<PAGE>
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
TERRA GLOBAL COMMUNICATIONS CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
I
<PAGE>
TERAGLOBAL COMMUNICATIONS CORP.
9171 Towne Centre Drive, Suite 600
San Diego, California 92122
------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 2000
-----------------------------------------------------
The annual meeting of the Shareholders of TeraGlobal Communications
Corp. (the "Company") will be held at the Scripps Green Hospital Auditorium
located at 10666 North Torrey Pines Road, La Jolla, California 92037, at 6:00
p.m. on May 30, 2000, for the following purposes:
1. To elect a board of six (6) Directors.
2. To transact such other business as may properly be brought
before the meeting or any adjournments thereof.
Only shareholders of record as of March 31, 2000, will be entitled to
notice of, and to vote at, the meeting and any adjournment thereof.
The Company's Proxy Statement is attached to this notice. Financial and
other information concerning the Company is contained in its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.
Your vote is important regardless of the number of shares of stock that
you hold. Whether or not you plan to attend in person, you are urged to fill in
the enclosed proxy and to sign and forward it. We have enclosed a business reply
envelope for your convenience, which requires no postage if mailed in the United
States. It is important that your shares be represented at the meeting to ensure
the presence of a quorum. Any shareholder who signs and sends in a proxy may
revoke it by executing a new proxy with a later date, by delivering written
notice of revocation to the Secretary of the Company at any time before it is
voted, or by attending the meeting and voting in person. Your cooperation in
promptly returning your proxy will help limit expenses incident to proxy
solicitation.
By Order of the Board of Directors
April 11, 2000 David Fann, Chairman of the Board
<PAGE>
TERAGLOBAL COMMUNICATIONS CORP.
9171 Towne Centre Drive, Suite 600
San Diego, California 92122
------------------------------------------------------
PROXY STATEMENT
------------------------------------------------------
INTRODUCTION
This proxy statement is furnished by and on behalf of the Board of
Directors of TeraGlobal Communications Corp., a Delaware corporation (the
"Company") in connection with solicitation of proxies for use at the Company's
Annual Meeting of Shareholders (the "Annual Meeting"), and at any postponements
thereof. The Annual Meeting will be held at 6 p.m. on May 30, 2000, at the
Scripps Green Hospital auditorium located at 10666 North Torrey Pines Road, La
Jolla, CA. Only shareholders of record at the close of business on March 31,
2000 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. There were 19,854,663 shares of common stock issued and outstanding as
of the Record Date. Proxies and proxy statements will first be given to
shareholders on approximately April 17, 2000.
The Company is bearing the expense of soliciting proxies and the cost
of preparing, assembling and mailing material in connection with the
solicitation of proxies. Proxies are being furnished by mail and may be
solicited by directors, officers and other employees of the Company, without
additional compensation, in person or by telephone or facsimile transmission.
The Company will also request brokerage firms, banks, nominees, custodians and
fiduciaries to forward proxy materials to the beneficial owners of shares of
common stock as of the Record Date and will reimburse such persons for the cost
of forwarding the proxy materials in accordance with customary practice.
VOTING
A majority of the outstanding shares, represented in person or by
proxy, will constitute a quorum at the meeting. Shareholders of record as of the
Record Date are entitled to one vote for each share held on all matters to come
before the meeting, except that as described below, shareholders may have
cumulative voting rights with respect to the election of Directors. Except with
regard to the election of directors, a majority of the shares constituting the
quorum must vote "for" a proposed action in order to approve such action. With
respect to the election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them, up to the number of
directors to be elected by such shares, are elected.
Certain provisions of California corporate law apply to the Company by
virtue of its physical presence in that state, including the right to cumulative
voting for Directors. The proxy process does not permit shareholders to cumulate
votes. No shareholder can cumulate votes unless the candidate's name for which
such votes are to be cast has been placed in nomination prior to voting and a
shareholder has given notice of the shareholder's intention to cumulate the
shareholder's votes at the meeting and prior to voting. If any shareholder has
given such notice, all shareholders may cumulate their votes for candidates in
nomination. Management does not, at this time, intend to give notice of
cumulative voting or to cumulate the votes it may hold pursuant to the proxies
solicited by this Proxy Statement. However, if a shareholder gives the required
notice at the meeting, management intends to cumulatively vote all of the
proxies held by it in favor of the nominees for office as set forth in this
Proxy Statement.
All proxies that are returned will be counted by the Inspector of
Elections in determining the presence of a quorum and on each issue to be voted
on. An abstention from voting or a broker non-vote will not be counted in the
voting process. The shares represented by proxies that are returned properly
signed will be voted in accordance with the shareholders' directions. If the
proxy card is signed and returned without direction as to how the shares are to
be voted, they will be voted as recommended by the Board of Directors.
Shareholders may revoke any proxy before it is voted by attending the meeting
and voting in person, by executing a new proxy with a later date and delivering
it to the Secretary of the Company, or by giving written notice of revocation to
the Secretary of the Company.
<PAGE>
CERTAIN INFORMATION WITH RESPECT OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
During fiscal year 1999 the Board of Directors met on six occasions.
The Board also took action by written consent on 11 occasions. The Company
formed Audit and Compensation Committees in April 1999. The Company does not
have a Nominating Committee. The Audit Committee is responsible for reviewing
the services performed by the Company's independent auditors and internal audit
department, evaluating the Company's accounting policies and its system of
internal controls and reviewing significant financial transactions. The
Compensation Committee is primarily responsible for reviewing compensation to be
paid to the Company's officers and for administering the Company's equity-based
incentive plans. Messrs. John F.A.V. Cecil, Lawrence Lacerte and William O.
McCoy, none of whom are employees, are the members of the Audit Committee.
Messrs. Cecil and McCoy are the members of the Compensation Committee. During
fiscal year 1999, the Audit Committee met once and the Compensation Committee
met twice.
The name of, principal occupation of, and certain additional
information about the Company's six directors, each of whom are also nominees,
are set forth below, together with information concerning the Company's
executive officers.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
David Fann 45 Chairman and Chief Executive Officer
Paul Cox 36 Director and President
Grant K. Holcomb 40 Director and Chief Technical Officer
John F.A.V. Cecil 43 Director
Lawrence Lacerte 47 Director
William O. McCoy 65 Director
Frederick C. McGee 53 Chief Financial Officer
James A. Mercer III 38 Executive Vice President and Secretary
</TABLE>
DAVID FANN. Mr. Fann has been the Chief Executive Officer and a
Director of the Company since September 1998. He has served as Chairman of the
Board of Directors since June 24, 1999. He has been the President of
TechnoVision Communications, Inc., a subsidiary of the Company, since November
1995. From February 1995 to October 1995, Mr. Fann served as Vice President of
Sales and Marketing for Quadraplex, a videoconferencing company. He co-founded
Totally Automated Systems Communications, a Unix-based communications company,
in January 1993 and served as Vice President of that company from January 1993
until January 1995. From January 1987 to December 1992, he served as Operations
Officer for Networks, Inc.
PAUL COX. Mr. Cox has been President of the Company since February
1997. He served as Chairman of the Board of Directors from February 1997 until
June 24, 1999. He founded and became the President of ATI Access Technologies
Inc. in 1996 and Video Stream Inc. in February of 1997. In 1995, Mr. Cox was the
President and a shareholder of International Video Conferencing, Inc., a
provider of video conferencing facilities, and had earlier been an Associate
with Pierce Scraper, where he advised clients on commercial investments. In
1994, he was a Senior Analyst with Colliers International, a commercial real
estate leasing and advisory firm. Prior to 1994, Mr. Cox practiced commercial
and residential mortgage administration with Canada Trust. Mr. Cox holds a
Bachelor of Arts in International Relations and Economics from the University of
British Columbia.
GRANT K. HOLCOMB. Mr. Holcomb has been a director and the Chief
Technical Officer of the Company since December 1997. From July 1996 to July
1998, Mr. Holcomb was the founder and President of Interactive Solutions Group,
Inc., a computer and network design group which focused on collaborative
communications applications. From July 1991 to April 1996, Mr. Holcomb was the
Vice President of Research and Development at Multimedia Design Corporation.
From August 1990 to April 1991, he served in the United States Marine Corps as
an Operations and Commanding Officer in Operation Desert Shield and Operation
Desert Storm. From August 1987 to August 1990, he served as an instructor of
Electrical Engineering and Digital Logic and Microprocessors at the U.S. Naval
Academy. Mr. Holcomb holds a Bachelor of Science degree in Electrical
Engineering from The Citadel and has completed his academic requirements for his
Masters of Science degree in Electrical Engineering from The Naval Postgraduate
School.
2
<PAGE>
JOHN F.A.V. CECIL. Mr. Cecil has been a director of the Company since
March 1999. Since 1992 Mr. Cecil has served as the President of Biltmore Farms
Inc., a real estate development company. Mr. Cecil is currently a member of the
Board of Directors of First Union -- Mid-Atlantic, Mission-St. Joseph's Health
Systems, Inc., and The Association of Governing Boards of Universities and
Colleges. He is also the Vice-Chairman - Board of Governors of the University of
North Carolina, which is responsible for the general determination, control,
supervision, management and governance of all affairs of the 16 constituent
institutions. Mr. Cecil holds a Bachelor of Arts degree from the University of
North Carolina at Chapel Hill and a Masters in International Management, from
the American Graduate School of International Management.
LAWRENCE LACERTE. Mr. Lacerte joined the Company's Board of Directors
in December 1999. Mr. Lacerte founded and served as President of Lacerte
Software Corporation, developers of tax preparation software, from 1979 until
its sale to Intuit Corporation in May 1998. Following the sale, Mr. Lacerte
founded Lacerte Technologies, a company specializing in technology and Internet
related ventures. Mr. Lacerte also serves on the boards of directors of various
technology companies, including Citadel Technology, Inc., How2.com, Inc., and
Worldpoint Interactive, Inc. Mr. Lacerte is actively involved in the community,
serving on the boards of the SMU Cox School of Business, the Hockaday School,
St. Mark's School of Texas, the Juvenile Diabetes Foundation and the Crystal
Ball Advisory Board.
WILLIAM O. MCCOY. Mr. McCoy joined TeraGlobal's Board of Directors in
April 1999. Since April of 1999 he has served as Acting Chancellor for the
University of North Carolina. Since December 1997 he has been a partner in
Franklin Street Partners, an investment management firm. From 1995 to 1998, he
served as Vice President and Chief Financial Officer for the University of North
Carolina. From 1984 to 1994, he served as Vice Chairman of the Board of
BellSouth Corporation and from 1986 to 1994, he served as President and Chief
Executive Officer of BellSouth Enterprises. Mr. McCoy currently serves as a
director of the following companies: Carolina Power & Light, an electricity
generator and distributor in North and South Carolina; The Kenan Corporation, a
tanker transport company specializing in bulk commodities (chiefly gasoline,
propane and chemicals); Liberty Corporation, a holding company for Liberty Life
Insurance and Cosmos Broadcasting; Weeks Corporation, a self-administered and
self-managed real estate investment trust. Mr. McCoy is also a Trustee of
Fidelity Investments, the largest mutual fund company in the world. Mr. McCoy
received his Bachelor of Arts degree in business administration from the
University of North Carolina at Chapel Hill and holds a Master's degree in
management from the Massachusetts Institute of Technology where he was a Sloan
Fellow.
FREDERICK C. MCGEE. Mr. McGee was appointed Chief Financial Officer of
the Company in March 2000. From August 1996 to August 1999, Mr. McGee was
Executive Vice President and Chief Financial Officer of Daou Systems, Inc., a
publicly traded information technology company specializing in healthcare
providers. From October 1988 to July 1996, he was Vice President of Finance and
Chief Financial Officer of Infrasonics, Inc., a publicly traded manufacturer of
medical devices used in respiratory care. Prior thereto, Mr. McGee held various
financial and management positions with Sears Roebuck & Company and other
retail, wholesale and manufacturing companies. He holds a Bachelors of Science
Degree in Finance from San Diego State University.
JAMES A. MERCER III. Mr. Mercer has been the Executive Vice President
of the Company since February 2000 and Secretary of TeraGlobal since April 1999.
From April 1994 to March 1999, Mr. Mercer was a partner of and associated with
the law firm of Luce, Forward, Hamilton & Scripps LLP, San Diego, California,
where he specialized in corporate and securities law. From December 1991 to
April 1994, Mr. Mercer was associated with the law firm of O'Connor, Cavanagh,
Andersen, Westover, Killingsworth & Beshears, Arizona. From August 1989 to
December 1991 he was associated with the law firm of Ervin, Cohen & Jessop,
Beverly Hills, California. Mr. Mercer obtained his Bachelor of Arts from the
University of California Los Angeles. He obtained a Masters in Business
Administration with concentration in administrative finance from the California
State University Fullerton. He received his Juris Doctor from the University of
Southern California.
DIRECTOR COMPENSATION
Directors do not receive compensation for their services as directors.
Outside directors are reimbursed for their expenses incurred to attend meetings.
In addition, outside directors are eligible for stock option grants pursuant to
the Company's 1997 Stock Option Plan and the 1999 Stock Option Plan.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000 certain
information with respect to the beneficial ownership of common stock by (a) each
person known by the Company to be the beneficial owner of more than 5% of its
outstanding common stock, (b) each of the Company's directors and (c) all
directors and executive officers as a group. Except as noted below, to the best
of the Company's knowledge, each of such persons has sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER SHARES PERCENT OF CLASS
------------------- ------ ----------------
<S> <C> <C>
Paul Cox 6,525,450 32.87%
David Fann 1,600,000(1) 7.82%
Grant K. Holcomb 1,718,950(1) 8.40%
John F.A.V. Cecil 107, 175(2) .54%
Lawrence A. Lacerte 818,452(3) 4.11%
William O. McCoy 55,000(4) .28%
James A. Mercer, III 301,000(5) 1.52%
Fred McGee 15,000(6) .08%
All executive officers and directors 11,141,027(7) 52.29%
as a group (8 persons)
</TABLE>
- --------------------
(1) Includes 600,000 shares issuable upon the exercise of outstanding stock
options.
(2) Includes 50,000 shares issuable upon the exercise of outstanding stock
options. Also includes 5,200 shares held in trust for the benefit of
Mr. Cecil's minor children. Mr. Cecil disclaims beneficial ownership of
such shares.
(3) Includes 37,500 shares issuable upon the exercise of outstanding stock
options.
(4) Includes 50,000 shares issuable upon the exercise of outstanding stock
options.
(5) Includes 100,000 shares issuable upon the exercise of outstanding stock
options.
(6) Represents shares issuable upon the exercise of outstanding stock
options.
(7) Includes 1,452,500 shares issuable upon the exercise of outstanding
stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 of the Company's common stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Company's common stock. Upon filing any such report with the Securities and
Exchange Commission, the filing person must furnish the Company with a copy of
such report. James A. Mercer III, Executive Vice President and Issa Nakhleh,
then Chief Financial Officer each acquired stock from the Company in stock grant
transactions which took place in July 1999. The Form 4s for those transactions
were filed late. They were filed on the next business day after the reporting
deadline. William McCoy, an outside Director of the Company, acquired stock in
the market in July 7, 1999. The Form 4 for the transaction was filed March 23,
2000.
EXECUTIVE COMPENSATION AND BENEFITS
The Company's compensation and benefits program is designed to attract,
retain and motivate employees to operate and manage the Company for the best
interests of its constituents. Executive compensation is designed to provide
incentives for those senior members of management who bear responsibility for
the Company's goals and achievements. The compensation philosophy is based on a
base salary, with opportunity for significant bonuses to reward outstanding
performance, and a stock option program.
4
<PAGE>
EXECUTIVE COMPENSATION
The following tables and notes show the compensation provided to the
Chief Executive Officer and the other most highly compensated executive
officers, who served as such at the end of fiscal 1999 and whose annual
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
RESTRICTED SECURITIES
STOCK UNDERLYING
SALARY BONUS AWARDS OPTIONS/ SARs
NAME/TITLE YEAR $ $ $ #(1)
- ------------------------------------ -------- ------------- ------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Paul Cox, 1999 192,083 -- -- --
President 1998 141,023 -- -- --
David Fann, 1999 192,083 250 -- 300,000
Chief Executive Officer 1998 54,000(2) -- -- 300,000
Grant K. Holcomb, 1999 192,083 250 -- 300,000
Chief Technology Officer 1998 124,324(3) -- -- 300,000
James A. Mercer III, Executive Vice
President and Secretary 1999 135,000(4) 250 101,000 100,000
</TABLE>
- --------------------
(1) Consists solely of options granted under the Company's 1997 and 1999
Stock Option Plans.
(2) Mr. Fann served as Chief Executive Officer commencing September 1,
1998.
(3) Mr. Holcomb served as Chief Technology Officer commencing April 1,
1998.
(4) Mr. Mercer served as Vice President and General Counsel commencing
March 2, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARs GRANTED EXERCISE PRICE
OPTIONS/SARs GRANTED TO EMPLOYEES IN FISCAL OR BASE PRICE EXPIRATION
NAME (#) YEAR ($/SHARE) DATE
------------- ------------------ ---------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
David Fann 300,000 19.79% $8.88 2/23/09
Grant K. Holcomb 300,000 19.79% $8.88 2/23/09
James A. Mercer III 100,000 6.60% $10.00 3/2/09
</TABLE>
5
<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES "IN THE MONEY"
UNDERLYING UNEXERCISED OPTIONS/SARs AT FISCAL
OPTIONS/SARs AT FISCAL YEAR-END(2)
YEAR-END(1) $
SHARES
ACQUIRED ON VALUE ----------------------- -----------------------
EXERCISE REALIZED
NAME # $ EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------- --------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
David Fann -- -- 600,000 / 0 1,032,000/ 0
Grant K. Holcomb -- -- 600,000 / 0 1,545,000/ 0
James A. Mercer III -- -- 100,000 /0 0/0
</TABLE>
- ------------------------------
(1) All options granted at 100% of fair market value. Optionees may satisfy
the exercise price by submitting currently owned shares, in-the-money
options and/or cash.
(2) Calculated based upon the December 31, 1999 fair market value share
price of $6.50 less the share price to be paid upon exercise.
EMPLOYMENT AGREEMENTS
The Company entered into Employment Agreements with each of Paul Cox,
David Fann and Grant K. Holcomb effective as of September 30, 1998. Pursuant to
those agreements, Paul Cox will serve as President, David Fann will serve as
Chief Executive Officer and Grant K. Holcomb will serve as Chief Technical
Officer of the Company. Each of these agreements provide for a base annual
salary of $162,000 per annum, or a higher amount as the Board of Directors may
determine. The Board of Directors amended the Employment Agreements in March
1999 to increase the base salary under each agreement to $200,000. In addition
to base salary, Messrs. Fann, Cox and Holcomb are eligible for bonuses under
certain conditions and are eligible for stock option grants under the Company's
1997 and 1999 Stock Option Plans and all other profit sharing or bonus plans
generally available to Company officers. The agreements expire on September 30,
2002. In the event the Company terminates the executive's employment without
cause, each executive will receive his salary remaining through the end of the
term of his Employment Agreement, and continuation of certain employee benefits.
The Company entered into an Employment Agreement with Frederick C.
McGee effective as of January 10, 2000. Pursuant to this Agreement, Mr. McGee
will serve as Chief Financial Officer of the Company. The Agreement provides for
a base annual salary of $225,000 per annum. In addition to base salary, Mr.
McGee is eligible for stock option grants under the Company's 1999 Stock Option
Plan and all other profit sharing or bonus plans generally available to Company
officers. The agreement is terminable at will by either party.
The Company entered into an Employment Agreement with James A. Mercer
III effective as of March 4, 2000. Pursuant to that Agreement, Mr. Mercer will
serve as Executive Vice President of the Company. This Agreement provides for a
base annual salary of $200,000 per annum. In addition to base salary, Mr. Mercer
is eligible for stock option grants under the Company's 1997 and 1999 Stock
Option Plan and all other profit sharing or bonus plans generally available to
Company officers. The Agreement expires March 4, 2002. In the event the Company
terminates Mr. Mercer's employment without cause, he will receive his base
salary for a period of three (3) months.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an exchange offer which concluded August 10, 1998, the
Company acquired 99.1% of the outstanding common stock of TechnoVision
Communications, Inc. ("TechnoVision") from its stockholders on the basis of
one share of the Company's stock for every two shares of TechnoVision stock
exchanged. Mr. Fann, Chairman and Chief Executive Officer of the Company is
an officer and director of TechnoVision and was at the time of the exchange
offer. Mr. Fann participated in the exchange offer on the same basis as other
TechnoVision shareholders. During fiscal 1999, the Company loaned Mr. Fann an
aggregate of $60,000. The loans are payable upon demand and bear interest at
the minimum applicable federal rate.
In July 1998, the Company acquired from Interactive Solutions Group,
Inc. all of the membership interests in ISG Acquisition, LLC, a Delaware limited
liability company wholly owned by Interactive Solutions Group. ISG Acquisition
held substantially all of the intellectual property assets of Interactive
Solutions Group related to network and multimedia products and technologies. The
Company acquired the interest in ISG Acquisition in exchange for the forgiveness
of a loan of $160,000 and the assumption of liabilities of ISG Acquisition up to
$91,000, for a total purchase price of $251,000. Interactive Solutions Group was
formed on July 15, 1996 by Grant Holcomb, its President. Mr. Holcomb is an
officer and director of the Company, and was at the time of the acquisition of
ISG Acquisition LLC from Interactive Solutions Group.
During 1998, the Company's TechnoVision subsidiary loaned an aggregate
of $56,500 to Mr. Holcomb. The loans were evidenced by promissory notes, payable
on or before June 1, 1999, bearing interest at 8% per annum. During fiscal 1999,
the Company loaned Mr. Holcomb an aggregate of $221,500. Mr. Holcomb used a
portion of the proceeds of this loan to repay the obligation to TechnoVision in
full. The loans are payable upon demand and bear interest at the minimum
applicable federal rate.
During 1999, the Company entered into a Service Agreement with Lacerte
Technologies to provide TeraMedia-TM- services. During fiscal 1999, the Company
received an aggregate of $164,469.38 under the Service Agreement. The majority
of that revenue was associated with the one-time sale of equipment. Lacerte
Technologies is owned by Lawrence Lacerte, a director of the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
PROPOSAL
The Directors of the Company are elected annually and hold office until
the next annual meeting of shareholders and until their successors shall have
been elected and shall have qualified. In the event any nominee is unable to or
declines to serve as a director at the time of the annual meeting, the proxy
will be voted for a substitute selected by the Board of Directors. Management
has no reason to believe, at this time, that the persons named will be unable,
or will decline, to serve if elected.
The nominees for election to the Board of Directors of the Company are:
Paul Cox, David Fann, Grant K. Holcomb, John F.A.V. Cecil, Lawrence A. Lacerte
and William O. McCoy.
VOTE REQUIRED
The six nominees for director receiving the highest number of
affirmative votes of the shares entitled to be voted for them shall be elected
as directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of quorum, but have no other legal effect.
RECOMMENDATION
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ALL SIX NOMINEES.
7
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if any other matters are properly brought before
the Annual Meeting, the persons appointed in the accompanying proxy intend to
vote the shares represented in accordance with their best judgement.
PROPOSALS OF SHAREHOLDERS
For proposals of shareholders to be included at the 2001 annual meeting
of shareholders, anticipated to be held in June 2001, such proposals must be
received by the Company not later than December 11, 2000. The acceptance of such
proposals is subject to Securities and Exchange Commission guidelines.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report on Form 10-KSB for fiscal year 1999 (which
is not part of the Company's proxy soliciting materials) is being mailed to the
Company's stockholders with this Proxy Statement. A copy of the Company's Annual
Report on Form 10-KSB will be furnished without charge to shareholders upon
request to:
INVESTOR RELATIONS
TERAGLOBAL COMMUNICATIONS CORP.
9171 TOWNE CENTRE DRIVE, SUITE 600
SAN DIEGO, CALIFORNIA 92122
858/404-5500
By Order of the Board of Directors
David Fann, Chairman of the Board
San Diego, California
April 11, 2000
8
<PAGE>
REVOCABLE PROXY--TERAGLOBAL COMMUNICATIONS CORP.
ANNUAL MEETING OF SHAREHOLDERS--MAY 30, 2000
The undersigned shareholder(s) of TeraGLOBAL Communications Corp. (the
"Company") hereby appoints, constitutes and nominates David Fann and Paul Cox,
and each of them, the attorney, agent and proxy of the undersigned, with full
power of substitution, to vote all shares of the Company which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held at the
Scripps Green Hospital auditorium, 10666 N. Torrey Pines Road, La Jolla,
California, on May 30, 2000 at 6:00 p.m. local time, and any and all
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present thereat, as follows:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS. To elect the following six
(6) persons to the Board of Directors of the Company to
serve until the next Annual Meeting of Shareholders and
until their successors are elected and have qualified:
Paul Cox David Fann Grant K. Holcomb John
F.A.V. Cecil Lawrence Lacerte William O.
McCoy
</TABLE>
<TABLE>
<S> <C> <C>
/ / FOR ALL NOMINEES LISTED ABOVE (EXCEPT AS MARKED TO THE / / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE
CONTRARY)
</TABLE>
A SHAREHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY LINING THROUGH
OR OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE.
<PAGE>
<TABLE>
<S> <C>
2. OTHER BUSINESS. To transact such other business as may
properly come before the Annual Meeting and any adjournment
or adjournments thereof.
</TABLE>
The Board of Directors recommends a vote FOR the foregoing proposal. If any
other business is properly presented at the Annual Meeting, this Proxy shall be
voted in accordance with the judgment of the proxy holders. THIS PROXY ALSO
VESTS DISCRETIONARY AUTHORITY TO CUMULATE VOTES. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS USE.
Date: _________________________
_______________________________
_______________________________
Signature(s)
_______________________________
Number of Shares
I (We) will / / will not / /
attend the Annual Meeting in
person.
NOTE: PLEASE SIGN YOUR FULL
NAME. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
