<PAGE> 1
SCHEDULE 14A INFORMATION
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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 sec.240.14a-11(c) or sec.240.14a-12
INTERVU INC.
- --------------------------------------------------------------------------------
(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 was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
INTERVU INC.
6815 FLANDERS DRIVE
SAN DIEGO, CALIFORNIA 92121
----------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
TO THE STOCKHOLDERS OF INTERVU INC.:
Notice is hereby given that the Annual Meeting of the Stockholders of
INTERVU Inc. (the "Company") will be held at the La Jolla Marriott, 4240 La
Jolla Village Drive, La Jolla, California, on Tuesday, July 27, 1999 at 3:00
p.m. for the following purposes:
1. To elect two directors for a three-year term to expire at the
2002 Annual Meeting of Stockholders. The present Board of Directors of
the Company has nominated and recommends for election as directors the
following two persons:
Edward E. David, Jr.
Alan Z. Senter
2. To consider and vote upon a proposal to amend the Amended and
Restated Articles of Incorporation of the Company to increase the number
of authorized shares of the Company's common stock from 20,000,000 to
50,000,000 shares.
3. To transact such other business as may be properly brought before
the Annual Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on _____, 1999 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. A list of
such stockholders will be open to the examination of any stockholder at the
Annual Meeting and for a period of ten days prior to the date of the Annual
Meeting at the offices of INTERVU Inc., 6815 Flanders Drive, San Diego,
California.
Accompanying this Notice is a Proxy. WHETHER OR NOT YOU EXPECT TO BE AT THE
ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY.
If you plan to attend the Annual Meeting and wish to vote your shares
personally, you may do so at any time before the Proxy is voted.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
Harry E. Gruber
Chairman of the Board and
Chief Executive Officer
San Diego, California
May _____, 1999
<PAGE> 3
INTERVU INC.
6815 FLANDERS DRIVE
SAN DIEGO, CALIFORNIA 92121
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
July 27, 1999
The Board of Directors (the "Board") of INTERVU Inc., a Delaware
corporation (the "Company" or "INTERVU") is soliciting the enclosed Proxy for
use at the Annual Meeting of Stockholders of the Company to be held at the La
Jolla Marriott, 4240 La Jolla Village Drive, La Jolla, California, on Tuesday,
July 27, 1999 (the "Annual Meeting"), and at any adjournments thereof. This
Proxy Statement will be first sent to stockholders on or about _____, 1999.
Unless contrary instructions are indicated on the Proxy, all shares represented
by valid Proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted for the election of the Board's nominees for
directors. As to any other business which may properly come before the Annual
Meeting and be submitted to a vote of the stockholders, Proxies received by the
Board will be voted in accordance with the best judgment of the holders thereof.
A Proxy may be revoked by written notice to the Secretary of the Company at
any time prior to the Annual Meeting by executing a later Proxy or by attending
the Annual Meeting and voting in person.
The Company will bear the cost of solicitation of Proxies. In addition to
the use of mails, Proxies may be solicited by personal interview, telephone or
telegraph, by officers, directors, and other employees of the Company. The
Company will also request persons, firms, and corporations holding shares in
their names, or in the names of their nominees, which are beneficially owned by
others to send or cause to be sent Proxy material to, and obtain Proxies from,
such beneficial owners and will reimburse such holders for their reasonable
expenses in so doing.
INTERVU's mailing address is 6815 Flanders Drive, San Diego, California
92121.
VOTING
Stockholders of record at the close of business on _____, 1999 (the "Record
Date") will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
As of April 30, 1999, 10,956,365 shares of the Company's common stock,
$.001 par value per share ("Common Stock"), and 1,280,000 shares of the
Company's Series G Convertible Preferred Stock ("Series G Preferred Stock") were
outstanding, representing the only voting securities of the Company. Each share
of Common Stock is entitled to one vote and each share of Series G Preferred
Stock is entitled to .6298 of one vote. The Common Stock and the Series G
Preferred Stock will vote as a single class and will not vote separately.
Votes cast by Proxy or in person at the Annual Meeting will be counted by
the person appointed by the Company to act as Inspector of Election for the
Annual Meeting. The Inspector of Election will treat shares represented by
Proxies that reflect abstentions or include "broker non-votes" as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions or "broker non-votes" do not constitute a vote "for" or
"against" any matter and thus will be disregarded in the calculation of "votes
cast." Any unmarked Proxies, including those submitted by brokers or nominees,
will be voted in favor of the nominees of the Board, as indicated in the
accompanying Proxy card.
2
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently consists of six members. The Company's Amended and
Restated Certificate of Incorporation provides for the classification of the
Board into three classes, as nearly equal in number as possible, with staggered
terms of office and provides that upon the expiration of the term of office for
a class of directors, nominees for such class shall be elected for a term of
three years or until their successors are duly elected and qualified. At this
meeting, two nominees for director are to be elected as Class II directors. The
nominees are Edward E. David, Jr. and Alan Z. Senter. The Class I and Class III
directors have two years and one year, respectively, remaining on their terms of
office. If no contrary indication is made, Proxies in the accompanying form are
to be voted for such nominees or, in the event any such nominee is not a
candidate or is unable to serve as a director at the time of the election (which
is not currently expected), for any nominee who shall be designated by the Board
to fill such vacancy. Both nominees are members of the present Board.
INFORMATION REGARDING DIRECTORS
The information set forth below as to each nominee for director has been
furnished to the Company by the respective nominees for director:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING AT THE
2002 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
<S> <C> <C>
Edward E. David, Jr. ......... 74 Director
Alan Z. Senter ............... 57 Director
</TABLE>
Edward E. David, Jr. has served as a director of INTERVU since its
inception in August 1995 and has served as President of Edward E. David, Inc., a
telecommunications consulting firm since 1992. In addition, since April 1996,
Dr. David has served as Vice President and Principal of Washington Advisory
Group, LLC. He has been Science Advisor to the President of the United States
and Director of the White House Office of Science and Technology. Dr. David was
also President of Exxon Research and Engineering Company and Executive Director
of Bell Telephone Laboratories. Mr. David serves as a director for
Intermagnetics General Corporation, Spacehab, Inc. and Protein Polymar
Technologies, all of which are publicly traded companies. Until recently, he
served as the U.S. Representative to the NATO Science Committee.
Alan Z. Senter joined INTERVU as a director in September 1997. From
September 1994 to May 1996, Mr. Senter served as Executive Vice President, Chief
Financial Officer and as a member of the Policy Council of Nynex Corporation.
From November 1993 to August 1994 and since June 1996, Mr. Senter has served as
Chairman of Senter Associates, a consulting firm founded by Mr. Senter in
November 1993. From August 1992 to November 1993, Mr. Senter served as Executive
Vice President, Chief Financial Officer and a director of GAF/ISP Corporation.
From January 1990 to July 1992, Mr. Senter served as Vice President of Finance
for Xerox Corporation. Mr. Senter serves on the Boards of Directors of Exel,
Ltd. and Advanced Radio Telecom, both publicly traded companies. Mr. Senter
obtained a B.S. in economics and political science from the University of Rhode
Island and an M.B.A. from the University of Chicago.
3
<PAGE> 5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING AT THE
2000 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
<S> <C> <C>
Harry E. Gruber .............. 46 Chairman of the Board, Chief Executive Officer and Director
J. William Grimes ............ 57 Vice Chairman of the Board and Director
</TABLE>
Harry E. Gruber is a founder of INTERVU and has served as Chairman and
Chief Executive Officer of INTERVU since July 1996. From July 1996 to July 1997,
Dr. Gruber served as INTERVU's President, and from July 1997 to February 1998,
Dr. Gruber served as INTERVU's Chief Financial Officer. Prior to founding
INTERVU, Dr. Gruber founded two start-up biotech ventures, Gensia Inc. and
Viagene Inc., which completed initial public offerings in 1990 and 1993,
respectively. From July 1995 to July 1996, Dr. Gruber served as Chief Scientific
Officer of Gensia, and from 1988 to July 1995, he served as Vice President,
Research of Gensia. Dr. Gruber serves as a director of Vascular Genomics, Inc.,
a privately held company, and as a director of the UCSD Foundation and a member
of the Board of Overseers for the University of Pennsylvania College of Arts and
Sciences. Dr. Gruber obtained his M.D. and B.A. degrees from the University of
Pennsylvania.
J. William Grimes joined INTERVU as a director in September 1997 and
has served as Vice Chairman of the Board since October 1997. Since July 1995,
Mr. Grimes has worked as a consultant with JAG Communications, Inc., a
communications consulting company he founded in July 1995. He also is a partner
of BG Media Investors and serves as a faculty member in the Media Studies
Program at the New School for Social Research, a position he has held since
September 1996. From September 1994 to August 1996, Mr. Grimes held the position
of President and Chief Executive Officer with Zenith Media, a media buying
service company. From October 1991 to December 1993, Mr. Grimes served as
President and Chief Executive Officer of Multimedia, Inc. From November 1988 to
September 1991, Mr. Grimes served as President and Chief Executive Officer of
Univision Holdings, Inc. Mr. Grimes served as President and Chief Executive
Officer of ESPN, Inc. from June 1982 to October 1988. Prior to June 1982, Mr.
Grimes held various positions with CBS, Inc., including his final position as
Executive Vice President of the CBS Radio division. He obtained a B.A. in
English from West Virginia Wesleyan College.
TERM EXPIRING AT THE
2001 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
<S> <C> <C>
Mark Dowley ............. 34 Director
Isaac Willis ............ 58 Director
</TABLE>
Mark Dowley joined INTERVU as a director in January 1997 and is the
Chief Executive Officer of Momentum IMC, an advertising agency division of
McCann-Erickson, a national advertising firm. Mr. Dowley has over ten years
experience in major event management, promotion and sponsorship. Mr. Dowley's
past and current clients include the NBA, the PGA Tour, NCAA, The Walt Disney
Company and Universal Studios. Mr. Dowley received a B.A. in economics from the
College of Wooster.
Isaac Willis has served as a director of INTERVU since November 1995.
Dr. Willis is a private investor with experience in venture financing and
banking, including the founding of Heritage Bank, Commercial Bank of Georgia and
Commercial Bank of Gwinnett. Dr. Willis has been a Professor and Director of
Dermatology Research at Morehouse School of Medicine since 1983 and was a Past
Commander of the 3297th U.S. Army Hospital. Dr. Willis obtained a M.D. from
Howard University and a B.S. in chemistry and mathematics from Morehouse
College.
4
<PAGE> 6
BOARD MEETINGS AND COMMITTEES
The Company's Board held three regularly scheduled meetings and five
special telephonic meetings during 1998. No nominee for director who served as
a director during the past year attended fewer than 75% of the aggregate of the
total number of meetings of the Board and the total number of meetings of
committees of the Board on which he served. The Board has established a
Compensation Committee and an Audit Committee. The Company does not have a
Nominating Committee or any other committee.
COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Grimes, Senter and Willis.
From September 30, 1997 until April 14, 1998, Mr. Dowley held the seat on the
Compensation Committee now held by Dr. Willis. The Compensation Committee
determines compensation for the Company's senior executive officers and
administers the 1996 Stock Plan and the 1998 Stock Option Plan. The Compensation
Committee held two meetings during 1998.
AUDIT COMMITTEE
The Audit Committee consists of Messrs. David, Senter and Willis. The Audit
Committee makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
held one meeting during 1998.
COMPENSATION OF DIRECTORS
The directors of the Company have never received any cash compensation from
the Company for services rendered as directors. Under the 1998 Stock Option
Plan, each director who is not an employee of the Company (each an "Independent
Director") will be granted an option to purchase 5,000 shares of Common Stock on
the date of each annual meeting of stockholders at which the director is
re-elected to the Board. In addition, each person who is initially elected to
the Board and who is an Independent Director at the time of such election will
be granted an option to purchase 20,000 shares of Common Stock on the date of
the initial election. These stock awards and options are subject to repurchase
rights or vesting schedules.
VOTE REQUIRED; ELECTION OF DIRECTORS
If a quorum is present and voting at the Annual Meeting, the two
nominees receiving the highest number of votes will be elected to the Board.
Votes withheld from any nominee, abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THE ACCOMPANYING PROXY.
5
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The executive officers and key employees of the Company and their ages as
of April 30, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Brian Kenner ................ 40 Vice President and Chief Technology Officer
Kenneth L. Ruggiero ......... 32 Vice President and Chief Financial Officer
Edward L. Huguez ............ 41 Vice President and Chief Operating Officer
Stephen H. Klein ............ 35 Vice President of Business Development, Networks
Larry Behmer ................ 51 Vice President, Engineering
Charles Bragg ............... 47 Vice President and General Manager, Sales
Stephen Condon .............. 35 Vice President, Marketing
Scott Crowder ............... 36 Vice President, Operations
</TABLE>
EXECUTIVE OFFICERS
Brian Kenner is a founder of INTERVU and has served as Vice President
and Chief Technology Officer of INTERVU since February 1996. From 1989 to
January 1996, Mr. Kenner was a Project Engineer at Science Applications
International Corporation, an advanced-technology development and research
organization. As Project Engineer, Mr. Kenner had responsibility for products
ranging from advanced hand-held instrumentation to devices which digitize,
compress, and transmit both moving and still images over public and proprietary
communications networks. Mr. Kenner obtained a B.S. in electrical engineering
from the University of California, San Diego.
Kenneth L. Ruggiero joined INTERVU in February 1998 and serves as Vice
President and Chief Financial Officer. From April 1996 to February 1998, Mr.
Ruggiero was employed by NBC. From December 1996 to February 1998, he was the
Chief Financial Officer of NBC Interactive Media, NBC's Internet division. In
this capacity he performed and managed financial reporting, implemented various
policies and procedures and structured and negotiated business development
activities. From April 1996 to December 1996, Mr. Ruggiero was a Manager in
NBC's Business Development and International Finance division. From September
1989 to April 1996, he was employed by Arthur Andersen, an independent public
accounting firm, where he held a number of positions, including most recently
Manager of Corporate Consulting. Mr. Ruggiero is a Certified Public Accountant.
He received an M.B.A. from Columbia University Graduate School of Business and a
B.A. in accounting from the University of Massachusetts, Amherst.
Edward L. Huguez joined INTERVU in May 1998 and serves as Vice
President and Chief Operating Officer. From October 1992 to May 1998, Mr. Huguez
was employed by DIRECTV, a direct broadcast satellite entertainment company. Mr.
Huguez held a number of different positions at DIRECTV, most recently Vice
President, New Media and Interactive Programming and Platforms. In this
capacity, Mr. Huguez was responsible for the business unit that managed
DIRECTV's new media and interactive business. From March 1987 to September 1992,
Mr. Huguez was employed by ESPN, Inc., most recently as Director, Affiliate
Sales and Marketing, Western Division. He received an M.B.A. from the John E.
Anderson Graduate School of Management at UCLA and a B.A. in political science
from Arizona State University.
KEY EMPLOYEES
Stephen H. Klein joined INTERVU in May 1996 as Director of Business
Development and Sales and has served as Vice President of Business Development,
Networks since March 1997. From 1994 to 1996, he served as New Business
Development Manager for General Instrument Corporation where he was one of the
originating founders of the SURFboard Program, General Instrument's Internet
cable modem technology and product line. From 1988 to 1992, Mr. Klein held
various product management and technical management positions at General
6
<PAGE> 8
Instrument's VideoCipher Division. Mr. Klein obtained an M.B.A. from San Diego
State University and a B.S. in engineering from Ohio State University.
Larry Behmer joined INTERVU in November 1998 as Vice President of
Engineering. Prior to joining INTERVU, Mr. Behmer was employed with U.S. West
from July 1987 to November 1998, including most recently as Executive Director
of Engineering. From May 1970 to July 1987, Mr. Behmer held various positions at
Bell Labs and Northern Telecom. Mr. Behmer earned a M.S. in computer science
from Northwestern University and a B.S. in computer science from University of
Dayton.
Charles Bragg joined INTERVU in September 1998 and serves as Vice
President and General Sales Manager. From June 1996 to September 1998, Mr. Bragg
held a number of management positions at Cybergold, an online marketing and
incentives company, including most recently Vice President of Sales. While at
Cybergold, Mr. Bragg was responsible for managing new business development and
advertising sales. Mr. Bragg's previous management experience includes
developing advertising sales operations for both cable television and Internet
Web site marketing venues. From 1985 to 1996, Mr. Bragg held various senior
management positions at Bigbook, Katz Media Corporation and Cable Adnet. He
received a B.A. in psychology from the University of North Carolina.
Stephen Condon joined INTERVU in September 1998 as Vice President of
Marketing from DIRECTV, where he most recently held the position of Senior
Marketing Director. While at DIRECTV, from January 1996 to August 1998, he was
responsible for national promotions, launching subscriber marketing programs,
developing partnership programs and customer communications. From February 1983
to January 1996, Mr. Condon also held various positions with Campbell-Ewald
Advertising, Chiat/Day, and J. Walter Thompson Pty. Ltd. Mr. Condon earned an
undergraduate degree from Kuring-gai College of Advanced Education, Sydney,
Australia.
Scott Crowder joined INTERVU in June 1998 as Vice President of
Operations. From July 1985 through May 1998, Mr. Crowder held a number of
positions at Sprint Long Distance, including most recently Director-Advanced
Product Support. Mr. Crowder has more than 16 years of industry and experience
and held various management roles at Sprint in the areas of switch data
services, ISDN, video conferencing, and drums multimedia collaboration
solutions.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for the
years ended December 31, 1997 and 1998 received by (1) the Chief Executive
Officer, (2) the Company's three most highly compensated executive officers
other than the Chief Executive Officer who were serving as executive officers at
the end of the 1998 fiscal year and (3) one additional individual, Mr.
Augustine, who would have been named but for the fact that he was not serving as
an executive officer at the end of the 1998 fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
FOR FISCAL YEAR 1998
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------------------ ----------------------------
OTHER NUMBER OF
ANNUAL RESTRICTED SECURITIES
NAME AND FISCAL COMPEN- STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARDS ($)(2) OPTIONS(#)
- ------------------ ------- --------- -------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harry E. Gruber
Chairman and Chief Executive Officer.... 1998 $180,003 $ 10,000 $ -- $ -- $ 40,000
1997 179,632 -- -- --
</TABLE>
7
<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Kenneth L. Ruggiero(3)
Chief Financial Officer .................... 1998 120,182 10,000 33,156 -- 100,000
Edward L. Huguez(4)
Chief Operating Officer .................... 1998 128,062 -- 65,711 -- 200,000
Stephen H. Klein
Vice President, Business Development........ 1998 100,970 10,000 -- -- 10,000
1997 89,875 -- -- 2,519
Douglas A. Augustine(5)
Former Vice President, Sales and Marketing.. 1998 121,411 5,000 -- -- 5,000
1997 112,052 -- -- 31,490
</TABLE>
- -----------------------
(1) Consists of moving expenses and relocation allowances.
(2) Dollar values of restricted stock awards are based on the market price
at the time of grant. With respect to each Named Executive Officer's
restricted stock holdings, the number of shares of Common Stock and the
dollar value thereof at December 31, 1998 are as follows: 1,007,680 and
$12,847,033 for Dr. Gruber; 62,980 and $800,476 for Mr. Augustine; and
62,980 and $801,080 for Mr. Klein. The value of restricted stock
holdings is based on the fair market value of the Common Stock on
December 31, 1998 ($12.75) less the purchase price paid by the
executive for such shares. Restricted stock awards vest daily over a
five-year period (with the first 20% of the award vesting on the first
anniversary of the date of grant).
(3) Mr. Ruggiero has been the Company's Chief Financial Officer since
February 1998. Mr. Ruggiero's annualized salary for 1998 was $140,000.
(4) Mr. Huguez has been Chief Operating Officer of the Company since May
1998. Mr. Huguez's annualized salary for 1998 was $200,000.
(5) Mr. Augustine resigned from the Company on November 20, 1998. Mr.
Augustine's annualized salary for 1998 was $136,800.
OPTION GRANTS DURING FISCAL YEAR 1998
The following table sets forth information regarding options to purchase
Common Stock granted during the year ended December 31, 1998 to each of the
Named Executive Officers. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE PER EXPIRATION ----------------------------
Name GRANTED(#) FISCAL YEAR(%) SHARE($/SH) DATE 5% 10%
---- ----------- -------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harry E. Gruber ........ 40,000 2.88% $ 15.31 6/22/08 $ 385,210 $ 976,199
Kenneth L. Ruggiero..... 100,000 7.20 $ 8.38 2/17/08 $ 526,699 $1,334,759
Edward L. Huguez ....... 200,000 14.40 $ 18.56 5/13/08 $2,334,671 $5,916,668
Stephen H. Klein ....... 10,000 0.72 $ 14.125 4/14/08 $ 88,831 $ 225,116
Douglas A. Augustine.... 5,000 0.36 $ 14.125 4/14/08 $ 44,415 $ 112,558
</TABLE>
- -------------------
(1) The potential realizable values are based on an assumption that the
stock price of the Company's Common Stock will appreciate at the annual
rate shown (compounded annually) from the date of grant until the end
of the option term. These values do not take into account amounts
required to be paid as income taxes
8
<PAGE> 10
under the Internal Revenue Code and any applicable state laws or option
provisions providing for termination of an option following termination
of employment, non-transferability or vesting. These amounts are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth of the shares of the Company's Common Stock.
OPTIONS EXERCISED DURING FISCAL YEAR 1998
The following table sets forth information regarding the exercise of
options to purchase Common Stock during the year ended December 31, 1998, and
the unexercised options held and the value thereof at that date, for each of the
Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
SHARES FISCAL YEAR AT FISCAL YEAR END
ACQUIRED END(#) ($)(1)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------------
<S> <C> <C> <C> <C>
Harry E. Gruber .............. -- -- 0/40,000 $0/$0
Kenneth L. Ruggiero .......... -- -- 0/100,000 $0/$437,500
Edward L. Huguez ............. -- -- 0/200,000 $0/$0
Stephen H. Klein ............. -- -- 756/11,763 $6,038/$14,081
Douglas A. Augustine ......... 10,847 $146,843 0/0 $0/$0
</TABLE>
---------------------
(1) Based on the closing sale price of the Common Stock on December 31,
1998 ($12.75), as reported by the Nasdaq National Market, less the
option exercise price.
1996 STOCK PLAN
The Company adopted the 1996 Stock Plan in December 1996 to enable
directors, officers, key employees and consultants of the Company to acquire an
equity stake in the Company to create an increased interest in and a greater
concern for the welfare of the Company. The 1996 Stock Plan initially provided
for aggregate option grants of up to 1,889,400 shares. As of April 30, 1999,
options to purchase an aggregate of 969,157 shares of Common Stock at prices
ranging from $.04 to $19.25 were outstanding under the 1996 Stock Plan. When the
Company's stockholders approved the 1998 Stock Option Plan in June 1998, the
Company ceased to reserve the balance of the shares initially reserved for
issuance under the 1996 Stock Plan. No further shares are available for issuance
under the 1996 Stock Plan.
1998 STOCK OPTION PLAN
The 1998 Stock Option Plan provides additional incentives to selected key
employees, Independent Directors and consultants of the Company. The Board
adopted the 1998 Stock Option Plan in February 1998 and the Company's
stockholders approved the adoption of the 1998 Stock Option Plan in June 1998.
Approximately 120 directors, officers, key employees and consultants are
currently eligible to participate in the 1998 Stock Option Plan. The Company
initially reserved 2,000,000 shares of Common Stock for issuance upon exercise
of options granted under the 1998 Stock Option Plan. As of April 30, 1999,
options to purchase an aggregate of 1,267,025 shares of Common Stock at prices
ranging from $5.25 to $71.00 were outstanding under the 1998 Stock Option Plan.
Nonqualified stock options and incentive stock options may be granted under the
1998 Stock Option Plan.
9
<PAGE> 11
The 1998 Stock Option Plan is administered by the Compensation Committee.
However, the Board will make most decisions regarding Independent Directors
under the 1998 Stock Option Plan. The Compensation Committee (or the Board in
the case of Independent Directors) is authorized to select from among the
eligible employees, directors and consultants the individuals to whom options
are to be granted and to determine the number of shares to be subject thereto
and the terms and conditions thereof, consistent with the 1998 Stock Option
Plan. The Compensation Committee also is authorized to adopt, amend and rescind
rules relating to the administration of the 1998 Stock Option Plan. The 1998
Stock Option Plan provides for formula grants of nonqualified stock options to
Independent Directors. Each Independent Director serving as a member of the
Board and who has been reelected to serve for an additional term, if applicable,
will be granted an option to purchase 5,000 shares of Common Stock on the date
of each annual meeting of stockholders. In addition, each person initially
elected to the Board will be granted an option to purchase 20,000 shares of
Common Stock on the date of the election.
Nonqualified stock options granted under the 1998 Stock Option Plan will
provide for the right to purchase Common Stock at a specified price, which may
not be less than 85% of the fair market value of the Common Stock on the date of
grant and usually will become exercisable (in the discretion of the Compensation
Committee or the Board in the case of Independent Directors) in one or more
installments after the date of grant. Incentive stock options, if granted, will
be designed to comply with, and will be subject to restrictions contained in,
the Internal Revenue Code, including exercise prices equal to at least 100% of
fair market value of Common Stock on the date of grant, but may be subsequently
modified to disqualify them from treatment as incentive stock options. Incentive
stock options may be granted only to employees. No option granted under the 1998
Stock Option Plan may have a term of greater than ten years from the date of
grant.
The period during which the right to exercise an option vests in the
optionee shall be set by the Compensation Committee. However, unless the
Compensation Committee states otherwise no option will be exercisable by an
optionee subject to Section 16 of the Securities Exchange Act of 1934 within the
period ending six months and one day after the date the option is granted. In
addition, options granted to Independent Directors will become exercisable in
annual installments of 25% on each of the first, second, third, and fourth
anniversaries of the date of grant.
QUALIFIED STOCK PURCHASE PLAN
On February 25, 1998, the Board adopted the Qualified Stock Purchase Plan.
The Company's stockholders approved the adoption of the Qualified Stock Purchase
Plan in June 1998. The Qualified Stock Purchase Plan, and the rights of
participants to make purchases thereunder, is intended to qualify under the
provisions of Sections 421 and 423 of the Internal Revenue Code. The purpose of
the Qualified Stock Purchase Plan is to provide an incentive for employees of
the Company to acquire an interest in the Company through the purchase of Common
Stock, thereby more closely aligning the interests of the employees and the
stockholders. The Qualified Stock Purchase Plan provides that an aggregate of
500,000 shares of the Common Stock may be issued thereunder. As of April 30,
1999, an aggregate of 5,146 shares of Common Stock had been issued under the
Qualified Stock Purchase Plan. The Compensation Committee administers the
Qualified Stock Purchase Plan.
The Qualified Stock Purchase Plan is implemented through a series of
24-month offering periods, with a new offering period commencing on each
February 1 and August 1 during the term of the Qualified Stock Purchase Plan.
The first offering period (a 23-month period) commenced on September 1, 1998.
The purchase price of the shares under the Qualified Stock Purchase Plan is
funded through payroll deductions during an offering period. Currently, the
payroll deductions may be any whole percentage amount between 1% and 15% of a
participant's base salary, wages and commissions, but excluding bonuses and
overtime pay, on each payroll date during the offering period. A participant may
discontinue his or her participation in the Qualified Stock Purchase Plan at any
time during the offering period. In addition, a participant may, no more than
once during each offering period, reduce or increase the rate of payroll
deductions.
Subject to certain limitations contained in the Qualified Stock Purchase
Plan, on the first day of each offering period, each participant is granted an
option to purchase, on each exercise date during the offering period, a
10
<PAGE> 12
number of shares of Common Stock determined by dividing the participant's
contributions to the Qualified Stock Purchase Plan by the applicable exercise
price. Unless a participant withdraws from the Qualified Stock Purchase Plan,
the participant's option to purchase shares will be exercised automatically on
each exercise date of the offering period to purchase the maximum number of full
shares that may be purchased at the exercise price with the accumulated payroll
deductions in the participant's account. The last day of each six-month period
during each offering period under the Qualified Stock Purchase Plan (i.e., each
July 31, and January 31) will be an exercise date under the Qualified Stock
Purchase Plan.
Initially, the exercise price per share at which shares will be sold under
the Qualified Stock Purchase Plan will be equal to the lower of 85% of the fair
market value of the Common Stock on the date of commencement of an offering
period or 85% of the fair market value of the Common Stock on each exercise date
of the option. The Compensation Committee may change the percentage rate from
85%; however, it may never be less than 85%. The fair market value of a share of
Common Stock on a given date will be the closing price of the Common Stock on
the Nasdaq Stock Market on such date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, the Compensation Committee was comprised of J.
William Grimes, Alan Z. Senter and Isaac Willis. No interlocking relationship
exists between any member of the Compensation Committee and any member of any
other company's board of directors or compensation committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of independent outside directors of
the Board. The Committee reviews and approves each of the elements of the
executive compensation program of the Company and continually assesses the
effectiveness and competitiveness of the program. In addition, the Committee
administers the stock option program and other key provisions of the executive
compensation program and reviews with the Board all aspects of compensation for
the Company's executives. Set forth below in full is the Report of the
Compensation Committee regarding compensation paid by the Company to its
executive officers during 1998:
COMPENSATION PHILOSOPHY
The goals of the Company's executive compensation program are to reward the
achievement of the Company's strategic goals and the creation of stockholder
value. The Company positions base salaries slightly below competitive levels.
However, the annual cash or stock bonus compensation is positioned to reward
above competitive levels for exceptional performance relative to the Company's
peers. The Company also believes in providing rewards for the creation of
stockholder value through the use of stock options. The Company and the
Committee believe this philosophy will motivate the executives and, thereby,
reinforce the accomplishments of the Company's strategic and financial goals.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
Base Salaries. The Company's salary levels for executive officers generally
are set at a rate slightly below the median level of other high technology
companies at a comparable stage of development, considering the experience,
achievements and contributions of the employees. Salary increases are designed
to reflect competitive practices in the industry, financial performance of the
Company and individual performance of the executive.
Annual Incentive Plan. The Company has not established an annual incentive
plan.
Long-Term Incentives. The objectives of the Company's long-term incentive
program are to offer opportunities for stock ownership that are competitive with
those at the peer companies and to encourage and create ownership and retention
of the Company's stock by key employees. Grant levels under the Company's
employee stock option plans are made in consideration of awards to officers
within peer companies and an assessment of the executive's tenure,
responsibilities and current stock and option holdings.
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<PAGE> 13
CEO COMPENSATION
Dr. Gruber's salary was established in July 1996, prior to formation of the
Committee. Dr. Gruber's salary has been reviewed by the Committee and the
Committee has not adjusted Dr. Gruber's salary. Mr. Gruber received bonus
compensation in 1998 based on corporate performance goals achieved by the
Company during 1998. Dr. Gruber's compensation, including salary and bonus, is
at a level slightly below CEO salaries at comparable companies.
SECTION 162(m) COMPLIANCE
The Company does not presently anticipate any of the Named Executive
Officers to exceed the million-dollar non-performance based compensation
threshold of Section 162(m) of the Internal Revenue Code. The Company and the
Committee will continue to monitor the compensation levels of the Named
Executive Officers and determine the appropriate response to Section 162(m) when
and if necessary. It is the Company's intent to bring the stock option program
into compliance with Section 162(m), if necessary, to ensure that stock option
grants are excluded from compensation calculation for the purposes of Section
162(m).
The foregoing report has been furnished by the Compensation Committee.
J. William Grimes
Alan Z. Senter
Isaac Willis
May _____, 1999
PERFORMANCE GRAPH
The following chart presents a comparison of the cumulative total return
for the period commencing November 20, 1997 through the fiscal year ended
December 31, 1998 of the Company's Common Stock, the Standard & Poors 500 Index,
the Nasdaq Computer & Data Processing Services Index and a peer group(1). The
Company has elected to use the Nasdaq Computer & Data Processing Services Index
rather than such peer group for a comparison of its cumulative total return. The
Company does not believe that the peer group currently includes those companies
with which a comparison of the Company's cumulative total return would be
meaningful. The Company believes the Nasdaq Computer & Data Processing Services
Index provides a more useful comparison of the Company's performance. The
following graph assumes an initial investment of $100 at November 20, 1997 and
reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ
(FISCAL YEAR COVERED) INTERVU S&P 500 COMP & D/P PEER GROUP
--------------------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
11/20/97 100.00 100.00 100.00 100.00
12/31/97 85.53 101.39 93.66 98.17
12/31/98 134.21 130.59 167.61 275.08
</TABLE>
- -------------------
(1) The Company's former peer group is comprised of the following issuers:
Amazon.com, Inc., At Home Corp., Broadvision, Inc., Concentric Network
Corporation, Cylinx Corp., EarthLink Network, Inc., Infoseek
Corporation, Lycos, Inc., Communications Network Solutions, Open Text
Corporation, Pairgain Technologies, Inc., RealNetworks, Inc., Spyglass,
Inc., VocalTec Communications Ltd. and Wavephore, Inc. The returns of
each component issuer of the group were weighted according to the
respective issuers' market capitalizations as of November 20, 1997.
12
<PAGE> 14
CERTAIN TRANSACTIONS
In connection with entering into a strategic alliance with NBC Multimedia,
Inc. in October 1997, INTERVU issued 1,280,000 shares of its Series G Preferred
Stock to NBC. INTERVU charged $3.4 million to expense in January 1998,
representing the fair value of 680,000 shares of Series G Preferred Stock at the
time NBC's obligation to return those shares lapsed. In addition, in connection
with the strategic alliance agreement, INTERVU became obligated to make $2.0
million in non-refundable payments to NBC Multimedia for certain production,
operating and advertising costs associated with some of NBC's Web sites. These
payments include (1) $750,000 paid on the completion of the initial public
offering in November 1997, (2) $500,000 paid in April 1998, (3) $500,000 due in
May 1998 and (4) $250,000 due in August 1998. Through December 31, 1998, INTERVU
has made a total of $1.25 million in payments to NBC Multimedia and $750,000 is
currently payable.
PROPOSAL 2
AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO AUTHORIZE ADDITIONAL SHARES OF COMMON STOCK
PROPOSED AMENDMENT
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate"), as currently in effect, provides that the Company is authorized
to issue 20,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock. In May 1999, the Board authorized an amendment (the "Amendment") to the
Certificate to increase the authorized number of shares of Common Stock to
50,000,000 shares. The Amendment will make no change in the number of authorized
shares of Preferred Stock.
If adopted, the Amendment would cause the first paragraph of Article Fourth
of the Company's Amended and Restated Articles of Incorporation to read as
follows:
"FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue shall be fifty-five million (55,000,000),
divided as follows: (i) fifty million (50,000,000) shares of Common
Stock with a par value of $.001 per share and (ii) five million
(5,000,000) shares of Preferred Stock with a par value of $.001 per
share, of which one million two hundred eighty thousand (1,280,000) are
hereby designated Series G Convertible Preferred Stock ("Series G
Preferred Stock")."
As of April 30, 1999, the Company had 10,956,365 shares of Common Stock
issued and outstanding, 1,280,000 shares of Series G Preferred Stock issued and
outstanding, 2,964,157 shares of Common Stock reserved for issuance upon
exercise of various stock options, 494,854 shares of Common Stock reserved for
issuance under the Qualified Stock Purchase Plan and 149,000 shares of Common
Stock reserved for issuance upon exercise of various warrants.
PURPOSE AND EFFECT OF AMENDMENT
The principal purposes of the Amendment, among others, are to authorize
additional shares of Common Stock that will be available in the event that the
Board determines to raise additional capital through the sale of securities, to
acquire another company or its business or assets or to establish a strategic
relationship with a corporate partner. If the Amendment is adopted, 30,000,000
additional shares of Common Stock will be available for issuance by the Board
without any further stockholder approval, although certain large issuances of
shares may require stockholder approval in accordance with the requirements of
the Nasdaq National Market. The Board
13
<PAGE> 15
believes that it is desirable for the Company to have the flexibility to issue
the additional shares without further stockholder approval. The Company has no
current plans or proposals to issue any portion of the additional shares to be
authorized under this proposal.
The additional shares could be issued at such times and under such
circumstances as to have a dilutive effect on earnings per share and on the
equity ownership of the present holders of Common Stock. The holders of Common
Stock have no preemptive rights to purchase any stock of the Company. In
addition, the Board's ability to issue additional shares of stock could enhance
the Board's ability to negotiate on behalf of the stockholders in a takeover
situation. Although it is not the purpose of the Amendment, the authorized but
unissued shares of Common Stock (as well as the authorized but unissued shares
of Preferred Stock) also could be used by the Board to discourage, delay or make
more difficult a change in the control of the Company. For example, such shares
could be privately placed with purchasers who might align themselves with the
Board in opposing a hostile takeover bid. The issuance of additional shares
could serve to dilute the stock ownership of persons seeking to obtain control
and thereby increase the cost of acquiring a given percentage of the outstanding
stock. The Company has previously adopted certain measures that may have the
effect of delaying or preventing an unsolicited takeover attempt, including
provisions of the Certificate authorizing the Board to issue Preferred Stock
with terms, provisions and rights fixed by the Board and a classified Board in
which the Board is divided into three classes. The Board is not aware of any
pending or proposed effort to acquire control of the Company.
VOTE REQUIRED
The approval of the Amendment requires the affirmative vote of a majority
of the outstanding shares of Common Stock. An abstention or non-vote is not an
affirmative vote and, therefore, will have the same effect as a vote against the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT
TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of April 30, 1999 by (i) each of the Company's
directors, (ii) each of the Company's Named Executive Officers (as defined
herein), (iii) each person who is known by the Company to own beneficially more
than 5% of the Common Stock and (iv) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
------------------- --------------------- ------------------
<S> <C> <C>
Harry E. Gruber(3) ............................ 1,043,605 9.5%
Brian Kenner(4) ............................... 1,049,905 9.6
Isaac Willis(5) ............................... 1,257,707 11.5
Stephen H. Klein(6) ........................... 67,576 *
Edward L. Huguez(7) ........................... 45,147 *
Edward E. David, Jr.(8) ....................... 28,947 *
Kenneth L. Ruggiero(9) ........................ 27,417 *
J. William Grimes(10) ......................... 18,919 *
Mark Dowley(11) ............................... 16,532 *
Alan Z. Senter(12) ............................ 12,545 *
All directors and executive officers as a group
(10 persons)(13) ............................ 3,568,300 32.1
Douglas A. Augustine(14) ...................... -- *
National Broadcasting Company, Inc.(15) ....... 1,016,670 8.6
Westchester Group LLC(16) ..................... 800,000 7.3
</TABLE>
14
<PAGE> 16
- ----------
* Less than 1%.
(1) Except as indicated, the address of each person named in the table is
c/o INTERVU Inc., 6815 Flanders Drive, San Diego, California 92121.
(2) Beneficial ownership includes shares of outstanding Common Stock and
shares of Common Stock that any person has the right to acquire within
60 days after the date of this table. Except as indicated in the
footnotes to this table and pursuant to applicable community property
laws, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by
them.
(3) Includes 309,542 shares subject to INTERVU's repurchase right under an
amended and restated vesting agreement, 1,035,452 shares held in a
family trust and 8,153 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(4) Includes 309,542 shares subject to INTERVU's repurchase right under an
amended and restated vesting agreement and 8,153 shares issuable upon
exercise of options that are currently exercisable or that will become
exercisable within 60 days after the date of this table.
(5) Includes 1,036,938 shares owned by the Willis Family Trust, of which Dr.
Willis is settlor. Includes 6,829 shares subject to INTERVU's repurchase
right under a restricted stock agreement and 19,689 shares issuable upon
exercise of options that are currently exercisable or that will become
exercisable within 60 days after the date of this table. Includes 17,994
shares held in an Individual Retirement Account.
(6) Includes 26,514 shares subject to INTERVU's repurchase right under a
restricted stock agreement and 3,420 shares issuable upon exercise of
options that are currently exercisable or that will become exercisable
within 60 days after the date of this table.
(7) Consists of 45,147 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(8) Includes 6,760 shares subject to INTERVU's repurchase right under a
restricted stock agreement and 3,758 shares issuable upon exercise of
options that are currently exercisable or that will become exercisable
within 60 days after the date of this table.
(9) Includes 27,227 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(10) Consists of 18,919 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(11) Consists of 16,532 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(12) Consists of 12,545 shares issuable upon exercise of options that are
currently exercisable or that will become exercisable within 60 days
after the date of this table.
(13) See Notes (3) - (12) regarding beneficial ownership of INTERVU's
executive officers and directors.
(14) Mr. Augustine resigned as INTERVU's Vice President, Marketing and Sales
on November 20, 1998.
(15) Includes shares of Series G Preferred Stock owned by NBC that are
convertible into Common Stock at the option of the holder and 210,526
shares of Common Stock owned by NBC Multimedia. The holder of each share
of Series G Preferred Stock has the right to vote on an as-converted
basis with the Common Stock. As the ultimate parent of NBC, General
Electric Company may be deemed to be the beneficial owner of all these
shares. The address for NBC is 30 Rockefeller Plaza, New York, New York
10112.
(16) The membership interests of Westchester Group LLC are owned by Marcia
Berman individually, with respect to 99.4% of the interests, and as
custodian for her minor children under the New York Uniform Gifts to
Minors Act, with respect to 0.6% of the interests. The address for
Westchester Group LLC is c/o Duckor Spradling & Metzger, 401 West A
Street, Suite 2400, San Diego, CA 92101.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company's financial statements for the 1998 fiscal year have been
examined by Ernst & Young. The Board has selected Ernst & Young LLP to serve as
the Company's independent accountants for the 1999 fiscal year. Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting and will
have the opportunity to make a statement and to respond to appropriate
questions.
15
<PAGE> 17
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under Section 16(a) of the Exchange Act, directors, officers and beneficial
owners of ten percent or more of the Company's Common Stock ("Reporting
Persons") are required to report to the Securities and Exchange Commission on a
timely basis the initiation of their status as a Reporting Person and any
changes regarding their beneficial ownership of the Company's Common Stock.
Based solely on its review of such forms received by it and the written
representations of its Reporting Persons, the Company has determined that no
Reporting Persons known to it were delinquent with respect to his or her
reporting obligations as set forth in Section 16(a) of the Exchange Act, except
for Forms 4 required to be filed in July 1998 by Messrs. Gruber, Kenner and
Willis with respect to shares of Common Stock purchased in June 1998 in
connection with a public offering by the Company. These purchases were each
reported on Forms 5, filed on February 11, 1999. In addition, Mr. Willis did not
file a Form 4 required to be filed in September 1998 with respect to shares of
Common Stock purchased in August 1998. This purchase was reported on Form 5,
filed on February 11, 1999.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's Annual
Meeting of Stockholders to be held in 2000 must be received by the Company no
later than _____, 2000, in order to be included in the Company's proxy statement
and form of proxy relating to that meeting. These proposals must comply with the
requirements as to form and substance established by the Securities and Exchange
Commission for such proposals in order to be included in the proxy statement. A
stockholder who wishes to make a proposal at the 2000 Annual Meeting without
including the proposal in the Company's proxy statement and form of proxy
relating to that meeting must notify the Company by _____, 2000. If the
stockholder fails to give notice by this date, then the persons named as proxies
in the proxies solicited by the Board for the 2000 Annual Meeting may exercise
discretionary voting power regarding any such proposal.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1998 will be mailed to stockholders of record on or about _____, 1999. The
Annual Report does not constitute, and should not be considered, a part of this
Proxy solicitation material.
If any person who was a beneficial owner of Common Stock of the Company on
the record date for the Annual Meeting of Stockholders desires additional
information, a copy of the Company's Annual Report on Form 10-K will be
furnished without charge upon receipt of a written request identifying the
person so requesting a report as a stockholder of the Company at such date.
Requests should be directed to INTERVU Inc., 6815 Flanders Drive, San Diego,
California 92121, Attention: Secretary.
16
<PAGE> 18
OTHER BUSINESS
The Board does not know of any matter to be presented at the Annual Meeting
which is not listed on the Notice of Annual Meeting and discussed above. If
other matters should properly come before the meeting, however, the persons
named in the accompanying Proxy will vote all Proxies in accordance with their
best judgment.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
Harry E. Gruber
Chairman of the Board and
Chief Executive Officer
Dated: May _____, 1999
17
<PAGE> 19
[FRONT OF PROXY CARD]
The undersigned stockholder(s) of InterVU Inc. (the "Company") hereby
constitutes and appoints Harry E. Gruber and Kenneth L. Ruggiero, and each of
them, attorneys and proxies of the undersigned, each with power of substitution,
to attend, vote and act for the undersigned at the Annual Meeting of
Stockholders of the Company to be held on July 27, 1999, and at any adjournment
or postponement thereof, according to the number of shares of Common Stock or
Series G Convertible Preferred Stock of the Company which the undersigned may be
entitled to vote, and with all powers which the undersigned would possess if
personally present, as follows:
1. To elect two directors for a three year term to expire at the 2002 Annual
Meeting of Stockholders:
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees
(except as marked to listed below
the contrary below)
Edward E. David, Jr.
Alan Z. Senter
(INSTRUCTION: To vote for all nominees listed above, mark the "FOR" box; to
withhold authority for all nominees listed above, mark the "WITHHOLD AUTHORITY"
box; and to withhold authority to vote for any individual nominee listed above,
mark the "FOR" box and write the nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTOR OF ALL NOMINEES SET
FORTH IN THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, UNLESS THE CONTRARY
IS INDICATED IN THE APPROPRIATE PLACE.
2. To approve the Amendment to the Amended and Restated Certificate of
Incorporation of the Company as described in the accompanying Proxy Statement.
FOR ______ AGAINST ______ ABSTAIN ______
THIS PROXY WILL BE VOTED FOR THE APPROVAL OF THE AMENDMENT TO THE AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION AS DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT, UNLESS THE CONTRARY IS INDICATED IN THE APPROPRIATE PLACE.
(Continued on reverse side)
<PAGE> 20
[REVERSE OF PROXY CARD]
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The undersigned revokes any prior proxy at such meeting and ratifies all
that said attorneys and proxies, or any of them, may lawfully do by virtue
hereof. Receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement is hereby acknowledged.
Dated: __________,1999
----------------- -------------------------
------------------------- ------------------
-------------------------------- -----------
(Signature(s) of stockholders) Please sign
exactly as name appears herein. When shares
are held by joint tenants, both should
sign; when signing as an attorney,
executor, administrator, trustee or
guardian, give full title as such. If a
corporation, sign in full corporate name by
President or other authorized officer. If a
partnership, sign in partnership name by
authorized partner.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERVU INC.
PLEASE COMPLETE, SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED.
