUR PROXY COMPANY #
CONTROL #
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. on May 19, 2000.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/VLAB/ -- QUICK *** EASY *** IMMEDIATE
* Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. on May 19, 2000.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to VideoLabs, Inc., c/o Shareowner
Services|PS, P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
1. Election of directors:
01 Richard F. Craven
02 James W. Hansen
03 Robin Sheeley
04 Peter McDonnell
[ ] Vote FOR
all nominees
(except as marked)
[ ] Vote WITHHELD
from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
2. To consider and act upon a proposal to ratify and approve an amendment to
Article FIRST of the Company's Certificate of Incorporation to change the
name of the Company from VideoLabs, Inc. to E.mergent, Inc.
[ ] For [ ] Against [ ] Abstain
3. To consider and act upon a proposal to amend the Company's Incentive Stock
Option Plan by increasing the number of shares reserved for issuance under
the Plan by 75,000 shares to an aggregate of 575,000 shares of Common
Stock, plus ten percent of any increase in the number of issued shares of
stock above the number of outstanding shares as of the date of this
amendment.
[ ] For [ ] Against [ ] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL DIRECTORS NAMED IN ITEM 1 AND FOR PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND MAIL THIS PROXY STATEMENT IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.
Address Change? Mark Box [ ] Indicate changes below:
Date _______________, 2000
__________________________
| |
__________________________
Signature(s) in Box
Please sign exactly as
your name appears at left;
in the case of joint
tenancy, both joint
tenants must sign;
fiduciaries please
indicate title and
authority.
