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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TELVUE CORPORATION
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(Name of Registrant as Specified in Its Charter)
IRENE A. DeAWAAN
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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*Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(609) 273-8888
-----------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M.,
September 21, 1995
-----------------------------------
TO THE STOCKHOLDERS OF TELVUE CORPORATION:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Stockholders of
TelVue Corporation, a Delaware corporation (the "Company"), will be held at the
TelVue Corporation located at 16000 Horizon Way, Suite 500, Mt. Laurel, New
Jersey on September 21, 1995 at 10:00 A.M. for consideration of and action upon
the following matters:
1. Election of six (6) directors to hold office for the ensuing year and
until their successors have been duly elected and qualified; and
2. A proposed amendment of Article Fourth of the Company's Certificate of
Incorporation to increase the total number of authorized shares of the Company's
Common Stock, par value $.01 share, from the present total of 80,000,000 shares
to 100,000,000 shares.
3. A proposed amendment of Article Fourth of the Company's Certificate of
Incorporation to increase the total number of authorized shares of the Company's
Class A Cumulative ($.06 semi-annual dividend), Convertible, Redeemable,
Payment-In-Kind, Non-Voting, Preferred Stock, par value $1.00 per share (the
"Preferred Stock") from the present total of 3,000,000 shares to 6,900,000
shares.
4. Such other matters as may properly come before the Annual Meeting.
The Board of Directors has fixed the close of business on August 21, 1995,
as the record date for determination of holders of Common Stock of the Company
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. A list of stockholders and their stockholdings as of such record date
will be available to all stockholders at the time and place of this meeting.
THE ACCOMPANYING FORM OF PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
THE COMPANY.
STOCKHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES AND WHETHER THEY EXPECT
TO ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE, SIGN, DATE AND
RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES. A PROXY MAY BE REVOKED AT ANY TIME
PRIOR TO ITS EXERCISE (a) BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING,
(b) BY DELIVERING A DULY EXECUTED PROXY BEARING A LATER DATE, OR (c) BY
ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS:
Irene A. DeZwaan, Secretary
August 22, 1995
<PAGE>
TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(609) 273-8888
DATED AUGUST 22, 1995
PROXY STATEMENT
This Proxy Statement is furnished with the attached Notice of Annual
Meeting with accompanying proxy on or about August 22, 1995, to each stockholder
of record of TelVue Corporation (the "Company") on August 21, 1995 ("Record
Date"), in connection with the solicitation of proxies by the Board of Directors
to be voted at the Annual Meeting of Stockholders of the Company to be held on
September 21, 1995 at 10:00 A.M. at TelVue Corporation, 16000 Horizon Way, Suite
500, Mt. Laurel, New Jersey 08054, and at any adjournment or adjournments
thereof for the purposes stated below. The form of Proxy is enclosed.
REVOCABILITY OF PROXY
Subject to the conditions set forth elsewhere in this Proxy Statement, the
shares represented by each executed Proxy will be voted at the Annual Meeting in
accordance with the instructions given. If no instruction is given on the Proxy,
the Proxy will be voted FOR the Board's nominees for director, FOR adoption of
proposals two, and three and at the discretion of the proxies, on any other
matter properly presented for a vote at the meeting.
Any Proxy given pursuant to this solicitation may be revoked at any time
prior to its exercise by notifying the Secretary of the Company in writing, by
delivering a duly executed Proxy bearing a later date, or by attending the
Annual Meeting and voting in person.
DISSENTER'S RIGHT OF APPRAISAL
The matters submitted to the stockholders for their approval will not give
rise to dissenter's appraisal rights under Delaware law.
PERSONS MAKING THE SOLICITATION
The accompanying Proxy is being solicited on behalf of the Board of
Directors of the Company. In addition to mailing the proxy materials,
solicitation may be made in person or by telephone or telegraph by directors,
officers or regular employees of the Company, none of whom will receive any
additional compensation in connection with such solicitation. The expense of the
solicitation of the Proxies for the Annual Meeting will be borne by the Company.
The Company will request banks, brokers and other nominees to forward proxy
materials to beneficial owners of stock held by them and will reimburse such
banks, brokers and other nominees for their reasonable out-of-pocket expenses in
doing so.
INTEREST OF CERTAIN PERSONS IN MATTER TO BE ACTED UPON
Pursuant to a voting agreement between H.F. Lenfest ("Mr. Lenfest"), and a
group consisting of Science Dynamics Corporation ("Science"), Lyndon A. Keele,
Robert W. Humes and Frederick N. Miller (collectively, the "Other Principal
Stockholders"), so long as the Other Principal Stockholders collectively own
stock representing not less than fifteen percent (15%) of the then current
voting power of the Company, Lenfest may designate eighty percent (80%) of the
persons to serve as director and Science may designate the remaining twenty
percent (20%). As of the Record Date, the Other Principal Stockholders own less
than 15% of the outstanding Common Stock, par value $.01 per share (the "Common
Stock"). Mr. Lenfest, therefore, as the beneficial owner of a majority of the
outstanding Common Stock, has the power and right to vote his shares and to
elect 100% of the Board of Directors.
-1-
<PAGE>
In addition, Proposals 2 and 3, below, relate to the proposed increase in
the authorized number of shares of Common Stock and Class A Cumulative ($.06
semi-annual dividend), Convertible, Redeemable, Payment-in-Kind, Non-Voting,
Preferred Stock, par value $1.00 per share (the "Preferred Stock") available for
future issuance by the Company. At present, Mr. Lenfest beneficially owns all of
the issued and outstanding Preferred Stock. The Preferred Stock pays dividends
of $.12 per share per annum payable semi-annually in cash or Preferred Stock at
the Company's election. In addition, as described below, Mr. Lenfest has
previously loaned $500,000 (the "Prior Lenfest Loan") to the Company and agreed
to loan up to $1,500,000 to the Company for the purchase of additional equipment
(the "National Equipment Loan"). Principal of the Prior Lenfest Loan and, if not
paid in cash, accrued interest is convertible into shares of Preferred Stock at
Mr. Lenfest's election, subject to certain restrictions described below. In
addition, the Company may elect to pay interest on the National Equipment Loan
in shares of Preferred Stock, as described below. The Company anticipates that
it will have insufficient cash for the foreseeable future to pay cash dividends
on the outstanding Preferred Stock or cash interest payments on either the Prior
Lenfest Loan or the National Equipment Loan. The Company expects to make such
payments in additional shares of Preferred Stock. As a result, Mr. Lenfest will
receive a portion of the additional shares of Preferred Stock (and have the
right to convert such shares into a portion of the Common Stock) proposed to be
authorized by Proposals 2 and 3.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record as of the close of business on August 21, 1995
(the "Record Date") will be entitled to vote on all matters presented for vote
at the Annual Meeting. At the close of business on the Record Date, the total
number of shares of the Company's Common Stock outstanding was 23,794,500
shares. Each share of Common Stock will be entitled to either one vote per share
or ten votes per share on all business to come before the Annual Meeting, as
described below. In addition, on the Record Date there also were 2,031,877
shares of the Company's Preferred Stock outstanding. The Preferred Stock is
convertible at any time at the election of the holder into Common Stock at 6.667
shares of Common Stock for each share of Preferred Stock. At the Record Date, no
shares of Preferred Stock had been converted into shares of Common Stock.
Article 17(f) of the Certificate of Incorporation provides that any shares
of Common Stock not owned beneficially for two years or not received in the
course of the original spin-off of the Company from Science, cannot be voted at
their full voting power of ten votes per share, unless the Board shall determine
that the same were acquired neither for purposes adverse to the best interests
of stockholders nor for purposes of disrupting the normal course of operations
of the Company. Stockholders wishing to have the holding period waived may make
written application to the Board of Directors by sending their request at any
time prior to the Annual Meeting to the Secretary of the Company at TelVue
Corporation, 16000 Horizon Way, Suite 500, Mt. Laurel, New Jersey, 08054.
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of the Record Date, certain information
with respect to each person who was known to the Company to be a beneficial
owner of more than five percent (5%) of the Company's Common Stock.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class (1)
------------------- -------------------- ------------
H.F. (Gerry) Lenfest................. 59,625,644 (2) 86.6% (2)
202 Shoemaker Road
Pottstown, PA 19464
Chairman of the Board and Director
--------------
(1) As of the Record Date, 23,794,500 shares of Common Stock were outstanding.
(2) Includes 15,153,031 shares of Common Stock issuable upon conversion of
Preferred Stock owned by Mr. Lenfest. Undeclared and unpaid dividends on
the Preferred Stock for the periods ended December 31, 1994, and June 30,
1995, which are convertible into 1,606,507 shares of Common Stock, are
included in the 15,153,031 shares of Common Stock. Includes Warrants to
acquire up to 29,915,160 additional shares of Common Stock. Does not
include principal or accrued but unpaid interest on the subordinated prior
Lenfest Loan which may be converted into shares of Preferred Stock. Also
does not include accrued interest, as of June 30, 1995, on the National
Equipment Loan, which the Company may elect to pay in shares of Preferred
Stock.
-2-
<PAGE>
Security Ownership of Management
The following table sets forth, as of the Record Date, certain information
with respect to the Common Stock beneficially owned by the directors and
executive officers of the Company and by all directors and executive officers as
a group. The address of all directors and executive officers is c/o TelVue
Corporation, 16000 Horizon Way, Suite 500, Mt. Laurel, NJ 08054.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class (1)
------------------- -------------------- ------------
<S> <C> <C>
H.F. (Gerry) Lenfest................................... 59,625,644(2) 86.6%(2)
202 Shoemaker Road
Pottstown, PA 19464
Chairman of the Board and Director
Joseph M. Murphy....................................... 90,000(3) .4%
Executive Vice President Sales and Operations
All Directors and Officers as a Group.................. 59,917,444(2)(3) 86.9%
(8 Persons)
</TABLE>
---------------
(1) As of the Record Date, 23,794,500 shares of Preferred Stock were
outstanding.
(2) Includes 15,153,031 shares of Common Stock issuable upon conversion of
Preferred Stock owned by Mr. Lenfest. Undeclared and unpaid dividends on
the Preferred Stock for the periods ended December 31, 1994, and June 30,
1995, which are convertible into 1,606,507 shares of Common Stock, are
included in the 15,153,031 shares of Common Stock. Includes Warrants to
acquire up to 29,915,160 additional shares of Common Stock. Does not
include principal or accrued but unpaid interest on the subordinated prior
Lenfest Loan which may be converted into shares of Preferred Stock. Also
does not include accrued interest, as of June 30, 1995, on the National
Equipment Loan, which the Company may elect to pay in shares of Preferred
Stock.
(3) Includes 15,000 shares issuable to Joseph M. Murphy upon exercise of
currently exercisable stock options held by Mr. Murphy.
(4) Includes 75,000 shares issuable to James T. Shelley and 3,000 shares
issuable to Randy Gilson upon exercise of currently exercisable incentive
stock options held by such persons. Though designated officers, they do not
have a policy making role with the Company.
-3-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Six (6) directors will be elected to hold office subject to the provisions
of the Company's by-laws until the next Annual Meeting of Stockholders, and
until their respective successors are duly elected and qualified. The vote of a
majority of the stockholders present in person or by proxy, is required to elect
members of the Board of Directors. The following table sets forth the name, age,
position with the Company and respective director service dates of each person
who has been nominated to be a director of the Company:
<TABLE>
<CAPTION>
Position(s)
Name Age With The Company Director Since
---- --- ---------------- --------------
<S> <C> <C> <C>
H. F. (Gerry) Lenfest 65 Chairman and Director 1989
Frank J. Carcione 54 President, Chief Executive 1990
Officer, and Director
Carl J. Cangelosi 52 Director 1990
Robert Lawrence 37 Director 1990
Donald L. Heller 49 Director 1993
Thomas J. Fennell 34 Director -
</TABLE>
Principal Occupation of the Director Nominees
H.F. Lenfest is the President, Chief Executive Officer and a director of Lenfest
Communications, Inc. and each of its subsidiaries (the "Lenfest Group"). The
Lenfest Group of companies are engaged in operating cable television systems,
providing cable advertising and programming and microwave communications. Mr.
Lenfest's principal occupation since 1974 has been the President and CEO of
Lenfest Communications, Inc. and the Lenfest Group of companies.
Frank J. Carcione was elected President and Chief Executive Officer of the
Company in May, 1991, after serving as Executive Vice President, Treasurer and a
Director of the Company since May 1990. From August 1989 to May 1990, he held
the position of Vice President (marketing sales, pay-per-view and franchise
relations) with Garden State Cablevision L.P., a New Jersey cable television
operator. From November 1980 until August 1989, he held the same position with
New York Times Cable TV, the predecessor to Garden State Cablevision L.P.
Carl J. Cangelosi has been the President of MicroNet, Inc., a provider of video,
voice and data communications since October 1990. MicroNet, Inc. is a
wholly-owned subsidiary of Suburban Cable TV Co. Inc., a Pennsylvania cable
television company ("Suburban"). Suburban is a wholly-owned subsidiary of
Lenfest Communications, Inc. Prior to assuming his current position, Mr.
Cangelosi was, from October 1989 to October 1990, a management consultant of
communications services. From September 1976 through September 1989, Mr.
Cangelosi was general counsel of GE American Communications, Inc., a provider of
satellite communications services.
Robert Lawrence is a Vice President and a General Manager of Suburban. Mr.
Lawrence has been a Vice President since March 1992 and has been a General
Manager since 1982.
Donald L. Heller has been a Vice President of Lenfest Communications, Inc. since
March 1993. Prior to assuming his current position, Mr. Heller was, from June
1984 to January 1993, the Vice President and General Manager of Sportschannel
Prism Associates, a regional cable television service which provides movies and
professional sports.
Thomas J. Fennell has been the Vice President of Affiliate Sales and Marketing
for Starnet, Inc., a provider of marketing services to the cable industry, since
October 1994. Starnet, Inc. is a wholly-owned subsidiary of Lenfest
Communications, Inc. Prior to assuming his current position, Mr. Fennell was
Vice President of Affiliate Sales Eastern Region for Black Entertainment
Television/Action pay-per-view from April 1992 to October 1994. From January
1989 through April 1992, Mr. Fennell was Director of Affiliate Sales for Sports
Channel America, a basic cable network.
-4-
<PAGE>
Meetings of the Board of Directors and Committees
The Board of Directors held four (4) meetings during the year ended
December 31, 1994 and acted by unanimous consent on several other occasions
during 1994. The Company has no nominating or compensation committees. The Audit
committee consists of Donald Heller and Carl Cangelosi. The Stock Option Plan
committee consists of Carl Cangelosi, Donald L. Heller and Robert Lawrence. No
meetings of either committee were held during 1994. All directors attended at
least 75% of the Board meetings [except Mr. Lenfest, who attended 50% of Board
Meetings]. Directors do not receive fees for their service as directors.
Executive Compensation
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and --------------------------------
Principal Position Year Salary Commissions
------------------ ---- ------ -----------
<S> <C> <C> <C>
Frank J. Carcione 1994 104,102 ---
Chief Executive Officer 1993 87,203 ---
1992 77,885 ---
James T. Shelley 1994 59,053 15,200
Executive Vice President 1993 76,506 30,096
1992 79,215 20,831
Joseph Murphy 1994 71,523 6,495
Vice President of Sales 1993 65,807 23,486
1992 65,285 39,568
</TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Acquired Value Unexercised Options In-The-Money Options
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Frank J. Carcione --- --- --- ---
Chief Executive --- ---
Officer
James T. Shelley 25,000 $ 5,033(1) 75,000 $ 5,858(1)
--- ---
Joseph M. Murphy 75,000 $11,723(1) 15,000 $ 1,172(1)
--- ---
</TABLE>
---------------
The Directors of the Company receive no compensation.
(1) Values calculated based upon the average of the bid and ask price on the
date of exercise.
-5-
<PAGE>
Certain Relationships and Related Transactions
Until November 2, 1989, the Company funded its expansion and operating
deficit through a line of credit extended by Science. In April 1990, after
receiving the necessary shareholder approvals, Mr. Lenfest and the Company
completed the transactions pursuant to which Mr. Lenfest invested a total of
$2,500,000 in the Company's Common Stock and Preferred Stock and agreed to loan
the Company up to an additional $500,000 (the "prior Lenfest Loan"). In
connection with the closing, the Company repaid Science $500,000 of the amount
outstanding under the line of credit arrangement, together with accrued
interest. By November 1990, the Company had exhausted the proceeds of the stock
sale and loan from Mr. Lenfest. Repayment of the prior Lenfest Loan is
subordinated to the New Science Note (described below).
On November 16, 1990, Lenfest and Science executed a letter agreement (the
"Letter Agreement") providing the Company with financial relief and further
funding. Under the Letter Agreement, the Company's outstanding indebtedness to
Science was restructured in the following manner. The Company's outstanding note
payable to Science in the principal amount of $960,064 (the "Prior Science
Note") was canceled and replaced by a new note in the principal amount of
$541,000 (the "New Science Note"). The Prior Science Note bore interest at the
rate of 12% per annum and was to be repaid in eight installments of $120,008
plus interest commencing on July 11, 1990. The Company did not make any payments
due under the Prior Science Note. The New Science Note did not bear interest and
was due and payable on December 31, 1991. Science had extended the due date to
December 31, 1996. Notwithstanding its due date, the New Science Note was
subordinate in right of repayment to Lenfest's $2,000,000 line of credit to the
Company (described below) and could only be repaid out of the Company's
accumulated cash not needed to fund operating expenses, equipment purchases,
lease obligations and notes payable to other parties. During January 1995, Mr.
Lenfest purchased the New Science Note and 1,660,485 shares of Common Stock
owned by Science.
In order to address the Company's liquidity problems, Mr. Lenfest agreed
under the Letter Agreement to loan up to an additional $2,000,000 on an as
needed basis, provided that he could terminate such lending at any time if, in
his reasonable opinion, there is no reasonable prospect that the Company would
be able to achieve net income on a consistent basis. On December 24, 1991, Mr.
Lenfest agreed to loan the Company up to an additional $750,000, in such amounts
and at such times as Lenfest and the Company were to agree, to fund equipment
purchases by the Company (the "Lenfest Loan"). Interest on all advances under
the $2,000,000 line of credit and the Lenfest Loan is set at the floating prime
rate of PNC Bank, N.A. plus 1%. As of June 30, 1992, the entire Lenfest Loan had
been drawn. As of October 6, 1992, the Company had borrowed the entire
$2,000,000 available under the line of credit. The $2,000,000 line of credit had
a maturity date of May 1, 1993, but has been extended by Lenfest to January 1,
1997. The Lenfest Loan is payable on demand. In addition, Mr. Lenfest had agreed
to consider further funding on an as needed basis, provided that he could
terminate such lending at any time if he determined, in his sole reasonable
opinion, there was no reasonable prospect that the Company would be able to
achieve net income on a consistent basis. Interest on all advances under this
arrangement was set at the floating prime rate of PNC Bank, N.A. plus 1%. As of
the Record Date, Mr. Lenfest had loaned $440,000 under this arrangement. On
March 8, 1994, Mr. Lenfest agreed to loan the Company up to $1,500,000 for the
purchase of additional equipment needed to expand the National POP (the
"National Equipment Loan"). Interest on the National Equipment Loan is set at
the floating prime rate of PNC Bank, N.A. plus 1%. Interest on the National
Equipment Loan is to be paid quarterly. At the option of the Company, the
interest may be paid by the delivery of shares of the Company's Preferred Stock
at the rate of one share of Preferred Stock for each one dollar of accrued
interest. As of June 30, 1995, the Company had borrowed $1,471,272 under the
terms of the National Equipment Loan. The Company has paid accrued interest on
the National Equipment Loan through September 30, 1994, in the amount of $27,377
with 27,377 shares of Preferred Stock. As of June 30, 1995, interest in the
amount of $98,681 had been accrued, but not paid, on the National Equipment
Loan.
On October 12, 1993 the Company entered into a Joint Venture with Voice FX
Corporation ("Voice FX"). The name of the Partnership is "TelVue-Voice FX Joint
Venture" (the "Partnership"), and the Partnership is doing business as "TelVue
FX." The business of the Partnership is to target the cable television
subscriber market for direct response type products, order processing and for
the sale and/or marketing of products and services, including, but not limited
to, coupons, audio-text, information, polling, surveys, fax-back and database
marketing (the "Pay-Per-View Plus Service"). The participation percentage
-6-
<PAGE>
for the Partnership is 70% for the Company and 30% for Voice FX. Under the terms
of the Partnership Agreement, the Company will make loans to the Partnership and
will purchase equipment at its own expense and lease the same to the Partnership
at $1.00 per year for use by the Partnership in the Partnership's business. The
sums loaned to the Partnership by the Company will bear interest at the rate of
2% above the floating prime rate of PNC Bank, N.A. Mr. Lenfest has verbally
agreed to loan to the Company the amounts needed for equipment purchases for use
in the Partnership's business and for loans from the Company to the Partnership
(the "TelVue Partnership Loan"). All advances from Mr. Lenfest are set at the
floating prime rate of PNC Bank, N.A. plus 2%. As of the Record Date, Mr.
Lenfest had loaned the Company $411,173 under the terms of the TelVue
Partnership Loan. On July 28, 1995, the Company and Voice FX agreed to terminate
the Partnership. The Partnership was terminated because the only promotions
which the Partnership was handling were pay-per-view industry promotions and the
Company was able to market and handle these promotions alone. Under the terms of
the Partnership dissolution, the Company must pay to Voice FX 30% of gross
revenues received by the Company for the period June 1, 1995 through December
31, 1995 for premium channel upgrade promotions under contracts which Voice FX
had originally sold. In addition, the Company must pay to Voice FX 10% of gross
revenues received by the Company for the period January 1, 1996 through December
31, 1996 for premium channel upgrade promotions under contracts which Voice FX
had originally sold.
Subsequent to the formation of the Partnership, Mr. Lenfest, with his son
H. Chase Lenfest, acquired the right to acquire beneficial ownership of up to
42% of Voice FX's common stock, and the right to designate two of the five
members of the Board of Directors of Voice FX. During 1994, other than the
Partnership, the Company and Voice FX had no commercial dealings with one
another.
On September 27, 1994, the Company entered into a service agreement with
Video Jukebox Network, Inc. ("VJN"). The Company acts as a 900 call service
bureau to facilitate the ordering, by VJN customers, of music videos on the
cable home dish of the VJN customer. Mr. Lenfest has guaranteed the obligation
of the Company to remit the funds received by the Company on behalf of VJN under
the terms of the service agreement. As of the Record Date, Mr. Lenfest has
loaned the Company $358,267 for equipment purchases required to provide service
to VJN (the "VJN Loan"). Interest on the loan is set at the floating prime rate
of PNC Bank, N.A. plus 1%. Mr. Lenfest is the Chairman of the Board of Directors
of VJN. He also controls a corporation which is a partner in a partnership which
is the principal stockholder of VJN. The Company believes that the terms of the
service agreement with VJN are at market rates. The Company plans to begin
service to VJN cable customers in September 1995.
On March 10, 1995, the Company agreed to provide management services to
Lenfest Networks, Inc. ("LNI"), a company wholly-owned by Mr. Lenfest. LNI owns
and operates a personal advertising television video programming service with
pay-per-call applications, and does business as "INTRONET". The Company has the
authority to perform all services necessary for the management of the business,
other than to acquire or dispose of assets, to incur debt other than in the
ordinary course of business or to encumber the assets of the business. The
Company believes that the financial and other terms of the management agreement
are no less favorable to the Company than similar agreements with unaffiliated
third parties.
Mr. Lenfest's agreement to provide the $2,000,000 line of credit was
conditioned, among other things, upon the Company's issuance of warrants (the
"Warrants") to purchase additional Common Stock at a price of $.01 per share in
an amount sufficient to increase his Common Stock ownership to eighty percent
(80%) without regard to conversion of any of the Preferred Stock he owns. On
March 15, 1991, the stockholders approved issuance of the Warrants to Lenfest as
well as amendments to the Company's Certificate of Incorporation to increase the
amount of authorized Common Stock and Preferred Stock.
-7-
<PAGE>
At the time of the November, 1989 stock sale, the Company entered into a
distributorship agreement with Science which granted TelVue the exclusive right
to use and distribute Science's ANI equipment to non-telephone customers. The
Letter Agreement provided, among other things, for the Company to continue to
have exclusivity under the distribution agreement through 1991 without a minimum
purchase requirement and thereafter as long as the Company purchased $500,000 of
Science equipment each calendar year. During 1992, the Company purchased
equipment from Science in the amount of $378,445. As a result, the Company no
longer possesses the exclusive right to distribute the Science equipment. The
Company believes that the distributorship agreement is not material to its
ability to continue its operations. The Company is currently using Syntellect
Network Systems, Inc. as its primary equipment supplier.
At December 31, 1994, the Company was indebted to Mr. Lenfest in the
principal amount of $5,406,979. (See Management's Discussion and Analysis and
Note F of the 1994 financial statements of the Company). Other related
transactions are described in Notes G and I of the 1994 financial statements of
the Company.
PROPOSAL 2
PROPOSED AMENDMENT TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK
The Company's Certificate of Incorporation currently authorizes the
issuance of up to 80,000,000 shares of Common Stock, par value $.01 per share.
The Board of Directors has approved a proposal to amend Article Fourth of the
Certificate of Incorporation to increase the number of shares of Common Stock
which the Company is authorized to issue to 100,000,000.
The portion of the next of Article Fourth, as proposed to be amended, is as
follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is 100,000,000 common shares with a par value of one
cent ($.01) per share..."
The terms and conditions of the Common Stock will not change as a result of
the adoption of the proposed amendment. Holders of the Common Stock do not and,
if the proposed amendment is adopted, will not have cumulative voting of
preemptive rights.
The purpose of the proposed amendment is to increase the number of
authorized shares of Common Stock to enable the Company to fulfill its ongoing
obligation to issue Common Stock in the event of an election to convert the
Preferred Stock which is now outstanding or which may become outstanding in the
future as a result of the Company's inability to pay dividends on the Preferred
Stock in cash or to pay principal or accrued interest on the $500,000 loan or
interest on the National Equipment Loan in cash, to issue Common Stock upon an
exercise of the warrants and to make available an additional quantity of Common
Stock for future issuance in the ordinary course of the Company's business.
On the Record Date, 23,794,500 shares of Common Stock were issued and
outstanding. A total of 50,708,897 additional shares of Common Stock are
reserved for future issuance pursuant to the following arrangements. The Company
has reserved 29,915,160 shares of Common Stock to issue upon the exercise Common
Stock warrants. The Company has reserved 1,400,000 shares of Common Stock for
issuance under its Incentive Stock Option Plan and 249,300 shares issuable under
other outstanding options. An additional 13,546,524 Common Shares are reserved
against the conversion of the outstanding shares of Preferred Stock, which are
convertible at any time at the election of the holder at 6.667 shares of Common
Stock for each share of Preferred Stock. The Preferred Stock pays dividends of
$.12 per share per annum payable semi-annually in cash or Preferred Stock at the
Company's election, on June 30 and December 31 of each year. The distribution of
Preferred Stock for the December 31, 1994 and June 30, 1995 dates, will
necessitate reserving 240,964 shares of additional Preferred Stock and 1,606,507
shares of Common Stock. The amount of Common Stock and Preferred Stock to be
reserved for this purpose will increase in subsequent years if the aggregate
amount of Preferred Stock outstanding continues to increase. Finally, 3,991,406
shares are reserved for issuance in the event Mr. Lenfest exercises the existing
option to have the Company convert the outstanding $500,000 principal amount
under the Prior Lenfest Loan into Preferred Stock, and if the Company chooses to
pay accrued interest on the National Equipment Loan of $98,681 as of June 30,
1995 with shares of Preferred Stock, which in turn would be convertible, at the
option of the holder, into Common Stock at the rate of 6.667 shares per $1.00 of
loan outstanding. Mr. Lenfest's right to convert such debt is limited in the
manner described in Proposal 3.
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<PAGE>
The holders of Common Stock have no preemptive rights and are entitled to
receive dividends when, if and as declared by the Board of Directors.
The Company is proposing to increase the amount of authorized Common Stock
to 100,000,000 shares. Such an increase would meet the Company's foreseeable
need for Common Stock for the purpose described in the preceding paragraphs with
25,496,603 million shares available for future issuance.
The affirmative vote of sixty percent (60%) of the shares of Common Stock
entitled to vote in the election of directors is required to adopt the proposed
amendment to the Certificate of Incorporation. At present, Mr. Lenfest owns 61%
the shares of Common Stock eligible to be cast on the Proposed Amendment. Mr.
Lenfest will personally benefit from the adoption of the Proposed Amendment.
Although the proposals have been approved by the Directors unanimously,
shareholders also should consider that Mr. Lenfest has designated all of the
Directors to serve in that capacity.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT.
PROPOSAL 3
PROPOSED AMENDMENT TO INCREASE THE
AUTHORIZED SHARES OF PREFERRED STOCK
The Company's Certificate of Incorporation currently authorizes the
issuance of up to 3,000,000 shares of Preferred Stock, with a par value of one
dollar ($1.00) per share. The Board of Directors has approved a proposal to
amend Article Fourth of the Certificate of Incorporation to increase the number
of shares of Preferred Stock which the Company is authorized to issue to
6,900,000.
The text of Article Fourth, as proposed to be amended by Proposal 3 is as
follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is . . . 6,900,000 shares of Class A Cumulative
($.06 semi-annual dividend) Convertible, Redeemable, Payment-in-Kind,
Non-Voting Preferred Stock with a par value of one dollar ($1.00) per
share."
The purpose of the proposed amendment is to increase the number of
authorized shares of Preferred Stock in order to enable the Company to fulfill
its future obligation to issue additional Preferred Stock to Mr. Lenfest upon a
conversion of the Prior Lenfest Loan as well as to provide the Company with the
ability to issue additional shares of Preferred Stock in appropriate
circumstances in the future, which circumstances include the payment of
dividends on the outstanding Preferred Stock, and interest on the Prior Lenfest
Loan and the National Equipment Loan in additional shares of Preferred Stock as
a result of the Company's inability, for the foreseeable future, to make such
payments in cash.
On the Record Date 2,031,877 shares of Preferred Stock were issued and
outstanding. An additional 240,964 shares of Preferred Stock are issuable at the
Company's election in lieu of making cash dividend payments otherwise due on the
outstanding Preferred Stock on December 31, 1994 and June 30, 1995.
Under the terms of the National Equipment Loan, interest is paid quarterly.
At the option of the Company, the interest may be paid by the delivery of shares
of Preferred Stock at the rate of one share of Preferred Stock for each one
dollar of accrued interest. As of June 30, 1995 the Company owed $98,681 in
accrued interest on the National Equipment Loan. The Company does not have
sufficient cash to pay the accrued interest and is planning to pay the accrued
interest with shares of Preferred Stock. The amount of Preferred Stock to be
reserved for this purpose will increase until sufficient cash is available to
pay the accrued interest or until the National Equipment Loan has been repaid.
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<PAGE>
Under the terms of the Credit Agreement between Mr. Lenfest and the
Company, dated November 2, 1989, Mr. Lenfest is entitled to convert the $500,000
principal amount of the Prior Lenfest Loan and accrued interest into Preferred
Stock under certain circumstances. The Credit Agreement provides that Mr.
Lenfest shall not be permitted to exercise the option to convert the Prior
Lenfest Loan into Preferred Stock, "until such time as TelVue has cash on hand
not required for its current or prospective operations sufficient to repay the
total of all such advances together with all accumulated interest..."
Increasing the authorized amount of Preferred Stock to 6,900,000 shares,
would enable the Company to issue additional shares of Preferred Stock to pay
Preferred Stock dividends, pay accrued interest on the National Equipment Loan,
and as a means of obtaining further financing in the future.
The Preferred Stock ranks senior to the Common Stock in the payment of
dividends and on liquidation, dissolution and winding up of the Company. The
Preferred Stock pays dividends of $.12 per share per annum, payable semi
annually in cash or shares of Preferred Stock, at $1.00 per share, at the
Company's election. Holders of the Preferred Stock are generally not entitled to
vote except a change of terms, designations an provisions of the Preferred Stock
in the event of any matter that might adversely affect the rights and
preferences of holders of the Preferred Stock.
The affirmative vote of 60% of the shares of Common Stock entitled to vote
in the election of directors is required to adopt the proposed amendment to the
Certificate of Incorporation. As noted in Proposal 2 above, Mr. Lenfest
presently beneficially owns 61% of the outstanding Common Stock. In addition, he
will personally benefit from approval of the proposed amendment.
If insufficient affirmative votes are received for Proposal 2, Proposal 3
will be deemed withdrawn from consideration because the Company would be unable
to reserve a sufficient number of shares of Common Stock against future issuance
of additional shares of Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT.
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented for inclusion in the
proxy statement and form of proxy related to the 1995 Annual Meeting must be
received at the Company's executive offices at 16000 Horizon Way, Suite 500, Mt.
Laurel, New Jersey no later than April 24, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Pressman, Ciocca & Smith served as the Company's
independent public accountants for the year ended December 31, 1994. A
representative of Pressman, Ciocca & Smith is expected to attend the Annual
Meeting and will have the opportunity to make a statement and respond to
appropriate questions of stockholders.
OTHER INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR 1994 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE BY
WRITING TO: PRESIDENT, TELVUE CORPORATION, 16000 HORIZON WAY, SUITE 500, MT.
LAUREL, NEW JERSEY 08054.
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<PAGE>
PROXY TELVUE CORPORATION PROXY
This Proxy is Solicited on Behalf of the Board of Directors for
Annual Meeting of Stockholders on September 21, 1995
The undersigned hereby appoints Frank J. Carcione proxy and attorney, with
full power of substitution, to vote all the shares of the Common Stock of TelVue
Corporation, a Delaware corporation, which the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held at TelVue Corporation located
at 16000 Horizon Way, Suite 500, Mt. Laurel, New Jersey, 08054, on September 21,
1995 at 10:00 o'clock a.m., local time, and any adjournment thereof upon the
following matters set forth in the notice of such meeting.
Each share of common stock is entitled to 10 votes; provided, however, that
persons who have been the beneficial owner of shares of common stock for less
than two years or who did not acquire such shares in the course of the spin-off
of the Company from Science Dynamics Corporation are entitled to only one vote
per share. As provided in the Certificate of Incorporation, the Board of
Directors, on written application directed to the Secretary of the Company at
any time prior to the special meeting, may waive such holding period
requirements and provide that shares held by such stockholder shall have 10
votes per share. Stockholders wishing to have the holding period waived may make
written application to the Board of Directors by sending their request at any
time prior to the annual meeting to the Secretary of the Company at TelVue
Corporation, 16000 Horizon Way, Suite 500, Mt. Laurel, NJ, 08054.
Please sign your name exactly as it is shown on the left. Corporate
Offices, executors, administrators, trustees, guardians and attorneys should
give their full title. All joint tenants, tenants in common, and tenants by the
entirety should sign.
Date:_________________________________, 1995
____________________________________________
____________________________________________
Signature(s) of stockholder(s)
<PAGE>
PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED ENVELOPE
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposals 1, 2, 3 and 4.
1. ELECTION OF DIRECTORS
H.F. Lenfest, Frank J. Carcione, Carl J. Cangelosi,
Robert Lawrence, Donald L. Heller, Thomas J. Fennell
| | FOR all nominees listed above (except as marked to the contrary below.)
| | WITHHOLD AUTHORITY to vote for nominees listed above
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
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2. TO AMEND ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO
100,000,000 SHARES.
| | FOR | | AGAINST | | ABSTAIN
3. TO AMEND ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK TO
6,900,000 SHARES.
| | FOR | | AGAINST | | ABSTAIN
4. IN THEIR DISCRETION, ON SUCH OTHER MATTERS INCIDENT TO THE SUBJECT MATTER
OF THE ANNUAL MEETING AND ANY ADJOURNMENT(S) THEREOF AND MATTERS INCIDENT
TO THE CONDUCT OF SUCH MEETING.
