<PAGE> 1
AMENDMENT NO. 1
TO
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Telechips Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Not Applicable.
- --------------------------------------------------------------------------------
(Name of Person 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:
_____________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________
(5) Total Fee paid: ____________.
[ ] Fee paid previously with preliminary material: ________.
[ ] 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:
_____________________________________________________
<PAGE> 2
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
MARCH 5, 1997
A Special Meeting of the Stockholders of TELECHIPS CORPORATION (the
"Company") will be held at 6880 South McCarran Boulevard, Reno, Nevada on March
5, 1997, at 8:30 A.M. Pacific time for the purpose of amending the Company's
Articles of Incorporation to effect a 1-for-15 reverse stock split of the
Company's issued and outstanding Common Stock, par value $.01, while keeping
20,200,000 authorized shares of Common Stock, at a par value of $.01.
The Board of Directors has fixed the close of business on February 10,
1997 as the record date for determination of the stockholders entitled to
notice of and to vote in person or by proxy at the Special Meeting.
Whether or not you presently plan to attend the meeting in person, the
Board of Directors urges you to date, sign, and promptly return the enclosed
proxy. Your giving of such proxy does not preclude your right to vote in
person if you attend the meeting. A postage-prepaid envelope is enclosed for
your convenience in returning the signed proxy.
Your early attention to the proxy will be appreciated.
By Order of the Board of Directors
Nelson B. Caldwell
Secretary
Reno, Nevada
A PROXY STATEMENT AND A FORM OF PROXY ACCOMPANY THIS NOTICE.
<PAGE> 3
TELECHIPS CORPORATION
6880 South McCarran Boulevard, Reno, Nevada 89509
-------------
PROXY STATEMENT
-------------
A Notice of a Special Meeting of Stockholders of TELECHIPS CORPORATION
(the "Company") is set forth on the preceding page and enclosed herewith is a
form of proxy solicited by the Board of Directors of the Company. This Proxy
Statement is being first sent to stockholders on or about February 12, 1997.
SOLICITATION OF PROXIES
This proxy solicitation is being made by the Board of Directors of the
Company. The expense of the solicitation will be paid by the Company. To the
extent necessary to assure sufficient representation at the Special Meeting,
proxies may be solicited by any appropriate means by directors, officers,
regular employees of the Company and the stock transfer agent for the Company's
Common Stock, who will not receive any additional compensation therefor. The
Company will request that banks, brokers and other fiduciaries solicit their
customers who own beneficially the Common Stock listed of record in names of
nominees and, although there is no formal arrangement to do so, the Company
will reimburse such persons the reasonable expenses of such solicitation.
VOTE REQUIRED AND VOTING PROCEDURES
Only stockholders of record as of the close of business on February
10, 1997 (the "Record Date"), are entitled to notice of and to vote at the
Special Meeting and/or any adjournment thereof. The outstanding stock of the
Company on the Record Date entitled to vote consists of 15,778,993 shares of
Common Stock.
Each holder of Common Stock will be entitled to one vote, in person or
by proxy, for each share standing in its name on the books of the Company as of
the Record Date on each of the matters duly presented for vote at the Special
Meeting.
In connection with the solicitation by the Board of Directors of
proxies for use at the Special Meeting, the Board of Directors has designated
Kevin A. Coyle, Esq. as proxy.
The Board of Directors is not aware of any matters that will come
before the Special Meeting other than as described above. However, if such
matters are presented, the named proxy will, in the absence of instructions to
the contrary, vote such proxies in accordance with the judgment of such named
proxy with respect to any such other matter properly coming before the Special
Meeting.
<PAGE> 4
A majority of the outstanding shares of Common Stock must be
represented in person or by proxy at the Special Meeting in order to constitute
a quorum for the transaction of business. The affirmative vote of a majority
of the voting power entitled to vote at the Special Meeting is required by the
Company for approval of the amendment of the Articles of Incorporation.
Votes that are cast against a proposal will be counted for purposes of
determining (i) the presence or absence of a quorum and (ii) the total number
of votes cast with respect to such proposal.
While there is no definitive statutory or case law authority in Nevada
as to the proper treatment of abstentions in the counting of votes with respect
to a proposal such as the amendment of the Articles of Incorporation, the
Company believes that abstentions should be counted for purposes of determining
both (i) the presence or absence of a quorum for the transaction of business
and (ii) the total number of votes cast with respect to such proposal. In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in such manner. Accordingly, abstentions as to the amendment of
the Articles of Incorporation will have the same effect as a vote against such
proposal.
A proxy submitted by a stockholder may indicate that all or a portion
of the shares of Common Stock represented by such proxy are not being voted by
such stockholder with respect to a particular matter. This could occur, for
example, when a broker is not permitted to vote stock held in street name on
certain matters in the absence of instructions from the beneficial owner of the
stock. The shares subject to any such proxy which are not being voted with
respect to a particular matter will be considered shares not present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum.
All shares represented by valid proxies received by the Company prior
to the Special Meeting will be voted as specified in the proxy; if no
specification is made and if discretionary authority is conferred by the
stockholder, the shares will be voted FOR the proposals described below.
REVOCABILITY OF PROXIES
A stockholder giving a proxy has the power to revoke it any time prior
to its exercise by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date, or by attending the
meeting and voting the shares in person.
APPRAISAL OR SIMILAR RIGHTS
Neither the stockholders abstaining nor voting against the proposal
which is the subject of this Proxy Statement have any appraisal or similar
rights of dissenters.
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INSPECTOR OF ELECTIONS
The Board of Directors has appointed Mick L. Friend, CPA as the
Inspector of Elections for the Special Meeting. The Inspector of Elections
will determine the number of shares of Common Stock represented in person or by
proxy at the Special Meeting, whether a quorum exists, the authenticity, and
validity and effect of proxies, and will receive and count the votes.
PROPOSAL
AMENDMENT OF THE ARTICLES OF INCORPORATION TO EFFECT A 1-FOR-15 REVERSE
STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
On February 5, 1997, the Board of Directors unanimously adopted
resolutions approving a proposal to amend the Articles of Incorporation of the
Company (the "Amendment") to effect a 1-for-15 reverse stock split ("Reverse
Split") of the Company's issued and outstanding shares of Common Stock, par
value $.01 ("Common Stock" or "Common Shares"). The Reverse Split will not
affect the number or par value of the authorized Common Stock. The text of the
Amendment is set forth in Appendix A to this Proxy Statement. The affirmative
vote of the holders of more than 50% of the outstanding shares of Common Stock
is required to approve the adoption of the Amendment.
The Reverse Split will become effective upon filing of the Amendment
with the Secretary of State of the State of Nevada. If the Amendment is
approved and management determines to proceed with the Reverse Split (see
"Reservation of Rights"), management will use its discretion to determine when
to file the Amendment.
Principal Effect of the Reverse Split
Based upon the 15,778,993 Common Shares outstanding as of February 5,
1997, the Reverse Split would decrease the outstanding Common Shares by
approximately 93%, and, once effective, the Reverse Split would result in
approximately 1,051,933 post-Reverse Split Common Shares outstanding, subject to
adjustment as a result of the elimination of fractional shares. Similarly, the
aggregate number of Common Shares reserved for issuance upon exercise of
warrants and options would decrease from approximately 3,048,490 Common Shares
to approximately 203,233 Common Shares, subject to adjustment as a result of
the elimination of fractional shares.
Each outstanding option or warrant will automatically become an option
or warrant, as the case may be, to purchase approximately 7% of the number of
shares subject to the option or warrant immediately prior to the Reverse Split
at an exercise price which is fifteen times the exercise price of the option or
warrant immediately prior to the Reverse Split, subject to adjustment as a
result of the elimination of fractional shares. In addition,
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the shares available for issuance under the Company's 1994 Stock Option Plan
and 1995 Stock Option Plan will be reduced by approximately 93% to reflect the
Reverse Split, subject to adjustments required to eliminate fractional shares,
and the other relevant terms and provisions of the Company's stock option plans
will be appropriately adjusted to reflect the Reverse Split. The Company will
obtain a new CUSIP number for the Common Shares effective at the time of the
Reverse Split. Following the effectiveness of the Reverse Split, the Company
will provide each record holder of Common Shares information to enable such
holder to obtain new shares and certificates.
The Reverse Split will not affect the par value of the authorized
Common Shares, and the number of authorized Common Shares will remain
20,200,000 Common Shares, $0.01 par value per share. The Reverse Split will
not affect the number or par value of the authorized Preferred Stock, which
will remain at 3,000,000 shares of Preferred Stock, $1.00 par value per share.
As a result, if the Amendment is approved, the decrease in the number of shares
outstanding and reserved for issuance pursuant to the exercise of options and
warrants will result in an increase in the number of shares available for
issuance. The terms of the post-Reverse Split Common Shares will be the same
as the terms of the Common Shares prior to the Reverse Split, and subject to
the provisions for the elimination of fractional shares, as described below,
consummation of the Reverse Split will not result in a change in the relative
equity interest in the Company or the voting power or other rights, preferences
or privileges of the holders of Common Shares.
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<PAGE> 7
The following table illustrates the principal effects of the proposed
Reverse Split discussed in the preceding paragraphs:
<TABLE>
<CAPTION>
Number of Common Shares
Before Reverse Split After Reverse Split
And The Amendment And The Amendment
-------------------- -------------------
<S> <C> <C>
Authorized 20,200,000 20,200,000
Outstanding 15,778,993 1,051,933
Subject to Outstanding
Options and Warrants 3,048,490 203,233
Reserved for Issuance in
Connection with Future
Grants Under Option Plans 499,426 33,295
Connection with Series A
Preferred Shares Being
Converted Assuming a Conversion
Price of $.40 per share 3,275,000 218,333
----------- ----------
Available (deficit) for Future Issuance
by Action of the Board (after
giving effect to the above
reservations) -2,401,909 18,693,206
=========== ==========
</TABLE>
Assuming the Reverse Split is approved by the stockholders and
management determines to proceed with the Reverse Split (see "Reservation of
Rights"), the Company will file an amendment to the Articles of Incorporation,
in the form set forth in Appendix A, with the Secretary of State of the State
of Nevada, effecting the Reverse Split on a date determined by management in
its discretion. Management currently expects the Amendment to be filed
sometime before the Company raises significant additional capital, so that the
Company will have sufficient authorized, but unissued, Common Shares to raise
such additional capital. See "Purposes of the Reverse Split." The Reverse
Split would become effective as of the close of business on the date of such
filing (the "Effective Date").
Purposes of the Reverse Stock Split
The Reverse Split would decrease the number of Common Shares
outstanding and presumably increase the per share market price for the
post-Reverse Split Common Shares. The Company's Board of Directors believes
that the relatively low market price per share of the Company's Common Shares
may impair the marketability of the Common Shares to institutional investors
and members of the investing public. In theory, the number of shares
outstanding should not, alone, affect the marketability of the Common Shares,
the type of investor who acquires them, or the Company's reputation in the
financial community. In practice, however, this is often not the case, because
many investors look upon low-priced shares as speculative in nature, and as a
matter of policy, avoid investment in such stocks. These factors may not only
affect the liquidity of the Common Shares, but may also impair the Company's
ability to raise additional capital through the sale of equity securities.
The Board also recognizes that many leading brokerage firms are
reluctant to recommend lower-priced securities to their clients. In addition,
a variety of brokerage house policies and practices currently tends to
discourage individual brokers within firms from dealing in lower-priced stocks.
Some of those policies and practices relate to the payment of brokers'
commissions and time-consuming procedures that make the handling of lower
priced stocks economically unattractive to brokers. The structure of brokerage
commissions tends to adversely impact holders of lower-priced stocks because
brokerage commissions on a sale of a lower-priced stock generally represent a
higher percentage of the sales price than the commissions on higher-priced
stocks.
The Company is currently listed on The Nasdaq SmallCap Market
("SmallCap Market"); however, there is no assurance that the Company will
continue to meet the maintenance standards for continued listing on The Nasdaq
SmallCap Market, particularly if proposed Nasdaq rule changes take effect.
Under The Nasdaq SmallCap Market's listing
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criteria, listed companies which have low stock prices for a sustained period
risk delisting by The Nasdaq SmallCap Market. If the Company is unable to
satisfy the SmallCap Market's requirements for continued listing, including,
among other things, an adequately high trading price, trading of the Common
Shares would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or Nasdaq's OTC Bulletin Board. Consequently, the
liquidity of the Company's Common Shares could be impaired, through delays in
the timing of transactions, reduction in the news media's coverage of the
Company, lack of investment analyst interest in covering the Company, and lower
prices for the Company's Common Shares than might otherwise be obtained.
The Board of Directors hopes that the decrease in the number of Common
Shares outstanding resulting from the Reverse Split and the anticipated
corresponding increased price per share will stimulate interest in the
Company's Common Shares, promote greater liquidity for the Company's
stockholders and result in a price level for the post-Reverse Split Common
Shares that will maintain its Nasdaq SmallCap Market listing. The Board also
hopes that the Reverse Split will result in a price level for the post-Reverse
Split Common Shares that will mitigate the present reluctance, policies and
practices of brokerage firms, and diminish the adverse impact of trading
commissions, recommendation restrictions and margin requirements on the
potential market for the Company's Common Shares. However, there is no
assurance that the Reverse Split will achieve the desired results, that the
price per post-Reverse Split Common Share will increase proportionately with
the decrease in the number of shares, that the post-Reverse Split Common Shares
will trade at a level at which they will be marginable, or that any price
increase can be sustained for a prolonged period of time. In addition, it is
possible that the liquidity of the post-Reverse Split Common Shares may be
adversely affected by the reduced number of shares outstanding if the proposed
Reverse Split is effected. In addition, the Reverse Split might leave some
stockholders with one or more "odd-lots" of the Company's Common Shares (stock
in amounts of less than 100 shares). These shares may be more difficult to
sell, or require a greater commission per share to sell, than shares in even
multiples of 100.
Although the Company has no current intent to engage in a "going
private" transaction or otherwise purchase shares of its Common Stock in the
public market, the decrease in the number of outstanding shares occasioned by
the Reverse Split may make it easier for the Company to effect a going private
transaction in the future, and there can be no assurance that the Board will
not deem it in the best interests of the Company to go private at some time in
the future. In the event the Company decided to attempt to effect a going
private transaction in the future, the Company would be required to comply with
Rule 13e-3 which, among other things, requires that certain financial and other
information about the Company be filed with the Commission and furnished to the
stockholders.
The Reverse Split is also being proposed to increase the number of the
Company's authorized but unissued Common Shares. As of the date of this Proxy
Statement, 15,778,993 shares of Common Stock are outstanding and approximately
3,048,490 shares of Common Stock are reserved for issuance upon exercise of
outstanding warrants and stock options and 499,426 shares of Common Stock are
reserved for future grant under outstanding Stock Option Plans, leaving the
Company with approximately 873,091 shares available for future issuance.
On October 2, 1996, the Company raised approximately $2,900,000 in net
proceeds in a placement of 4,188 shares of its 4% Convertible Preferred Stock,
stated value $1,000 per share (the "Preferred Shares") under Regulation S. The
Preferred Shares are convertible at a conversion price equal to the lower of
$3.00 or the average five-day closing bid price prior to the date of
conversion. As of the date of this Proxy Statement, a total of 2,878 Preferred
Shares have been converted into 11,784,805 Common Shares, including 4% Common
Interest paid.
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<PAGE> 9
On December 6, 1996, the stockholders approved an amendment to the
Articles of Incorporation to increase the number of authorized shares of Common
Stock from 10,200,000 to 20,200,000 ("Original Amendment"). The Original
Amendment was based, in part, on the Preferred Shares being converted at an
assumed exercise price of $3.00 per share. However, due to fluctuations in the
price of the Common Stock, the actual conversion price has been much lower.
Assuming a conversion price of $.40 per share, 3,275,000 shares must be
reserved for conversion of the remaining unconverted Preferred Shares, thus
leaving the Company in a deficit share position of at least 2,401,909 shares.
Further, additional shares of Common Stock may be required depending on future
fluctuations in the Common Stock price.
After the Reverse Split, the Company would have 20,200,000 shares of
Common Stock authorized, but would only have approximately 1,051,933 Common
Shares issued and outstanding and 203,233 share of Common Stock reserved for
issuance upon exercise of outstanding options and warrants, subject to
adjustment as a result of the elimination of fractional shares; leaving the
Corporation with what management believes will be sufficient shares to cover
future conversions of the Preferred Shares.
In addition, the Board of Directors has determined, based on its
current proposed growth plans and assumptions relating to its growth and
operations, that the proceeds from the Regulation S Offering, the IPO, private
placements, borrowings and planned revenues will not be sufficient to satisfy
the Company's contemplated cash requirements for the immediate future and that
the Company will be required to raise additional funds within the very near
future. THEREFORE, THE BOARD DEEMS IT ESSENTIAL THAT THE AMENDMENT TAKE PLACE
IF THE COMPANY IS TO CONTINUE AS A GOING CONCERN.
There are no preemptive rights available to stockholders in connection
with the Reverse Split.
Exchange of Certificates and Elimination of Fractional Share Interests
On the Effective Date, each fifteen Common Shares will automatically
be combined and changed into one Common Share. No additional action on the
part of the Company or any stockholder will be required in order to effect the
Reverse Split and beginning on the Effective Date, each certificate
representing pre-Reverse Split Common Shares will represent for all purposes
one-fifteenth of that number of post-Reverse Split Common Shares. Stockholders
will be requested to exchange their certificates representing Common Shares
held prior to the Reverse Split for new certificates representing Common Shares
issued as a result of the Reverse Split. The Company's transfer agent will act
as the Company's exchange agent to act for holders of Common Shares in
implementing the exchange of their certificates. Stockholders will be
furnished the necessary materials and instructions to effect such exchange
promptly following the Effective Date. Certificates representing pre-Reverse
Split Common Shares subsequently presented for transfer will not be transferred
on the books and records of the Company but will be returned to the tendering
person for exchange. Stockholders should not submit any certificates until
requested to do so.
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No scrip or fractional post-Reverse Split Common Shares will be issued
to any stockholder in connection with the Reverse Split. Accordingly, all
stockholders of record who would otherwise be entitled to receive fractional
post-Reverse Split Common Shares, will, upon surrender of their certificates
representing pre-Reverse Split Common Shares, be issued an additional fraction
of a share as is necessary to increase the fractional share to a full share.
Federal Income Tax Consequences of the Reverse Split
The following general description of the federal income tax
consequences is based on the Internal Revenue Code of 1986, as amended, the
applicable treasury regulations promulgated thereunder, judicial authority and
current administrative rulings and practices as in effect on the date of this
Proxy Statement, all of which are subject to change and any such change could
apply retroactively. This discussion is for general information only and does
not purport to deal with all aspects of federal income taxation that may be
relevant to holders of Common Shares and does not discuss consequences which
may apply to special classes of taxpayers (e.g., non-resident aliens,
broker-dealers, tax-exempt organizations, banks or insurance companies).
Stockholders are urged to consult their own tax advisors to determine the
particular federal, state, local and foreign tax consequences to them.
The combination and change of each fifteen pre-Reverse Split Common
Shares into one post-Reverse Split Common Share should be a tax- free
transaction, and no gain or loss will be recognized to the Company or its
Stockholders. The holding period of the pre-Reverse Split Common Shares will
be transferred to the post-Reverse Split Common Shares received in exchange
therefor, provided that the stockholder held the pre-Reverse Split Common
Shares as a capital asset at the time of the exchange. The tax basis in the
post-Reverse Split Common Shares will equal the tax basis in the pre-Reverse
Split Common Shares exchanged therefor, plus the amount of any gain or income
recognized by the stockholder.
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This discussion should not be considered as tax or investment advice,
and the tax consequences of the Reverse Split may not be the same for all
stockholders. Stockholders should consult their own tax advisors to ascertain
their individual federal, state, local and foreign tax consequences.
Vote Required
Approval of the Amendment requires the affirmative vote of the holders
of a majority of the outstanding Common Stock. Abstentions and broker
non-votes will not be deemed affirmative votes, and will have the same effect
as a negative vote on the proposal. Such votes, however, will be counted in
determining the number of shares of Common Stock present or represented by
proxy in determining whether a quorum is present Proxies received in response
to this solicitation will, in the absence of any contrary specification, be
voted in favor of the proposal.
Reservation of Rights
The Board of Directors reserves the right to abandon the proposed
Amendment and Reverse Split without further action by the stockholders at any
time before the filing of the Amendment with the Secretary of State of the
State of Nevada, notwithstanding authorization of the proposed Amendment and
Reverse Split by the stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE AMENDMENT
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PRINCIPAL STOCKHOLDERS
The table below sets forth certain information as of February 5, 1997
(the "Reference Date") with respect to the beneficial ownership of (i) each
person who beneficially owns more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) certain named executive officers and (iv) all
officers and directors as a group. Except as otherwise indicated below, the
address for each such person is: c/o Telechips Corporation, 6880 S. McCarran
Boulevard, Reno, Nevada 89509.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership(1) Beneficially Owned
---------------- ----------------------- ------------------
<S> <C> <C>
Hans Junker . . . . . . . . . . . . . . 179,292(2) 1.1%
Randall Pinato . . . . . . . . . . . . 176,292(3) 1.1%
Richard Adrey . . . . . . . . . . . . . 50,000(4) *
Frank Vigilante . . . . . . . . . . . 30,000(5) *
Nelson B. Caldwell . . . . . . . . . . 39,401(6) *
All Officers and Directors as a
Group (six persons) . . . . . . . . . . 651,277(7) 4.1%
</TABLE>
_______________
* Less than 1%.
(1) A person is deemed to be the beneficial owner of voting securities
that can be acquired by such person within 60 days from the date of
this Proxy Statement upon the exercise of options, warrants or
convertible securities. Each beneficial owner's percentage ownership
is determined by assuming that convertible securities, options or
warrants that are held by such person (but not those held by any other
person) exercisable within such period have been exercised.
Percentage figures based on 15,778,993 shares of Common Stock
outstanding on the Reference Date, and including 241,300 shares of
Common Stock held in escrow pursuant to the Series B Escrow Agreement
by and among the Company, American Stock Transfer Company of New York
as escrow agent, and certain stockholders of the Company, dated as of
October 31, 1994, as amended on October 20, 1995 (the "Escrow
Agreement").
(2) Consists of (i) 38,608 shares of Common Stock, (ii) 38,608 shares of
Common Stock held in escrow pursuant to the Escrow Agreement, (iii)
99,076 shares of Common Stock held in escrow pursuant to the Founder's
Options and (iv) 3,000 shares held by the Hans Jorgen Junker Trust, of
which Mr. Junker is the trustee.
(3) Consists of (i) 38,608 shares of Common Stock, (ii) 38,608 shares of
Common Stock held in escrow pursuant to the Escrow Agreement and (iii)
99,076 shares of Common Stock held in escrow under the terms of the
Founder's Options.
(4) Consists of 50,000 shares underlying currently exercisable options
held of record by Coastline Financial Group, Inc. of which Mr. Adrey
is a controlling person.
(5) Consists of options pursuant to the terms of the Directors Option
Agreements entered into between the Company and non-employee
directors of the Company.
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(6) Consists of (i) 325 shares of Common Stock owned of record by the
Zamora Family Trust, of which Mr. Caldwell is the trustee and
(ii) 39,076 shares of Common Stock reserved for issuance upon
exercise of stock options.
(7) Consists of (i) 119,149 shares of Common Stock, (ii) 115,824 shares of
Common Stock held in escrow pursuant to the terms of the Escrow
Agreement, (iii) 327,228 shares of Common Stock held in escrow
pursuant to the terms of the Directors and Founders Options, and (iv)
89,076 shares reserved for issuance upon exercise of currently
exercisable options.
OTHER MATTERS
The Company does not know of any matter other than those discussed in
the foregoing materials contemplated for action at the Special Meeting. Should
any other matter be properly brought before the Special Meeting, the holders of
the proxies herein solicited will vote thereon in their discretion.
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SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
In accordance with Rule 14a-8 of the proxy rules of the Securities and
Exchange Commission, stockholders are advised that any proposal which a
stockholder wishes to have presented at the 1998 Annual Meeting of the
Stockholders and included in the Company's Proxy Statement and form of proxy
for such meeting must be received by the Company, at its principal office, 6880
South McCarran Boulevard, Reno, Nevada 89509, Attention: Mr. Nelson B.
Caldwell, no later than December 1, 1997.
February 18, 1997
By Order of the Board of Directors
Nelson B. Caldwell
Secretary
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APPENDIX A
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
TELECHIPS CORPORATION
We the undersigned President and Secretary of TELECHIPS CORPORATION DO
HEREBY CERTIFY:
1. That the Board of Directors of TELECHIPS CORPORATION pursuant to a
special meeting of the Board on February 5, 1997, adopted resolutions to amend
the Articles of Incorporation as follows:
"The First Paragraph of Article FOUR be amended in its entirety to
read as follows:
"FOUR: The total number of shares of all classes of stock
which the Corporation has authority to issue is 23,200,000 consisting
of (A) 20,200,000 shares of Common Stock, par value $0.01 per share
(the "Common Stock" and the holders thereof referred to herein as the
"Common Stockholders"), and (B) 3,000,000 shares of Preferred Stock,
par value $1.00 per share (the "Preferred Stock" and the holders
thereof being referred to herein as the "Preferred Stockholders"),
none of which shall be entitled to any preemptive rights.
Effective as of the close of business on the date of filing of
this amendment ("Amendment") to the Articles of Incorporation (the
"Effective Time"), the filing of this Amendment shall effect a reverse
stock split (the "Reverse Split") on the basis of one new share of
Common Stock for each fifteen then issued and outstanding shares of
Common Stock.
Immediately as of the Effective Time, and without any action
by the holders of outstanding Common Shares, outstanding certificates
representing the Corporation's Common Shares shall represent for all
purposes, and each Common Share issued and outstanding immediately
before the Effective Time shall automatically be converted into, new
Common Shares in the ratio of fifteen old Common Shares for one new
Common Share, all by virtue of the Reverse Split and without any
action on the part of the holder of such Common Shares.
Notwithstanding any of the foregoing to the contrary, no scrip
or fractional Common Shares shall be issued in connection with the
Reverse Split. In lieu thereof, each record holder of Common Shares as
of the Effective Date who would otherwise have been entitled to
receive a fractional new Common Share shall, upon surrender of such
stockholder's certificates representing pre-Reverse Split Common
Shares, be
<PAGE> 16
issued an additional fraction of a share as is necessary to increase
the fractional share to a full share."
2. That the number of shares of stock of TELECHIPS CORPORATION
outstanding and entitled to vote on an amendment to the Articles of
Incorporation is ____________ shares of Common Stock; that said change and
amendment has been consented to and authorized by at least a majority of the
shares of stock outstanding and entitled to vote thereon.
-----------------------
-----------------
President
-----------------------
Nelson B. Caldwell
Secretary
<PAGE> 17
STATE OF NEVADA )
COUNTY OF )
On this _____ day of _____________ in the year 1997, before me
personally appeared ______________ and Nelson Caldwell, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to this instrument, and acknowledged that they executed
it.
-----------------------------
Notary Public
My commission expires on
________________________
<PAGE> 18
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
OF
TELECHIPS CORPORATION
THE UNDERSIGNED UNDERSTANDS THAT THIS PROXY IS BEING SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF TELECHIPS CORPORATION, A NEVADA CORPORATION
(THE "CORPORATION"). The undersigned hereby appoints Kevin A. Coyle, Esq.,
with full power of substitution, proxy for the undersigned to vote all shares
of Common Stock of the Corporation which the undersigned is entitled to vote at
the Special Meeting of Stockholders of the Corporation to be held on March 5,
1997, at the principal office of the Corporation located at 6880 South McCarran
Boulevard, Reno, Nevada, at 8:30 A.M. local time, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
AMENDMENT OF THE ARTICLES OF INCORPORATION TO EFFECT A 1-FOR-15
REVERSE STOCK SPLIT OF THE COMPANY'S ISSUED AND OUTSTANDING COMMON
STOCK
( ) FOR amendment of the Articles of Incorporation.
( ) AGAINST amendment of the Article of Incorporation.
( ) ABSTAIN from voting for or against amendment of the Article of
Incorporation.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL ABOVE.
When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, or on behalf of an
entity, please provide the name of the stockholder of record and the full title
of the person signing on behalf of the stockholder of record.
Dated: _____________, 1997
------------------------------
Signature of Stockholder
------------------------------
Print Name of Stockholder
------------------------------
Signature of Stockholder
------------------------------
Print Name of Stockholder
STOCKHOLDERS SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT
IN THE ENCLOSED ENVELOPE.
