CODED COMMUNICATIONS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 28, 1998
The Annual Meeting of Shareholders (the "Annual Meeting") of Coded
Communications Corporation (the "Company") will be held at the offices of the
Company, 1939 Palomar Oaks Way, Carlsbad, California on August 28, 1998, at
9:00 a.m., local time, and at any and all adjournments thereof, for the
following purposes:
1. To elect four members to the Board of Directors to serve for the
ensuing year as set forth in the accompanying Proxy Statement.
2. To approve an amendment to the Company's Certificate of
Incorporation giving the Board of Directors the authorization and
discretion to effect, prior to August 30, 1999, if necessary, a
reverse stock split of the Company's Common Stock, $.01 par value
("Common Stock") in a ratio to be determined by the Board of
Directors of not less than one-for-twenty and not more than one-
for-twenty-five. The par value of $.01 per share and the number
of authorized shares of Common Stock will remain the same.
3.To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock by 50,000,000 shares, from 100,000,000 shares to 150,000,000
shares.
4.To ratify the selection of Coopers & Lybrand, LLP as the Company's
independent public accountants for the current year.
5.To transact such other business as may properly come before the
Annual Meeting and any adjournment or adjournments thereof.
The Board of Directors fixed the close of business on July 1, 1998, as
the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. Those who cannot attend are urged to complete, sign and date the
accompanying proxy card and return it promptly in the enclosed envelope. If
you return your proxy card you may nevertheless attend the Annual Meeting and
vote your shares in person.
This Notice of Annual Meeting of Shareholders is given pursuant to
Section 222 of the Delaware Corporation Law and the Notice and the
accompanying Proxy Statement are scheduled to be mailed on or about July 27,
1998. All inquiries with respect to the Annual Meeting, this Notice of Annual
Meeting and Proxy Statement and the enclosed proxy card should be directed to
the Company, Attention: Secretary, at its principal executive office, 1939
Palomar Oaks Way, Carlsbad, California 92009.
By Order of the Board of Directors,
Hugo R. Camou
Chief Executive Officer
Carlsbad, California
July 6, 1998
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY.
CODED COMMUNICATIONS CORPORATION
1939 PALOMAR OAKS WAY
CARLSBAD, CALIFORNIA 92009
__________________________________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 28, 1998
_________________________________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting")
of Coded Communications Corporation, a Delaware corporation (the "Company"),
to be held on August 28, 1998, at the offices of the Company, 1939 Palomar
Oaks Way, Carlsbad, California, at 9:00 a.m. local time, and at any
adjournments thereof. The accompanying Proxy is solicited by and on behalf of
the Board of Directors of the Company.
The Notice of Annual Meeting, this Proxy Statement, and the form of proxy
will be mailed to shareholders on or about July 27, 1998 The shares
represented by all properly executed proxies received by the Board of
Directors in time for the Annual Meeting will be voted.
Matters to be Considered
The matters to be considered and voted on at the Annual Meeting will be:
1. To elect four members to the Board of Directors to serve for the
ensuing year as set forth in the accompanying Proxy Statement.
2. To approve an amendment to the Company's Certificate of
Incorporation giving the Board of Directors the authorization and
discretion to effect, prior to August 30, 1999, if necessary, a
reverse stock split of the Company's Common Stock, $.01 par value
("Common Stock") in a ratio to be determined by the Board of
Directors of not less than one-for-twenty and not more than one-
for-twenty-five. The par value of $.01 per share and the number
of authorized shares of Common Stock will remain the same.
3.To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock by 50,000,000 shares, from 100,000,000 shares to
150,000,000 shares.
4.To ratify the selection of Coopers & Lybrand, LLP as the
Company's independent public accountants for the current year.
5.To transact such other business as may properly come before the
Annual Meeting and any adjournment or adjournments thereof.
Proxies and Voting
A Proxy for use at the Annual Meeting is enclosed. Any shareholder who
executes and delivers a Proxy has the right to revoke it at any time before it
is exercised by filing with the Company a written revocation of the Proxy or a
duly executed Proxy bearing a later date, or by the shareholder personally
appearing at the Annual Meeting and casting a contrary vote. Subject to such
revocation, all shares represented by a properly executed Proxy received in
time for the Annual Meeting will be voted in accordance with the instructions
contained therein. Directors are elected by a plurality of the votes cast at
the Annual Meeting (Proposal 1). The affirmative vote of a majority of the
outstanding voting stock will be required to amend the Company's Certificate
of Incorporation to effect a reverse split of the Company's Common Stock in a
ratio of not less than one-for-twenty and not more than one-for-twenty-five
(Proposal 2) and the increase in authorized shares of Common Stock from
100,000,000 to 150,000,000 shares (Proposal 3). The affirmative vote of a
majority of the outstanding voting stock present, in person or by proxy, and
entitled to vote at the meeting will be required to ratify the appointment of
Coopers & Lybrand LLP as the Company's independent public accountants for the
Company's fiscal year ending December 31, 1998 (Proposal 4). Abstentions are
considered as shares entitled to vote and, therefore, are effectively negative
votes for Proposals 2 and 3. Broker non-votes with respect to any matter are
not considered as shares entitled to vote. However, because an affirmative
vote of a majority of the outstanding voting stock is required to amend the
Company's Certificate of Incorporation, broker non-votes will have the same
effect as a vote "against" the amendments. Broker non-votes will have no
effect on the outcome of the vote on Proposals 1 or 4. The Board of Directors
does not anticipate any matters being presented at the Annual Meeting other
than as set forth in the accompanying Notice of Annual Meeting. If, however,
any other matters are properly presented at the Annual Meeting, the Proxy will
be voted by the proxyholders in accordance with the discretionary authority
conferred in the Proxy.
The shareholders are entitled to cumulative voting for Directors if the
Company is characterized as a pseudo-California corporation pursuant to
California law. Generally, a corporation is a pseudo-California corporation
if more than 50% of its property, payroll and sales are located or generated
in California, and more than 50% of its voting securities are held of record
by persons resident in California. Currently, the Company believes that it is
a pseudo-California corporation. No shareholder may cumulate votes, however,
unless a shareholder has announced at the Annual Meeting the intention to do
so. Upon any shareholder making such an announcement, all shareholders may
cumulate votes. Cumulative voting rights entitle a shareholder to give one
nominee as many votes as are equal to the number of Directors to be elected,
multiplied by the number of shares owned by such shareholder, or to distribute
his or her votes as the shareholder sees fit among two or more nominees on the
same principle, up to the total number of nominees to be elected. The four
nominees for Director receiving the highest number of votes at the Annual
Meeting will be elected.
Shareholders of record at the close of business on July 1, 1998 (the
"Record Date") will be entitled to notice of and to vote at the Annual
Meeting. On the Record Date, there were outstanding 78,724,134 shares of the
Company's Common Stock, 5,778 shares of the Company's Series A preferred
stock, and 46,775 shares of the Company's Series B preferred stock. Holders
of Common Stock are entitled to one (1) vote per share, while holders of the
Series A preferred stock are entitled to 300 votes per share and the holder of
the Series B preferred stock is entitled to 163.271 votes per share. In
electing Directors of the Company and approving the other proposals presented,
holders of Common Stock and preferred stock will vote together as a single
class. The presence, in person or by proxy, of the holders of shares of
Common Stock representing 39,362,067 votes at the Annual Meeting will
constitute a quorum. Assuming a quorum is present at the Annual Meeting,
Directors will be elected by a plurality of the votes cast, with the Common
Stock and preferred shareholders voting together as a single class. The
approval of the amendments to the Certificate of Incorporation to (i) effect a
reverse split of Common Stock in a ratio of not less than one-for-twenty and
not more than one-for-twenty-five (Proposal 2) and (ii) increase the
authorized number of shares of Common Stock from 100,000,000 shares to
150,000,000 shares (Proposal 3) each requires an affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting (i.e., the affirmative vote of 44,047,263 shares). The
ratification of the selection of independent public accountants requires the
vote of a majority of the shares of Common Stock present and entitled to vote
at the Annual Meeting.
At July 1, 1998, ISA Investments Corporation, a majority owned subsidiary
of ISA Corporativo, S.A. de C.V. ("ISA") held 54,272,767 shares of Common
Stock, or approximately 68.9% of the outstanding shares of Common Stock of the
Company. ISA has indicated it will vote all of its shares "FOR" approval of
all of the shareholder proposals set out herein.
Solicitation of Proxies
The enclosed Proxy is solicited on behalf of the Board of Directors of
the Company. The cost of this solicitation will be borne by the Company.
This will include the cost of supplying necessary additional copies of the
solicitation material to beneficial owners of shares held of record by
brokers, dealers, banks and voting trusts, and their nominees, and, upon
request, the reasonable expenses of the record holders for completing the
mailing of such materials and reports to such beneficial owners. The original
solicitation will be by mail. Following the original solicitation, certain
individual shareholders may be further solicited through telephonic or other
oral communications from management. Management may elect to use specially
engaged employees or paid solicitors, and the cost of these services will be
borne by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to (i)
each person who, as of July 1, 1998, is known to the Company to be the
beneficial owner of more than 5% of any class of its Common Stock, (ii) each
director of the Company and (iii) all directors and executive officers as a
group.
<TABLE>
Shares of Common Stock Percent of
Name and Address (6) Position With Company Beneficially Owned Class___
Directors and Executive Officers:
<CAPTION>
<S> <C> <C> <C>
Hugo R. Camou Chief Executive Officer 54,272,767 (1) 68.9%
and Chairman of the Board
John Wiggins President, Chief Operating
Officer and Director 1,515,000 (2) 1.9%
Fernando Molina Director -- --
Miguel Vildosola Director 3,000,000 (3) 3.8%
All directors and executive -- 63,722,657 (4) 75.5%
officers as a group (7 persons)
Other Shareholders:
ISA Investments Corporation 54,272,767 (1) 68.9%
Orizaba No. 182 Col. Rima
C.P. 06700 Mexico DF
Renaissance Capital Partners II, LTD. 11,229,316 (5) 12.6%
8080 North Central Expressway
Dallas, Texas 75206 (5)
_________________________
</TABLE>
(1) Mr. Camou was appointed chief executive officer on February 17, 1998.
Shares include 54,272,767 shares of Common Stock held directly by ISA
Investments Corporation. ISA and Mr. Camou and his immediate family are
the majority shareholders of ISA Investments Corporation. Mr. Camou is
the majority shareholder of ISA.
(2) Mr. Wiggins was appointed president on February 17, 1998. Shares
include options to purchase 1,515,000 shares of Common Stock exercisable
within 60 days of July 1, 1998. Mr. Wiggins was appointed to the Board
of Directors on February 13, 1998.
(3) Shares held by Viga Holdings, Ltd. Mr. Vildosola is a controlling
partner of Viga Holdings, Ltd. Mr. Vildosola disclaims beneficial
interest in 625,000 shares of Common Stock held by Viga Holdings, Inc.
(4) Shares include options to purchase 5,715,000 shares of Common Stock
exercisable within 60 days of July 1, 1998, and 54,272,767 shares of
Common Stock beneficially owned by Mr. Camou (See Note 1).
(5) Shares include 1,333,500 shares of Common Stock issuable upon the
conversion of Series A preferred stock; 7,636,991 shares of Common
Stock issuable upon conversion of Series B preferred stock; and
1,244,240 shares of Common Stock issuable upon conversion of a note
in the principal amount of $311,060, bearing interest at 6% per annum
and maturing March 1, 1999 (the "6% Note"). The 6% Note is convertible
into shares of Common Stock at a price of $.25 per share.
(6) For purposes of this Proxy Statement, the address of Messrs. Camou,
Wiggins, Molina and Vildosola is 1939 Palomar Oaks Way, Carlsbad, CA
92009.
ELECTION OF DIRECTORS AND INFORMATION CONCERNING
DIRECTORS AND EXECUTIVE OFFICERS
(PROPOSAL 1)
General
The Directors and Executive Officers of the Company are elected annually.
The Bylaws of the Company provide for a Board of Directors of not less than
three nor more than seven, with the exact number to be fixed from time to time
by the Board of Directors. At the present time, the number of Directors is
fixed at four. The nominees receiving the highest number of affirmative votes
of the shares present in person or represented by proxy and entitled to vote
for them, are elected as Directors. Only votes cast for a nominee will be
counted in determining whether that nominee has been elected as Director.
Shareholders may withhold authority to vote for the entire slate nominated or,
by writing the name of an individual nominee in the space provided on the
proxy card, withhold the authority to vote for any individual nominee.
Abstentions, broker non-votes, and instructions on the accompanying proxy card
to withhold authority to vote for one or more of the nominees will result in
such nominee receiving fewer votes, but will not otherwise affect the outcome
of the vote. Should any nominee become unavailable to serve as a Director,
the proxies will be voted for such other person as the proxyholder may in its
discretion determine. To the best of the Company's knowledge, all nominees
are and will be available to serve.
Shares represented by the enclosed Proxy will be voted "FOR" the election
of the nominees, unless authority to vote for one or more nominees is
withheld.
Effective September 19, 1996 and until September 18, 1999, ISA
Investments Corporation is entitled to appoint and thereafter nominate a
majority of the members of the Company's Board of Directors, including the
chairman of the board. The three individuals appointed by ISA Investments
Corporation to serve as members of the Company's Board of Directors are
Messrs. Hugo R. Camou, Fernando Molina and Miguel Vildosola. In addition,
Renaissance Capital Partners II, Ltd. ("RenCap"), the holder of all of the
outstanding shares of the Company's Series B preferred stock, has the right to
select one Director. RenCap has designated Mr. Vance Arnold, its Executive
Vice President, as an Advisory Director. An Advisory Director has the right
to be notified of and to attend all Board meetings, but does not have the
right to vote on any matters before the Board. Mr. Arnold has served as
RenCap Executive Vice President for the last five years.
<TABLE>
Set out below are the names of, and certain information with respect to,
the Directors all of whom are also nominees, and Executive Officers of the
Company.
<CAPTION>
Name Age Position Held With Company
Directors and Nominees:
<S> <C> <C>
Hugo R. Camou (1) (2) (3) 41 Chief Executive Officer and
Chairman of the Board
John Wiggins 46 President, Chief Operating
Officer and Director
Fernando Molina (1) (3) 57 Director
Miguel Vildosola (2) 33 Director
Executive Officers:
Fernando Pliego 57 Executive Vice President
Finance
Steven Borgardt 46 Vice President Finance
Richard Carrine 55 Vice President Manufacturing
____________________________
</TABLE>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Stock Option Committee
Hugo R. Camou was appointed as the Company's Chief Executive Officer on
February 17, 1998 and the Chairman of the Board of Directors on September 19,
1996. Mr. Camou is the Chairman of the Board, CEO and controlling shareholder
of ISA Corporativo S.A. de C.V. Since 1988, Mr. Camou founded and/or co-
founded all of the companies comprising ISA. Mr. Camou holds a degree in
mathematics and physics from the Instituto Poletecnico Nacional in Mexico.
Prior to founding ISA, Mr. Camou taught computer science and mathematics for
undergraduate and graduate university programs in Mexico.
John Wiggins was appointed to the Board of Directors on February 13, 1998
and assumed the additional responsibilities of President on February 17, 1998.
John Wiggins joined the Company in April 1994, and was appointed Chief
Operating Officer in June 1996. Mr. Wiggins has over 12 years experience in
sales and software applications support of mobile data communications systems.
Prior to joining the Company in 1994, Mr. Wiggins served in various sales and
engineering management positions over a twelve year period with Motorola, Inc.
Mr. Wiggins holds a Bachelors of Science degree in Computer Science from
Knightsbridge University in the U.K.
Fernando Molina has served as a Director of the Company since September
19, 1996. Mr. Molina is the Executive Vice President of Grupo Embotellador
Mexicano, S.A. de C.V., the largest Pepsi Cola bottling plant and distributor
in Mexico. He also serves on the Board of Directors of Banco Nacional de
Mexico and Consorcio Azucarero Escorpion. Mr. Molina is a public accountant
with a degree from the ITAM University.
Miguel Vildosola has served as a Director of the Company since September
19, 1996. Mr. Vildolso has served as the President of Corporacion Digital
MV, S.A. de C.V. since August 5, 1995, a data telecommunications services and
equipment company located in Mexicali, Mexico. Prior to joining Corporacion
Digital MV, Mr. Vildosola was Manager of Strategic Planning for Kenworth
Mexicana from 1993 to July 1995. Mr. Vildosola has a Masters degree in
Management Information Systems from Instituto Technologico y de Estudios
Superiores de Monterrey (ITESM).
Fernando Pliego was appointed Executive Vice President of Finance on
February 17, 1998. Mr. Pliego served as a Director of the Company from
September 1996 to May 1997. Over the past five years, Mr. Pliego served in
various senior management positions with affiliates of ISA. Mr. Pliego has
more than twenty years of experience in telecommunications in Mexico. Mr.
Pliego holds a degree in Chemical Engineering from the Universidad Nacional
Autonoma de Mexico.
Steven Borgardt was appointed the Company's Vice President Finance and
Chief Financial Officer in August 1993 and he presently serves as Vice
President Finance. Mr. Borgardt served as a Director of the Company from
September 13, 1995 to September 19, 1996. From September 1981 through August
1993, Mr. Borgardt served as the Vice President Finance or Chief Financial
Officer for the Company's wholly-owned subsidiary, Decom Systems, Inc.
("Decom"). Mr. Borgardt holds a Bachelor of Science degree in Accounting
from San Diego State University and he is a Certified Public Accountant in
California.
Richard Carrine was appointed the Company's Vice President Manufacturing
in August 1993. Prior to August 1993, he served as Decom's Vice President
Manufacturing and Operations and in similar positions since September 1976.
Interest of Management and Insiders in Material Transactions
None of the directors or officers of the Company, nor any person who
beneficially owns, directly or indirectly, shares carrying more than 10% of
the voting rights attached to all outstanding shares of Common Stock, nor any
associate or affiliate of the foregoing persons has any material interest,
direct or indirect, in any transaction since the commencement of the Company's
last completed fiscal year or in any proposed transaction which, in either
case, has or will materially affect the Company, except as disclosed in this
Proxy Statement.
There are no family relationships between any of the directors or
executive officers of the Company.
Information About The Board of Directors and Committees of the Board
In 1997, the Board of Directors held 6 meetings. No director attended
less than 75% of such meetings. Non-employee directors are entitled to
receive an annual grant of options to purchase shares of Common Stock under
the Company's 1992 Stock Option Plan. Directors who are also officers of the
Company or its subsidiaries receive no additional compensation for their
services as directors. All directors are reimbursed for their expenses
incurred to attend meetings.
The standing committees of the Board of Directors are the Compensation
Committee, Audit Committee and Stock Option Committee. The principal duties
of the Compensation Committee are to determine and review all compensation of
directors and officers of the Company, and to report to the Board of Directors
of the Company. The principal duties of the Audit Committee are to advise and
assist the Board of Directors in evaluating the performance of the Company's
independent auditors, including the scope and adequacy of the auditor's
examination, and to review with the auditors the accuracy and completeness of
the Company's financial statements and procedures. The principal duty of the
Stock Option Committee is to determine grants of stock options under the
Company's option plan.
Subsequent to August 1997, non-employee members of the Board of Directors
are to receive a fee of $1,000 for every board meeting attended by the
director. Messrs. Molina and Vildosola each earned but were not paid $3,000
in meeting fees in 1997. Effective with election to the board in 1998, all
non-employee directors will also receive an annual retainer fee of $5,000.
There were no Compensation Committee meetings held in 1997 and the Audit
Committee held one meeting in 1997. All of the members of the Audit Committee
attended the meeting. The Stock Option Committee held no formal meetings in
1997, however, options to purchase shares of Common Stock under the 1992
Option Plan were granted from time to time throughout 1997 by the Stock Option
Committee.
Executive Compensation and Benefits
The compensation and benefits program of the Company is designed to
attract, retain, and motivate employees to operate and manage the Company for
the best interests of its shareholders.
Executive compensation is designed to provide incentives for those senior
members of management who are responsible for the Company's goals and
achievements. The compensation policy calls for base salaries, with the
opportunity for bonuses to reward outstanding performance, and a stock option
program.
Summary Compensation Table
<TABLE>
The following table and notes show the compensation provided to the Chief
Executive Officer and the other executive officers, who served as such at the
end of 1997, and whose annual compensation exceeded $100,000.
<CAPTION>
Long-Term
Compensation All
Annual Compensation Stock Option Other
Name and Position Year Salary ($) Bonus ($) Other($)(1) Shares (#) Compensation ($)(6)
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick. (2).. . 1997 161,532 50,000 --- 3,000,000 ---
Chief Executive Officer and
President
John A. Robinson, Jr. (3) 1997 140,083 --- --- --- 1,960
President, Decom Systems 1996 134,083 25,000 --- 1,615,000 1,156
1995 128,842 --- --- 215,000 ---
John Wiggins (4)... . 1997 125,450 25,000 33,600 (5) --- 1,630
Chief Operating Officer 1996 133,450 25,000 16,000 (5) 1,500,000 997
1995 114,692 --- --- 15,000 ---
Steven Borgardt.. ......... 1997 125,000 25,000 --- --- 1,971
Vice President Finance 1996 102,080 25,000 --- 1,005,000 901
and Chief Financial Officer 1995 95,576 --- --- 175,000 ---
Richard Carrine... ..........1997 110,000 25,000 --- --- 1,730
Vice President Manufacturing 1995 93,650 25,000 --- 1,015,000 817
1995 91,153 --- --- 175,000 ---
</TABLE>
____________________
(1) In the interest of attracting and retaining qualified personnel, the
Company provides executive officers with certain other benefits, which may
include relocation allowances, automobile allowances, insurance and other
benefits. Unless otherwise noted, the cost of providing such personnel
benefits did not exceed, as to any individual named above, the lesser of
$25,000 or 10% of the total annual salary reported for the executive officer.
(2) Mr. Gary L. Luick was appointed chief executive officer and president on
March 3, 1997. Mr. Luick resigned on February 17, 1998. All stock options
granted to Mr. Luick were terminated in 1998.
(3) Includes compensation in 1995 as Chief Operating Officer through March 13,
1995; as Chief Executive Officer from March 13, 1995 through March 3, 1997;
and as President of Decom subsequent to March 3, 1997.
(4) Includes compensation in 1996 as Chief Operating Officer and Vice
President Engineering; and in 1995 as Vice President Engineering. Mr. Wiggins
was appointed president on February 17, 1998.
(5) Housing allowance for executive officer's relocation to San Diego,
California, which is paid to the executive officer on a monthly basis.
(6) Company matching contributions to 401(k) savings plan.
Employment Agreements
In February 1997, the Company entered into an employment agreement with
Mr. Gary L. Luick, the Company's chief executive officer and president. Under
the terms of the three year agreement, Mr. Luick was to receive an initial
base salary of $200,000 per year and a bonus in 1997 to be not less than
$50,000. In the event the employment agreement was terminated by the Company
for good cause, as defined in the agreement, Mr. Luick was to receive a
severance benefit equal to 25% of his base salary. In the event the
employment agreement was terminated by the Company for any reason other than
good cause, then Mr. Luick was entitled to receive the greater of (i) 100% of
his annual base salary or (ii) the balance of the obligations payable to Mr.
Luick over the remaining term of the contract. In addition, Mr. Luick was
granted an option to purchase 3,000,000 shares of common stock under the
Company's 1992 Stock Option Plan. The exercise price was $.33 per share or
the approximate fair market value per share on the date of grant. In
February 1998, Mr. Luick resigned as chief executive officer and president,
and he was removed from the board of directors by written consent action of
the Company's majority shareholders, ISA Investments Corporation. In February
1998, Mr. Luick and the Company entered into a Separation and Release
Agreement terminating his employment. Pursuant to that agreement, Mr. Luick
received a final lump sum payment of $225,000, released the Company from any
further obligations or claims, and forfeited all rights to vested and unvested
employee stock options.
Mr. Robinson entered into a letter agreement with ISA in 1996 pursuant to
which ISA has committed to cause the Company to retain the services of Mr.
Robinson in an executive position for three years. Mr. Robinson's base salary
is $140,000. Mr. Robinson could be discharged only if he is convicted of a
felony. In April 1998, Mr. Robinson resigned as president of Decom. Mr.
Robinson will provide limited consulting services to the Company and he will
continue to be paid his monthly salary through September 1999, or the
expiration date of his employment agreement.
Messrs. Wiggins, Borgardt and Carrine entered into employment agreements
with the Company in September 1996 providing initial base salaries of
$125,000, $125,000 and $110,000, respectively. The term of each agreement is
three years. The agreements provide each officer an opportunity to earn an
annual incentive bonus of 30% of base salary, under a plan to be approved
annually by the Board of Directors. If the agreements are terminated by the
Company without cause or following a change of control, as those terms are
defined in the agreements, Messrs. Wiggins, Borgardt and Carrine are to
receive the greater of (i) 100% of their annual salary or (ii) the salary
payable over the remaining term of their contract. If the agreement is
terminated by the executive officer, the executive officer can, under defined
circumstances, receive 25% of his then current base salary as a severance
benefit. The agreements also provide, on a case by case basis, additional
benefits such as paid life insurance, and housing relocation and automobile
allowances. The value of these benefits, for any one executive officer, does
not exceed 25% of his annual base salary, except that Mr. Wiggins is entitled
to receive an annual housing allowance of $33,600. Effective February 17,
1998, Mr. Wiggins was appointed the Company's president, in addition to his
responsibilities as chief operating officer. Mr. Wiggins salary was
increased, effective February 17, 1998, to $210,000 per year.
Certain Transactions
During the year ended December 31, 1997, affiliates of ISA placed orders
for their third-party customers with the Company in the approximate amount of
$5,000,000. Mr. Hugo Camou, the Company's chief executive officer and the
chairman of the board of directors, is the controlling shareholder of ISA.
The Company believes that the orders from ISA customers were accepted on
terms not less favorable to the Company than could have been obtained from
other third-party customers.
From February 26, 1998 through June 12, 1998, ISA advanced $805,500 to
the Company for working capital. The terms and conditions of the loans are
subject to further negotiation and approval by the disinterested members of
the Company's Board of Directors.
Stock Options Granted During Fiscal Year
In February 1997, the Company's former CEO and president, Gary L. Luick,
was granted options to purchase 3,000,000 shares of Common Stock at an
exercise price of $.33 per share. All of the options granted to Mr. Luick
were canceled in February 1998. There were no other stock option grants to
executive officers in the year ended December 31, 1997.
Stock Options Exercised During the Fiscal Year and Year-End Value of
Unexercised Options
<TABLE>
The following table sets forth information about stock options held by
the Company's named executive officers individually, as of December 31,
1997.
<CAPTION>
Aggregated Option Exercises in Last
Fiscal Year and FY-End Option Values
Shares Acquired Value Number of Value of Unexercised
on Realized Unexercised Options In-the Money Options($)
Name Exercise (#) ($) Exercisable Unexercisable ExercisableUnexercisable
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick (1) --- --- --- 3,000,000 (1) $ --- $ ---
John A. Robinson, Jr. --- --- --- 1,830,000 --- ---
John Wiggins --- --- --- 1,515,000 --- ---
Steven Borgardt --- --- --- 1,180,000 --- ---
Richard Carrine --- --- --- 1,190,000 --- ---
________________
</TABLE>
(1) Mr. Luick resigned in February 1998 and all options to purchase shares
of Common Stock were canceled.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Company's directors,
officers and any person holding more than 10% of outstanding shares of Common
Stock are required to report their initial ownership of Common Stock and any
subsequent changes in ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established, and the Company is
required to disclose in this proxy statement any failure to file these reports
on a timely basis. Based solely on a review of the copies of such forms
furnished to the Company or written representations from reporting persons,
the Company believes that during the period from January 1, 1997 to December
31, 1997, its directors, officers and greater than 10% beneficial owners
complied with the Section 16(a) filing requirements, except that Mr. Vildosola
did not file his Form 3, Initial Statement of Beneficial Ownership of
Securities and Mr. Camou and ISA Investments Corporation failed to file a Form
4, Statement of Changes in Beneficial Ownership regarding a disposition of
shares in 1997.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO
REVERSE SPLIT SHARES OF COMMON STOCK
(PROPOSAL 2)
Introduction
In May 1998, the Board of Directors of the Company adopted subject to
shareholders' approval, a proposal to amend at any time prior to August 30,
1999, the Company's Certificate of Incorporation to effect a reverse stock
split of the Company's Common Stock in a ratio to be determined by the Board
of Directors that is not less than one-for-twenty and not more than one-for-
twenty-five (the "Reverse Split").
The directors propose to amend the Company's Certificate of Incorporation
to reclassify the Common Stock of the Company to effect a Reverse Split, such
that for every twenty (20) to twenty-five (25) pre-amendment shares of Common
Stock held by a shareholder, with the exact Reverse Split ratio to be
determined by the Board of Directors, such holder would be entitled to one (1)
post-amendment share of Common Stock, fractional shares being rounded up to
the nearest full post-amendment share. Outstanding options to purchase Common
Stock and the number of shares of Common Stock into which shares of Series A
and Series B preferred stock are convertible will also be adjusted
accordingly. The Reverse Split will become effective upon the date of filing
with the Secretary of State of Delaware of an amendment to the Company's
Certificate of Incorporation (the "Effective Date"). The Board of Directors
shall determine, in their discretion, at any time prior to August 30, 1999,
the Reverse Split ratio and the date and time the amendment shall be filed to
effect the Reverse Split; however, there is no obligation for the Board of
Directors to effect the Reverse Split if, in the sole discretion of the Board,
a Reverse Split is not in the best interests of the Company and its
shareholders. The Board of Directors recommend approval of a range for the
Reverse Split, with the Board being given the discretion to choose the exact
ratio of the Reverse Split to be adopted, primarily because the Board of
Directors will be able to assess at a time closer to the possible Effective
Date the ratio of the Reverse Split that is most likely to accomplish the
Company's objectives of increasing the market price per share of the Company's
Common Stock. The Board will consider factors including, but not limited to,
the then current market price of Common Stock, trading volumes, market
conditions, the possible reaction of the market to a Reverse Split in
determining whether or not to effect the Reverse Split and in deciding the
final ratio of the Reverse Split.
Adjustments to the corporate financial statements to reflect the
reclassification and Reverse Split are expected to be minimal. The immediate
effect in the market price of the Company's Common Stock would be an expected
twenty to twenty-five times increase in the trading price per share (depending
on the final Reverse Split ratio determined by the Board of Directors).
However, there can be no assurance that the trading price per share following
the Reverse Split will increase. Upon effectiveness of the Reverse Split, the
Company's outstanding shares of Common Stock will be reduced from 78,724,134
(or such number of shares outstanding on the Effective Date) to approximately
3,936,206 shares if the Reverse Split is effective at a ratio of one-for-
twenty, and approximately 3,148,965 shares if the Reverse Split is effective
at a ratio of one-for-twenty-five. The shares of Common Stock issued pursuant
to the Reverse Split will be fully paid and non-assessable. The voting and
other rights that presently characterize the Common Stock will not be altered
by the Reverse Split.
Consummation of the Reverse Split will not change the par value of the
Common Stock or the number of shares of Common Stock authorized by the
Company's Certificate of Incorporation, which will remain at 100,000,000
shares (or 150,000,000 authorized shares if Proposal 3 is approved by
shareholders and such proposal is implemented by the Board of Directors). If
for any reason the Board of Directors deems it advisable that the Reverse
Split should not be effected, the proposed amendment may be abandoned even if
such proposal has been approved by the shareholders.
As soon as practical after the Effective Date, the Company will mail a
letter of transmittal to each holder of record of a stock certificate or
certificates which represent issued Common Stock outstanding on the Effective
Date. The letter of transmittal will contain instructions for the surrender
of such certificate or certificates to the Company's designated exchange agent
in exchange for certificates representing the number of whole shares of Common
Stock into which the shares of Common Stock have been converted as a result of
the Reverse Split. See "Exchange of Shares; No Fractional Shares."
Reasons for the Reverse Split
The primary purpose of the Reverse Stock Split is to combine the
outstanding shares of Common Stock so that the Common Stock outstanding after
giving effect to the Reverse Split trades at a significantly higher price per
share than the Common Stock outstanding before giving effect to the Reverse
Split and that the number of shares of Common Stock outstanding will be
reduced.
The trading price of the Company's Common Stock over the last year ranged
from $.04 to $.39 per share over the last year. On July 2, 1998, the last
trading price quoted on the OTC Bulletin Board was approximately $.04 per
share. There are currently 78,724,134 shares of Common Stock outstanding.
Assuming the conversion of preferred shares and convertible debt into Common
Stock and the exercise of outstanding options to purchase shares of Common
Stock, there would be approximately 100,000,000 shares of Common Stock
outstanding.
The Company believes that the current per share price level of the
Company's Common Stock has reduced the effective marketability of the shares
because of the reluctance of many leading brokerage firms to recommend low
priced stock to their clients. Certain investors view low-priced stock as
unattractive, although certain other investors may be attracted to low-priced
stock because of the greater trading volatility sometimes associated with such
securities. In addition, a variety of brokerage house policies and practices
tends to discourage individual brokers within those firms from dealing in low-
priced stock. Some of those policies and practices pertain to the payment of
brokers commissions and to time-consuming procedures that function to make the
handling of low-priced stocks unattractive to brokers from an economic
standpoint.
In addition, since brokerage commissions on low-priced stock generally
represent a higher percentage of the stock price than commissions on higher
priced stocks, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commission, markups, or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor also
may limit the willingness of institutions to purchase the Common Stock at its
current low share price.
The Company also believes that the number of shares of Common Stock
outstanding is too high relative to the Company's current market
capitalization and revenue levels.
Shareholders should note that the effect of the Reverse Split upon the
market prices for the Company's Common Stock cannot be accurately predicted.
In particular, there is no assurance that prices for shares of the Common
Stock immediately after the Reverse Split will be twenty to twenty-five times
the prices for shares of the Common Stock, depending on the actual Reverse
Split ratio. Furthermore, there can be no assurance that the proposed Reverse
Split will achieve the desired results which have been outlined above, nor can
there be any assurance that the Reverse Split will not adversely impact the
market price of the Common Stock or, alternatively, that any increased price
per share of the Common Stock immediately after the proposed Reverse Split
will be sustained for any prolonged period of time. In addition, the Reverse
Split may have the effect of creating odd lots of stock for some shareholders
and such odd lots of stock may be more difficult to sell or have higher
brokerage commissions associated with the sale of such odd lots.
Possible Disadvantages
If the Reverse Split is enacted, there is no assurance that the Reverse
Split will achieve the intended objectives or that the market price of the
Common Stock will not decline in post Reverse Split trading. The market price
of stock is determined by a number of factors, some of which may be adversely
affected by a reverse stock split.
The Reverse Split may result in a shareholder owning an odd lot of Common
Stock. Shareholders may incur higher transactional costs to trade an odd lot
of Common Stock than the shareholder would incur to trade a round lot.
Shareholders should consult with their brokers concerning such transactional
costs. Generally, an odd lot is fewer than 100 shares and a round lot is 100
shares. The Company does not sponsor and does not presently intend to sponsor
any program for trading odd lots of the Common Stock or for the Company
purchasing odd lots.
Effect of the Reverse Split
As a result of the Reverse Split, the number of whole shares of Common
Stock held by shareholders of record as of the close of business on the
Effective Date will be equal to the number of shares of Common Stock held
immediately prior to the close of business on the Effective Date divided by
actual Reverse Split ratio, which shall be not less than twenty and not more
than twenty-five. The Reverse Split will not affect a shareholder's
percentage ownership interest in the Company or proportional voting power,
except for minor differences resulting from the roll-up of fractional shares.
The rights and privileges of the holders of shares of Common Stock will be
unaffected by the Reverse Split. The par value of the Common Stock will
remain at $.01 per share following the Effective Date of the Reverse Split,
and the number of shares of Common Stock issued will be reduced. The number
of shares of Common Stock authorized for issuance but not issued will
increase. Such shares will be available for issuance, from time to time and
at prices and terms that shall be determined by the Board of Directors without
further action or approval of shareholders. Such issuances could have the
effect of diluting the earnings per share (if any) and book value per share,
as well as the stock ownership and voting rights, of outstanding Common Stock.
Having more shares available for issuance could, under certain circumstances,
have an anti-takeover effect (by, for example, permitting issuances which
would dilute the stock ownership of persons seeking to effect a change in the
Company's Board of Directors or contemplating a tender offer or other
transactions by the Company with another company). The Board of Directors
believes additional shares of Common Stock, or shares of preferred stock
convertible into shares of Common Stock will be sold from time to time in
public or private transactions to raise capital to finance the Company's
operations. The Board of Directors will sell such shares on terms and
conditions it considers to be acceptable to the Company and in the best
interests of the shareholders, without further action or approval of
shareholders. Further, shares of Common Stock or convertible preferred stock
may be sold at a discount to the then current trading market price of shares
of Common Stock.
On May 15, 1998, the Board of Directors approved the sale of up to 30,000
shares of Series C preferred stock. Each share of Series C preferred stock is
initially convertible into 400 shares of Common Stock (equivalent to a price
of $.25 per share of Common Stock). Series C preferred stock will be subject
to a mandatory reset of the Common Stock conversion ratio on October 15, 1998,
April 15, 1999, October 15, 1999 and April 15, 2000. The conversion price per
share will be reset to a per share value equal to 80% of the average closing
price per share of Common Stock quoted by the OTC Bulletin Board or NASDAQ, as
applicable, for the 30 trading dates immediately prior to the reset dates.
However, in no event shall the new reset conversion price per share of Common
Stock be less than $.35 per share or more than $.95 per share.
Shareholders have no right under Delaware law or under the Company's
Certificate of Incorporation or By-Laws to dissent from the Reverse Split.
The Company is presently authorized to issue 2,000,000 shares of
preferred stock. The proposed amendment to the Certificate of Incorporation
will not change the number of authorized shares of preferred stock.
Exchange of Shares; No Fractional Shares
Pursuant to the proposed Reverse Split, every twenty to twenty-five
shares of issued Common Stock, depending on the effective Reverse Split ratio,
would be converted and reclassified into one (1) share of Common Stock, and
any fractional interests resulting from such reclassification would be rounded
upward to the nearest whole share. For example, a holder of one hundred (100)
shares prior to the Effective Date would be the holder of five (5) shares at
the Effective Date if the Reverse Split ratio is one-for-twenty, or four (4)
shares if the Reverse Split ratio is one-for-twenty-five. All shares held by
a shareholder will be aggregated and one new stock certificate will be issued,
unless the transfer agent is otherwise notified by the shareholder. The
proposed Reverse Split would become effective immediately on the Effective
Date. The Company's transfer agent, Montreal Trust Company of Canada, will
act as the Company's exchange agent (the "Exchange Agent") for shareholders
in implementing the exchange of their certificates.
As soon as practicable after the Effective Date, shareholders will be
notified and provided the opportunity (but shall not be obligated) to
surrender their certificates to the Exchange Agent in exchange for
certificates representing post-split Common Stock. Shareholders will not
receive certificates for shares of post-split Common Stock unless and until
the certificates representing their shares of pre-split Common Stock are
surrendered and they provide such evidence of ownership of such shares as the
Company or the Exchange Agent may require. Shareholders should not forward
their certificates to the Exchange Agent until they have received notice from
the Exchange Agent.
Certain Federal Income Tax Consequences
A summary of the federal income tax consequences of the Reverse Split as
contemplated in Proposal Two is set forth below. The discussion is based on
present federal income tax law. The discussion is not intended to be, nor
should it be relied on as a comprehensive analysis of the tax issues arising
from or relating to the proposed Reverse Split. Income tax consequences to
shareholders may vary from the federal tax consequences described generally
below. Shareholders should consult their own tax advisors as to the effect of
the contemplated Reverse Split under applicable federal, state and local
income tax laws.
The proposed Reverse Split constitutes a "recapitalization" to the
Company and its shareholders to the extent that issued shares of Common Stock
are exchanged for a reduced number of shares of Common Stock. Therefore,
neither the Company nor its shareholders will recognize any gain or loss for
federal income tax purposes as a result thereof.
The shares of Common Stock to be issued to each shareholder will have an
aggregate basis, for computing gain or loss, equal to the aggregate basis of
the shares of such stock held by such shareholder immediately prior to the
Effective Date. A shareholder's holding period for the shares of Common Stock
to be issued will include the holding period for the shares of Common Stock
held thereby immediately prior to the Effective Date provided that such shares
of stock were held by the shareholder as capital assets on the Effective Date.
Proposed Amendment to the Certificate Of Incorporation to Effect a Reverse
Split in a Ratio Of Not Less Than One-for-Twenty and Not More Than One-for-
Twenty-five.
The proposed shareholder resolution and the text of the proposed
amendment to the Certificate of Incorporation are as follows:
"At the same time as the filing of this Amendment to the Certificate of
Incorporation of the corporation with the Secretary of the State of Delaware
becomes effective, each share of Common Stock $0.1 par value per share of the
corporation (the "Old Common Stock"), issued and outstanding or held in the
treasury of the Corporation immediately prior to the effectiveness of such
filing, shall be combined, reclassified and changed into fully paid and
nonassessable shares of Common Stock in a ratio of (not less than one-for-
twenty shares and not more than one-for-twenty-five shares, with the actual
ratio to be determined by the Board of Directors at the time of amendment of
the Certificate of Incorporation).
No fractional share of Common Stock or script representing fractional
shares shall be issued upon such combination and reclassification of the Old
Common Stock into shares of Common Stock. Instead of there being issued any
fractional shares of Common Stock which would otherwise be issuable upon such
combination and reclassification, the fractional share shall be rounded up to
the nearest full share."
Shareholder Vote Required
The affirmative vote of the holders of a majority of the Company's
outstanding Common Stock and preferred stock voting as a single class is
required to approve this proposal. The Board of Directors unanimously
recommends shareholders vote "FOR" approval of the proposed amendment to the
Certificate of Incorporation to Reverse Split shares of Common Stock in a
ratio of not less than one-for-twenty and not more than one-for-twenty-five.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 3)
The Board of Directors has unanimously approved an amendment of Article
4(A) of the Company's Certificate of Incorporation to increase the number of
authorized shares of Common Stock by 50,000,000 shares from 100,000,000 shares
to 150,000,000 shares. The Board of Directors recommends that the Company's
shareholders approve this amendment. Approval of the amendment will give the
Company the power to cause a Certificate of Amendment with respect to the
increase in the number of authorized shares of Common Stock ("Certificate of
Amendment") to be filed with the Delaware Secretary of State on or after
August 30, 1998 without further action by the shareholders; provided, however,
that the Company shall not be obligated to file a Certificate of Amendment at
any specified time or at all.
The Board believes that the proposed increase is desirable so that, as
the need may arise, the Company will have more flexibility to issue shares of
Common Stock in connection with raising capital to fund the operations of the
Company, and for future opportunities for expanding the business through
investments or acquisitions, possible future stock dividends or stock splits,
and for other general corporate purposes. There are no preemptive rights with
respect to the Company's Common Stock and there currently is no specific use
planned for any of the additional shares being proposed for authorization
under this proposal. Presently, all of the Company's authorized shares of
Common Stock have been issued or reserved for future issuance. As of July 1,
1998, the Company had 78,724,134 shares of Common Stock outstanding and had
reserved up to 21,275,866 shares of Common Stock for future issuance upon the
exercise of employee stock options, and the conversion of preferred stock and
debt into shares of Common Stock. On May 15, 1998 the Board of Directors
approved the sale of up to 30,000 shares of Series C preferred stock. Each
share of Series C preferred stock is initially convertible into 400 shares of
Common Stock at a price of $.25 per share of Common Stock. See "Approval of
Amendment to Certificate of Incorporation to Reverse Split Shares of Common
Stock - Effect of the Reverse Split."
Authorized but unissued shares of the Company's Common Stock may be
issued at such times, for such purposes and for such consideration as the
Board may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable law or
stock exchange policies. The increase in authorized Common Stock will not
have any immediate effect on the rights of existing stockholders. To the
extent that the additional authorized shares are issued in the future, they
will decrease the existing stockholders' percentage equity ownership;
depending upon the price at which they are issued, they could be either
dilutive or nondilutive to the existing stockholders.
If the proposed amendment to the Certificate of Incorporation is
approved, the authorized shares of Common Stock in excess of those issued and
reserved will be available for issuance at such times and for such corporate
purposes as the Board of Directors may deem advisable without further action
by the Company's shareholders, except as may be required by applicable laws or
the rules of any stock exchange or national securities association trading
system on which the Company's securities may be listed or traded. The Board
of Directors does not intend to issue any Common Stock except on terms that
the Board deems to be in the best interests of the Company and its then
existing shareholders. Management has no arrangements, agreements,
understandings or plans at the present time for the issuance or use of the
additional shares of Common Stock proposed to be authorized, other than as
described above. Because holders of Common Stock do not have preemptive
rights, any future issuances of Common Stock could have a dilutive effect.
The full text of Article 4, as such is proposed to be amended, is as follows:
"The total number of shares of capital stock which the
Corporation shall have authorization to issue is one hundred
fifty-two million (152,000,000) shares, of which one hundred
fifty million (150,000,000) shares shall be Common Stock, $.01
par value per share, and two million (2,000,000) shares shall
be preferred stock, $.01 par value per share (the "Preferred
Stock")."
The Company is presently authorized to issue 2,000,000 shares of
preferred stock. The proposed amendment to the Certificate of Incorporation
will not change the number of authorized shares of preferred stock.
The affirmative vote of the holders of a majority of the Company's
outstanding Common Stock and preferred stock voting as a single class is
required to approve this proposal. The Board of Directors unanimously
recommends shareholders vote "FOR" approval of an increase in the number of
authorized shares of Common Stock.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
Unless marked to the contrary, proxies received will be voted "FOR" the
ratification of the appointment of Coopers & Lybrand, LLP as independent
public accountants for the current year. A representative of Coopers &
Lybrand, LLP is expected to attend the Annual Meeting and be available to
respond to appropriate questions. The representative will also have an
opportunity to make a statement if he or she desires to do so. Coopers &
Lybrand, LLP have been the Company's independent accountants since 1987.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting or any adjournment thereof (including the election of any
substitute for any of the foregoing nominees who is unable to, or for good
cause will not, serve on the Board of Directors), the proxyholders will have
the discretionary authority to vote the shares represented by proxy in
accordance with their best judgment.
Any proposal of a shareholder intended to be presented at the Company's
1999 Annual Meeting of Shareholders must submit such proposal no later than
February 17, 1999. Shareholder proposals should be submitted to Corporate
Secretary, Coded Communications Corporation, 1939 Palomar Oaks Way, Carlsbad,
CA 92009.
1997 ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB, including the financial
statements and the financial schedules, required to be filed with the
Securities and Exchange Commission for the year ended December 31, 1997, will
be furnished without charge to any shareholders upon written request to:
Coded Communications Corporation, Investors Relations, 1939 Palomar Oaks Way,
Carlsbad, California 92009.
By Order of the Board of Directors
Hugo R. Camou
Chief Executive Officer
Carlsbad, California
July 6, 1998
CODED COMMUNICATIONS CORPORATION
PROXY
FOR THE ANNUAL MEETING TO BE HELD AUGUST 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF THE COMPANY.
The undersigned, being a shareholder of Coded Communications Corporation
(the "Company"), hereby appoint(s) Hugo, R. Camou and John Wiggins, as
proxies with full power of substitution and authorizes them or any of them,
to attend the Annual Meeting of the Company to be held on August 28, 1998,
and at any adjournment thereof, and to vote all the shares of Common and
Preferred Stock of the Company registered in the name of the undersigned
with respect to the matters set forth below as follows:
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 PROPOSALS 1, 2, 3, AND 4.
1. ELECTION OF DIRECTORS:
FOR ALL nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for ANY of the nominees
to the contrary below) listed below
NOMINEES: Hugo R. Camou, John Wiggins, Fernando Molina and
Miguel Vildosola.
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space below:
_______________________________________________________________________
2. To approve an amendment to the Company's Certificate of Incorporation
giving the Board of Directors the authorization and discretion to effect
prior to August 30, 1999, if necessary, to effect a reverse stock split
of the Company's Common Stock, $.01 par value ("Common Stock") in a ratio
to be determined by the Board of Directors of not less than one-for-twenty
and not more than one-for-twenty-five. The par value of $.01 per share
and the number of authorized shares of Common Stock will remain the same.
FOR AGAINST
3. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock by 50,000,000
shares from 100,000,000 shares to 150,000,000 shares.
FOR AGAINST
4. Proposal to ratify the selection of Coopers & Lybrand as independent
public accountants for the current year.
FOR AGAINST
5.With respect to the transaction of such other business as may properly
come before the Annual Meeting, as the proxyholders,in their sole
discretion, may see fit.
SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE IN PERSON EVEN THOUGH THEY HAVE
PREVIOUSLY MAILED THIS PROXY. PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN
THE ENCLOSED ENVELOPE.
Dated: , 1998
________________________ ___________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
_______________________ ___________________________
PRINT NAME PRINT NAME
IMPORTANT: Please date this Proxy and sign exactly as name(s) appear(s)
hereon. When signing as a fiduciary, please give your full title. Return
his Proxy promptly in the enclosed envelope.
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(e)(2)
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Coded Communications Corporation (File No. 0-17574)
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it wasdetermined):
___________________________________________________________________________
(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:
___________________________________________________________________________
