TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(609) 273-8888
ANNUAL MEETING OF STOCKHOLDERS
BE HELD AT 10:00 A.M.,
June 17, 1999
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 executive offices of the Company located at 16000 Horizon Way,
Suite 500, Mt. Laurel, New Jersey, 08054 on June 17, 1999 at 10:00 A.M.
for consideration of and action upon the following matters:
I. Election of five (5) directors to hold office for the ensuing
year and until their successors have been duly elected and qualified; and
II. Consider and act upon a proposal to adopt the Company's 1999
Stock Option Plan; and
III. Such other matters as may properly come before the Annual
Meeting The Board of Directors has fixed the close of business on May 20,
1999, 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
May 21, 1999
<PAGE>
TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(609) 273-8888
DATED May 21, 1999
PROXY STATEMENT
This Proxy Statement is furnished with the attached Notice of Annual
Meeting and with accompanying proxy on or about May 21, 1999, to each
stockholder of record of TelVue Corporation (the "Company") at the close
of business on May 20, 1999 ("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 June 17, 1999
at 10:00 A.M. at the executive offices of the Company, 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 the adoption of the Company's 1999 Stock Option
Plan, and FOR 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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record as of the close of business on 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
24,194,500 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 3,518,694 shares of the Company's Preferred Stock
outstanding. The Preferred Stock does not have any voting rights until it
is converted into Common Stock. 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 Dynamics Corporation, 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 67,931,746 (2) 87.6%
c/o The Lenfest Group
200 Cresson Boulevard
P.O. Box 989
Oaks, PA 19456-0989
Chairman of the Board and Director
(1) As of the Record Date, 24,194,500 shares of Common Stock were
outstanding.
(2) Includes 23,459,133 shares of Common Stock issuable upon
conversion of Preferred Stock owned by Mr. Lenfest. Includes Warrants to
acquire up to 29,915,160 additional shares of Common Stock. Does not
include accrued but unpaid interest on the subordinated $500,000 Note
which may be converted into shares of Preferred Stock. Also does not
include accrued interest, as of March 31, 1999, on the National Equipment
Loan made to the Company or accrued dividends on the shares of Preferred
Stock owned by Mr. Lenfest, either of which the Company may elect to pay
in shares of Preferred Stock.
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.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS (1)
H.F. (Gerry) Lenfest
c/o The Lenfest Group 67,931,746 (2) 87.6%
200 Cresson Boulevard
P.O. Box 989
Oaks, PA 19456-0989
Chairman of the Board and Director
Frank J. Carcione
Chief Executive Officer,
President and Director 125,000 *
Joseph M. Murphy
Executive Vice President 190,000 (3) *
Sales and Operations and Director
Donald L. Heller
Director 15,000 *
Joseph DiJulio
Director 5,000 *
All Directors and Officers as
a Group (7 Persons) 68,446,546 (2)(3)(4) 88.2%
* Less than 1%
(1) As of the Record Date, 24,194,500 shares of Common Stock were
outstanding.
(2) Includes 23,459,133 shares of Common Stock issuable upon
conversion of Preferred Stock owned by Mr. Lenfest. Includes Warrants to
acquire up to 29,915,160 additional shares of Common Stock. Does not
include accrued but unpaid interest on the subordinated $500,000 Note
which may be converted into shares of Preferred Stock. Also does not
include accrued interest, as of March 31, 1999, on the National Equipment
Loan made to the Company or accrued dividends on the shares of Preferred
Stock owned by Mr. Lenfest, either of which the Company may elect to pay
in shares of Preferred Stock.
(3) Includes 15,000 shares issuable to Joseph Murphy upon exercise
of currently exercisable stock options held by Mr. Murphy.
(4) Includes 3,000 shares issuable to Randy Gilson upon exercise
of currently exercisable stock options held by Mr. Gilson.
PROPOSAL 1
ELECTION OF DIRECTORS
Five (5) 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 votes entitled to be cast by
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:
NAME AGE POSITION(S) DIRECTOR
WITH THE COMPANY SINCE
H. F. (Gerry) Lenfest 69 Chairman and 1989
Director
Frank J. Carcione 58 President, Chief 1990
Executive
Officer, and Director
Joseph M. Murphy 45 Vice President of 1997
Sales and Operations
and Director
H. Chase Lenfest 35 Director Nominee
Brook J. Lenfest 30 Director Nominee
The Board of Directors has unanimously recommended the slate of
nominees for election as directors at the Annual Meeting. The Board of
Directors recommends that the stockholders vote FOR the election of the
entire slate of nominees.
PRINCIPAL OCCUPATION OF THE DIRECTOR NOMINEES
H. F. Lenfest has been a director of the Company since 1989. He is
the President, CEO 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. Mr. Lenfest's principal occupation since
1974 has been President and CEO of Lenfest Communications, Inc. and The
Lenfest Group of companies.
Frank J. Carcione has been a director of the Company since 1990. He
became the Executive Vice President in May 1990, and was elected President
and Chief Executive Officer in May 1991. 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 and an affiliate of The Lenfest Group of
companies. 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.
Joseph M. Murphy has been a director of the Company since 1997. He
is the Executive Vice President of Sales and Operations of the Company.
Mr. Murphy was appointed to this position in September 1994. Prior to
this appointment, Mr. Murphy had been Vice President of Sales since
joining the Company in 1986.
H. Chase Lenfest has been the Vice President of Local Sales of
Lenfest Advertising, Inc., a subsidiary of Lenfest Communications, Inc.,
since December 1998. Prior to assuming his current position, Mr. Chase
Lenfest was the Director of Local Sales. From January 1996 through
January 1997, he was the Regional Photo Classified Manager of Lenfest
Programming Services, Inc., a subsidiary of Lenfest Communications, Inc.
From February 1994 through January 1996, he was employed by the Company as
a Special Projects Manager. From March 1988 until January 1994, he was a
stockbroker with Wheat First Butcher & Singer. He is the son of H.F.
Lenfest and a Director of Lenfest Communications, Inc.
Brook J. Lenfest has been the Vice President-Business Development
for Suburban Cable TV Company, Inc., a subsidiary of Lenfest
Communications, Inc. since May 1997. Mr. Brook Lenfest was a Vice
President and Director of Operations for Starnet, Inc., a subsidiary of
Lenfest Communications, Inc., and was an officer of Starnet Inc. from
January 1995. He was Vice President-Business Development, Director of
Communication and Product Manager for Starnet, Inc. from January 1994 to
1995. From 1993 to 1994 he was a Marketing Manager for South Jersey
Cablevision (now Lenfest Atlantic, Inc.), a subsidiary of Lenfest
Communications, Inc. Prior to 1993, he held various positions at Garden
State Cablevision. He is the son of H.F. Lenfest and a Director of Lenfest
Communications, Inc.
CERTAIN LEGAL PROCEEDINGS
In April 1996, a former employee filed suit against the Company and
its majority stockholder, James T. Shelley vs. TelVue Corporation and H.F.
Lenfest, with the Superior Court of Burlington County, New Jersey, Civil
Action Number 01368-96 (the "Shelley Case"). The complaint alleged breach
of contract, breach of implied covenant of good faith and fair dealing
detrimental reliance and unjust enrichment. The lawsuit sought
compensation and compensatory damages. Although the Company believed the
employee's claims were without merit, the Company settled the lawsuit in
June 1998, after considering the amount the Company's insurance carrier
was willing to reimburse the Company versus the legal fees that would be
incurred if the case went to trial. The Company recorded $33,430 in
litigation settlement expense, net of proceeds received from the Company's
insurance carrier for the year ended December 31, 1998.
The Company has received notice from a cable operating company
customer asserting its right to be indemnified against claims of patent
infringement made to the cable operator by a third party. The third party
has alleged to the cable operator that portions of the cable operator's
pay-per-view operations infringe one or more patents held by such party.
No notice of alleged infringement has been received by the Company from
such third party. The Company has retained independent patent counsel to
review the terms and the alleged infringement. The Company is unable at
this time to determine if it has liability under the indemnity provisions
of the contracts with the cable operator or the amount of such liability
if it exists.
On December 6, 1995, the Securities and Exchange Commission (the
"SEC")sued H.F. Lenfest and his wife, in the United States District Court
for the Eastern District of Pennsylvania. The SEC alleged that, in
October 1993, Mr. Lenfest, while in possession of non-public information,
recommended to one of his sons that he purchase Tele-Communications, Inc.
("TCI") stock and that his wife traded in TCI stock in October 1993 on the
basis of information she misappropriated from her husband. During October
1998, the case was dismissed by the trial judge.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held two meetings during the year ended
December 31, 1998, and acted by unanimous consent on several other
occasions during 1998. The Company has no nominating or compensation
committees. The Audit committee and Stock Option committee consists of
Donald Heller. No meetings of either committee were held during 1998.
Mr. Carcione and Mr. Murphy attended 100% of the Board meetings. Mr.
Lenfest, Mr. Heller and Mr. DiJulio attended 50% of the Board meetings.
The employee directors of the Company receive no compensation. Non-
employee directors (other than Mr. Lenfest) receive $500 paid in shares of
common stock of the Company for each meeting of the Board attended. The
shares are priced at the higher of $.05/share or the ask price on the date
of grant. During 1998, Messers Heller and DiJulio were entitled to
receive 5,000 shares of common stock each.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL ANNUAL ANNUAL RESTRICTED ALL OTHER
POSITION YEAR SALARY COMMISSIONS STOCK ANNUAL
AWARDS COMPENSATION
Frank J. Carcione 1998 $135,000 - $9,219 (2) $3,375 (1)
President and 1997 124,950 - - 3,124 (1)
Chief Executive 1996 119,000 - - 2,761 (1)
Officer
Joseph Murphy 1998 $93,767 $21,448 $7,375 (3) $2,344 (1)
Executive Vice 1997 89,302 44,155 - 2,233 (1)
President of Sales 1996 85,362 53,710 - 2,134 (1)
and Operations
(1) Company funded contributions to the Company's Simplified Pension Plan
(SEP).
(2) Includes 125,000 shares of common stock awarded to Frank J. Carcione
at a value of $.07375 per share.
(3) Includes 100,000 shares of common stock awarded to Joseph Murphy at a
value of $.07375 per share.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
NUMBER OF VALUE OF
SHARES UNEXERCISED UNEXERCISED
ACQUIRED ON VALUE OPTIONS IN-THE-MONEY
NAME EXERCISE REALIZED EXERCISABLE/ OPTIONS
UNEXERCISABLE EXERCISABLE/
UNEXERCISABLE
Frank J. Carcione
President and Chief - - - -
Executive Officer
Joseph M. Murphy
Executive Vice - - 15,000 $ 1,725 (1)
President of Sales
and Operations
(1) Values calculated based upon the average of the bid and ask price on
December 31, 1998.
Certain Relationships and Related Transactions
Since November 2, 1989, the Company has funded its expansion and
operating deficit from the $2,500,000 of proceeds from the sale of shares
of the Company's Common Stock and Preferred Stock to Mr. Lenfest and from
borrowings from Mr. Lenfest. From November 1989 to February 1996, the
Company borrowed an aggregate of $6,128,712 from Mr. Lenfest. The
interest rates on the loans range from a floating rate based on the prime
rate of PNC Bank to a fixed rate of 12%. Interest on one of the loans in
the principal amount of $1,471,272 as of the Record Date, is payable
quarterly and, at the option of the Company 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. Interest due on
this loan prior to 1998, in the amount of $473,682 has been paid with
473,682 shares of Preferred Stock. No Preferred Stock has been issued for
1998 accrued interest. In addition, during January 1995, Mr. Lenfest
purchased from Science Dynamics Corporation (the Company's former parent)
the Company's non-interest bearing note in the amount of $541,000.
Effective as of March 31, 1999, the Company obtained from Mr.
Lenfest a written agreement stating he will not demand a lump-sum
repayment of his loans or accrued interest on the loans through January 1,
2001. During 1998, the Company made monthly principal payments of $150,000
to Mr. Lenfest and, at management's discretion, made monthly principal
payments in excess of $150,000 when the Company had cash not needed to
fund operations. In addition, at the direction of the Board, without the
participation of Mr. Lenfest, effective January 1, 1998, the Company began
accruing interest on all unpaid interest on all outstanding loan balances
due to Mr. Lenfest. During 1998, the Company made principal payments of
$1,900,000 to Mr. Lenfest. Beginning January 1, 1999, the Company
voluntarily began to pay current monthly interest payments to Mr. Lenfest
from the $150,000 payment. The balance of the payment is applied to loan
principal. The aggregate outstanding loan balance due to Mr. Lenfest as
of the Record Date is $2,082,940 in loan principal and $2,564,424 in
accrued interest.
At December 31, 1998, the Company was indebted to Mr. Lenfest in the
principal amount of $2,419,712. Other related transactions are described
in Notes 4, 6 and 9 of the financial statements of the Company in the 1998
Annual Report.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented for inclusion in
the proxy statement and form of proxy related to the 2000 Annual Meeting
must be received at the Company's executive offices at 16000 Horizon Way,
Suite 500, Mt. Laurel, New Jersey, 08054 no later than January 16, 2000.
PROPOSAL 2
ADOPTION OF THE 1999 STOCK OPTION PLAN
Subject to stockholder approval as described in this Proxy
Statement, the Board of Directors has approved a proposal to adopt the
1999 Stock Option Plan (the "1999 Plan").
DESCRIPTION OF THE 1999 PLAN
The purpose of the 1999 Plan is to promote the overall financial
objectives of the Company and its stockholders by motivating officers and
other employees selected to participate in the 1999 Plan (the
"Participants") to achieve long-term growth of the Company and by
retaining the association of those individuals who are instrumental in
achieving this growth through the acquisition and ownership of the
Company's Common Stock. As of March 31, 1999, approximately 17 officers
and employees were eligible to participate in the Plan.
Under the 1999 Plan, the Company may grant incentive stock options
("ISOs") and stock options that do not qualify as ISOs (non-qualified
stock options or "NQSOs"). The Company has reserved 10,000,000 shares of
its Common Stock for issuance pursuant to the exercise of options granted
under the 1999 Plan (the "Option Shares"). If any outstanding option
granted under the 1999 Plan expires, lapses or is terminated for any
reason, the Option Shares allocable to the unexercised portion of such
option may again be the subject of an option granted pursuant to the 1999
Plan. As of March 31, 1999, the market value of the securities reserved
for issuance under the 1999 Plan was approximately $769,000. No options
have been granted under the 1999 Plan as of the date of this Proxy
Statement.
The 1999 Plan will be administrated by either the Board of Directors
of the Company or a committee (the "Committee") as appointed from time to
time by the Board of Directors of the Company composed of two or more non-
employee directors. The Committee shall from time to time at its
discretion grant options under the 1999 Plan and shall have plenary
authority to determine who are the Participants, when the options will be
granted, the number of Option Shares to be covered by such grants and the
price and other terms thereof. The interpretation and construction by the
Committee of any provision of the 1999 Plan or of any benefit granted
under it shall be final, binding and conclusive.
In the case of an ISO, the per share option price shall be not less
than 100% of the "Fair Market Value" of a share of Common Stock on the
grant date. In the case of a NQSO, the per share option price shall be
not less than 50% of the Fair Market Value of a share of Common Stock on
the grant date. If the Common Stock is listed on a national securities
exchange or quoted on The NASDAQ Stock Market ("NASDAQ"), the Fair Market
Value is the closing price of the Common Stock on the relevant date (or,
if such date is not a business day or a day on which quotations are
reported, then on the immediately preceding date on which quotations were
reported), as reported by the principal national exchange on which such
shares are traded (in the case of an exchange) or by NASDAQ, as the case
may be. If the Common Stock is not listed on a national securities
exchange or quoted on NASDAQ, the Fair Market Value will be as determined
by the Committee in good faith. If an ISO is granted to an Optionee who
then owns, directly or by attribution under Section 424(d) of the Internal
Revenue Code of 1986, as amended (the "Code"), shares possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, then the option price shall be not less than 110% of
the Fair Market Value of an Option Share on the grant date.
At the time of exercise, a Participant must either pay the Company
the full purchase price of the Option Shares in cash, bank check payable
to the order of the Company or such other mode of payment as the Committee
may approve.
No ISO granted under the 1999 Plan may be transferred, except by
will or by the laws of descent and distribution. During the lifetime of
the person to whom an ISO is granted, such option may be exercised only by
such person. No NQSO granted under the 1999 Plan may be transferred,
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code, or Title I of
the Employee Retirement Income Security Act, or the rules thereunder.
Options granted under the 1999 Plan may not have exercise periods
exceeding ten years from the date of grant, subject to sooner expiration
upon the occurrence of certain events set forth in the 1999 Plan which are
generally applicable to all options granted under the 1999 Plan. With
respect to an ISO granted to a 10% stockholder of the Company, such option
will terminate no later than five years from the date of grant.
The 1999 Plan shall commence on the date of approval by the Board of
Directors but shall terminate unless the 1999 Plan is approved by the
stockholders within 12 months of such date. No options may be granted
under the 1999 Plan ten years after the effective date or such earlier
date as the Board of Directors or the Committee may determine. After
termination of the 1999 Plan, no grants may be effected; however,
previously made grants will remain outstanding in accordance with their
terms and conditions and the terms and conditions of the 1999 Plan.
The 1999 Plan may be amended by the Board of Directors of the
Company or the Committee without approval by the stockholders of the
Company, provided that no action will be taken without the approval of the
stockholders to increase the maximum number of shares as to which options
may be granted or change the eligibility of the Participants.
FEDERAL INCOME TAX CONSEQUENCES UNDER THE 1999 PLAN
The following is a brief description to the federal tax consequences
of stock options which may be granted under the 1999 Plan under present
tax laws.
ISOs
There is no immediate federal income tax consequence to either the
Participant or the Company upon the grant of an ISO. The Participant will
not have to recognize any income upon the exercise of an ISO, and the
Company will not be allowed any deduction, as long as the Participant (i)
exercises the ISO while employed by the Company or within three months
following the termination of his employment and (ii) does not dispose of
the Option Shares within two years from the date the ISO was granted or
within one year from the date the Option Shares were transferred to the
Participant (the "Holding Period Requirement"). For this purpose, the
renewal, extension or modification of the terms of an outstanding ISO will
generally be treated as the grant of a new ISO. Upon a sale of the Option
Shares after meeting the Holding Period Requirement, the Participant will
recognize a long-term capital gain (or loss) measured by the excess (or
deficit) of the amount realized from such sale over the option price of
such Option Shares, but no deduction will be allowed to the Company.
If a Participant disposes of Option Shares before the Holding Period
Requirement is satisfied, the Participant will recognize ordinary income
in the year of disposition, and the Company will be entitled to a
corresponding deduction, in an amount equal to the lesser of (a) the
excess of the fair market value of the Option Shares on the date of
exercise over the option price of the Option Shares or (b) the excess of
the amount realized from such disposition over the option price of the
Option Shares. Where Option Shares are sold before the Holding Period
Requirement is satisfied, the Participant will also recognize a capital
gain to the extent that the amount realized from the disposition of the
Option Shares exceeded the fair market value of the Option Shares on the
date of exercise.
For alternative minimum tax purposes, regardless of whether the
Participant satisfies the Holding Period Requirement, the excess of the
fair market value of the Option Shares on the exercise date over the
option price will be treated as a positive adjustment to the Participant's
alternative minimum taxable income for the year the ISO is exercised. If
the Option Shares are disposed of in the year the ISO was exercised,
however, the positive adjustment taken into account for alternative
minimum tax purposes will not exceed the gain realized on such sale.
Exercise of an ISO may thus result in liability for alternative minimum
tax.
NQSOs
There is no federal income tax consequence to either the Participant
or the Company upon the grant of a NQSO. Upon the exercise of a NQSO, the
Participant will recognize ordinary compensation income in an amount equal
to the excess of the Fair Market Value of each Option Share on the date of
exercise over the option price, and the Company will be entitled to a
federal income tax deduction of the same amount. A Participant's tax
basis in Option Shares acquired upon exercise of a NQSO will equal the
fair market value of such Option Shares on the date of exercise, and any
subsequent gain or loss from the sale of such Option Shares will be a
short-term or long-term capital gain or loss, depending upon the holding
period of such Option Shares.
The Board of Directors deems the above proposal to be in the best
interests of the Company and recommends a vote "FOR" adoption of the 1999
Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Pressman Ciocca Smith LLP served as the
Company's independent public accountants for the year ended December 31,
1998. A representative of Pressman Ciocca Smith LLP 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 1998 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.
<PAGE>
PROXY TELVUE CORPORATION PROXY
This Proxy is Solicited on Behalf of the Board of Directors for
Annual Meeting of Stockholders on June 17, 1999
The undersigned hereby appoints Frank J. Carcione and Joseph M.
Murphy 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 June 17, 1999 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.
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 and 3.
1. ELECTION OF DIRECTORS
H.F. Lenfest, Frank J. Carcione, Joseph M. Murphy, H. Chase
Lenfest, Brook J. Lenfest
____ 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.)
2. ADOPTION OF THE 1999 STOCK OPTION PLAN
___ FOR
___ AGAINST
___ ABSTAIN
3. 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.
PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED ENVELOPE
<PAGE>
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:_________________________________, 1999
____________________________________________
____________________________________________
Signature(s) of stockholder(s)
<PAGE>
APPENDIX A
TELVUE CORPORATION
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT
1.1 PURPOSE. The TelVue Corporation 1999 Stock Option Plan (the
"Plan") is hereby established by TelVue Corporation (the "Company"). The
purpose of the Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating those persons selected to
participate in the Plan to achieve long-term growth of the Company and by
retaining the association of those individuals who are instrumental in
achieving this growth. The Plan provides additional incentives to
officers and other employees of the Company or its Affiliates, as defined
herein, to enter into or remain in the service or employ of the Company or
its Affiliates and to devote themselves to the Company's success by
granting such individuals an opportunity to acquire or increase their
proprietary interest in the Company through receipt of rights (the
"Options") to acquire the Company's Common Stock, par value $.01 per share
(the "Common Stock").
ARTICLE II
STOCK SUBJECT TO PLAN
2.1 AGGREGATE MAXIMUM NUMBER. The aggregate maximum number of
shares of the Common Stock for which Options may be granted under the Plan
is 10,000,000 shares (the "Option Shares"), which number is subject to
adjustment as provided in Section 6.6. Option Shares shall be issued from
authorized and unissued Common Stock or Common Stock held in or hereafter
acquired for the treasury of the Company. If any outstanding Option
granted under the Plan expires, lapses or is terminated for any reason,
the Option Shares allocable to the unexercised portion of such Option may
again be the subject of an Option granted pursuant to the Plan.
ARTICLE III
TERM OF PLAN
3.1 TERM OF PLAN. The Plan shall commence on May 10, 1999, the
date of approval of the Plan by the Board of Directors of the Company
("Effective Date"), but shall terminate unless the Plan is approved by the
stockholders of the Company within twelve months of such date, as set
forth in Section 422(b)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). Any Options granted pursuant to the Plan prior to
approval of the Plan by the stockholders of the Company shall be subject
to such approval and, notwithstanding anything to the contrary herein or
in any Option Document (as defined below), shall not be exercisable until
such approval is obtained. No Option may be granted under the Plan on or
after the date which is ten years after the Effective Date.
ARTICLE IV
ELIGIBILITY
4.1 ELIGIBILITY. Except as herein provided, the persons who shall
be eligible to participate in the Plan and be granted awards of Options
shall be those officers and other employees who shall be in a position, in
the opinion of the Committee, as defined herein, to make contributions to
the growth, management, protection and success of the Company and its
Affiliates. Of those persons described in the preceding sentence, the
Committee, may, from time to time, select persons to be granted Options
and shall determine the terms and conditions with respect thereto. In
making any such selection and in determining the terms and conditions of
the Option, the Committee may give consideration to the person's functions
and responsibilities, the person's contributions to the Company and its
Affiliates, the value of the individual's service to the Company and its
Affiliates and such other factors deemed relevant by the Committee. The
term "Affiliates" shall mean a corporation which is a parent corporation
or a subsidiary corporation with respect to the Company within the meaning
of section 424(e) or (f) of the Code.
ARTICLE V
STOCK OPTIONS
5.1 STOCK OPTIONS. Options granted under the Plan may be either
ISOs, as defined herein, or NQSOs, as defined herein. Each Option granted
under the Plan is intended to be an incentive stock option ("ISO") within
the meaning of Section 422(b) of the Code for federal income tax purposes,
except to the extent (i) such ISO grant would fail to meet the limitations
and restrictions on ISOs set forth in subsections 5.2(a) and 5.2(b) below,
or (iii) any Option is specifically designated at the time of grant (the
"Grant Date") as not being an ISO (an Option which is not an ISO, and
therefore is a non-qualified option, is referred to herein as an "NQSO").
Under the Plan, Options may be granted to Optionees at such times, in such
amounts, and on such terms and conditions as determined by the Committee,
in accordance with the terms of the Plan.
5.2 TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to
the Plan shall be evidenced by written documents ("Option Documents") in
such form as the Committee shall from time to time approve, subject to the
following terms and conditions. Option Documents may also contain such
other terms and conditions (including vesting schedules for the
exercisability of Options) which the Committee shall from time to time
provide which are not inconsistent with the terms of the Plan. Persons to
whom Options are granted are hereinafter referred to as "Optionees."
(a) NUMBER OF OPTION SHARES. Each Option Document shall
state the number of Option Shares to which it pertains. To the extent
that the aggregate fair market value of Option Shares (determined as of
the date each applicable ISO is granted) with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year
(under all incentive stock option plans of the Company or its Affiliates)
exceeds $100,000, the portion of such options in excess of $100,000 shall
be treated as NQSOs in accordance with Section 422(d) of the Code.
(b) OPTION PRICE. Each Option Document shall state the
price at which an Option Share may be purchased (the "Option Price"),
which, in the case of an ISO shall be not less than 100% of the "Fair
Market Value" of a share of the Common Stock on the Grant Date. In the
case of a NQSO, the Option Price shall be not less than 50% of the Fair
Market Value of a share of the Common Stock on the Grant Date. If the
Common Stock is listed on a national securities exchange or quoted on The
NASDAQ Stock Market ("NASDAQ"), the Fair Market Value is the closing price
of the Common Stock on the relevant date (or, if such date is not a
business day or a day on which quotations are reported, then on the
immediately preceding date on which quotations were reported), as reported
by the principal national exchange on which such shares are traded (in the
case of an exchange) or by NASDAQ, as the case may be. If the Common Stock
is not listed on a national securities exchange or quoted on NASDAQ, the
Fair Market Value will be as determined by the Committee in good faith.
If an ISO is granted to an Optionee who then owns, directly or by
attribution under Section 424(d) of the Code, shares possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, then the Option Price shall be not less than One
Hundred and Ten Percent (110%) of the Fair Market Value of an Option Share
on the Grant Date.
(c) MEDIUM OF PAYMENT. An Optionee shall pay for Options
Shares (i) in cash, (ii) by bank check payable to the order of the Company
or (iii) by such other mode of payment as the Committee may approve,
including payment through a broker in accordance with procedures permitted
by Regulation T of the Federal Reserve Board.
(d) INITIAL EXERCISE. The Committee shall determine the
time at which an Option may first be exercised.
(e) TERMINATION OF OPTIONS. All Options shall expire at
such time as the Committee may determine and set forth in the Option
Document, which date shall not be later than the last business date
immediately preceding the tenth anniversary of the Grant Date of such
Option (the "Expiration Date"). No Option may be exercised later than the
Expiration Date. Notwithstanding the foregoing, no Option shall be
exercisable after the first to occur of the following:
(i) In the case of an ISO, five years from the Grant
Date if, on the Grant Date the Optionee owns, directly or by attribution
under Section 424(d) of the Code, shares possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company;
(ii) The date set by the Committee to be an
accelerated Expiration Date after a finding by the Committee that a change
in the financial accounting treatment for Options from that in effect on the
date the Plan was adopted materially adversely affects or, in the
determination of the Committee, may materially adversely affect in the
foreseeable future, the Company, provided the Committee may take whatever
other action, including acceleration of any exercise provisions, it deems
necessary should it make the determination referred to hereinabove;
(iii) Expiration of three months (or such shorter
period as the Committee may select and set forth in the Option Document) from
the date the Optionee's employment or service with the Company or its
Affiliates terminates for any reason other than (a) disability (within the
meaning of section 22(e)(3) of the Code) or death, or (b) circumstances
described by Subsection (e)(v), below;
(iv) In the event of a "Change in Control" (as
defined in Subsection (f) below), the Committee can (A) accelerate the
Expiration Date of any Option which has vested provided an Optionee who holds
an Option is given written notice at least thirty (30) days before the date
so fixed, (B) terminate any Option which has not then vested or (C)
accelerate the vesting schedule of any Option;
(v) In the case of an Option granted under the Plan,
a finding by the Committee, after full consideration of the facts presented
on behalf of both the Company and the Optionee, that the Optionee has been
discharged from employment with the Company or its Affiliates for Cause.
For purposes of this Section, "Cause" shall mean: (A) a breach by
Optionee of his employment agreement with the Company, (B) a breach of
Optionee's duty of loyalty to the Company, including without limitation
any act of dishonesty, embezzlement or fraud with respect to the Company,
(C) the commission by Optionee of a felony, a crime involving moral
turpitude or other act causing material harm to the Company's standing and
reputation, (D) Optionee's continued failure to perform his duties to the
Company or (E) unauthorized disclosure by Optionee of trade secrets or
other confidential information belonging to the Company. In the event of
a finding that the Optionee has been discharged for Cause, in addition to
immediate termination of the Option, the Optionee shall automatically
forfeit all Option Shares for which the Company has not yet delivered the
share certificates upon refund of the Option Price; or
(vi) Expiration of one year from the date the
Optionee's employment with the Company or its Affiliates terminates by
reason of the Optionee's disability (within the meaning of section
22(e)(3) of the Code) or death.
(f) CHANGE OF CONTROL. In the event of a Change in
Control (as defined below), the Committee may take whatever action with
respect to the Options outstanding under the Plan it deems necessary or
desirable, including, without limitation, accelerating the Expiration Date
in the respective Option Documents to a date no earlier than thirty (30) days
after notice of such acceleration is given to the Optionee or terminate
any Option which has not then vested. A "Change of Control" shall be
deemed to have occurred upon the earliest to occur of the following
events:
(i) The date the stockholders of the Company (or the
Board of Directors, if stockholder action is not required) approve a plan
or other arrangement pursuant to which the Company will be dissolved or
liquidated;
(ii) the date the stockholders of the Company (or the
Board of Directors, if stockholder action is not required) approve a
definitive agreement to sell or otherwise dispose of all or substantially
all of the assets of the Company;
(iii) the date the stockholders of the Company (or the
Board of Directors, if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of
directors if stockholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or into such
other corporation, other than, in either case, a merger or consolidation
of the Company in which holders of shares of the Common Stock immediately
prior to the merger or consolidation will hold at least a majority of the
ownership of common stock of the surviving corporation (and, if one class
of common stock is not the only class of voting securities entitled to
vote on the election of directors of the surviving corporation, a majority
of the voting power of the surviving corporation's voting securities)
immediately after the merger or consolidation, which common stock (and, if
applicable, voting securities) is to be held in substantially the same
proportion as such holders' ownership of Common Stock immediately before
the merger or consolidation; or
(iv) the date any entity, person or group, (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act")), other than (A) the
Company or any of its Affiliates or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its Affiliates or
(B) any person who, on the date the Plan is approved by the stockholders,
shall have been the beneficial owner of at least twenty percent (20%) of
the outstanding Common Stock, shall have become the beneficial owner of,
or shall have obtained voting control over, more than fifty percent (50%)
of the outstanding shares of the Common Stock.
(g) TRANSFERS. No ISO granted under the Plan may be
transferred, except by will or by the laws of descent and distribution.
During the lifetime of the person to whom an ISO is granted, such Option
may be exercised only by such person. No NQSO under the Plan may be
transferred, except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
(h) OTHER PROVISIONS. The Option Documents shall contain
such other provisions including, without limitation, additional
restrictions upon the exercise of the Option or additional limitations
upon the term of the Option, as the Committee shall deem advisable.
(i) AMENDMENT. The Committee shall have the right to
amend Option Documents issued to such Optionee, subject to the Optionee's
consent if such amendment is not favorable to the Optionee, except that
the consent of the Optionee shall not be required for any amendment made
under Subsection (f) above.
5.3 EXERCISE.
(a) NOTICE. No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice of such
exercise and of payment in full of the Option Price for the Option Shares
to be purchased. Each such notice shall (i) specify the number of Option
Shares to be purchased, and (ii) satisfy the securities law requirements
set forth in this Section 5.3.
(b) RESTRICTED STOCK. Each exercise notice shall (unless
the Option Shares are covered by a then current registration statement or
a Notification under Regulation A under the Securities Act of 1933, as
amended (the "Securities Act")), contain the Optionee's acknowledgment in
form and substance satisfactory to the Company that (i) such Option Shares
are being purchased for investment and not for distribution or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the
registration provisions of the Securities Act); (ii) the Optionee has been
advised and understands that (A) the Option Shares have not been
registered under the Securities Act and are "restricted securities" within
the meaning of Rule 144 under the Securities Act and are subject to
restrictions on transfer and (B) the Company is under no obligation to
register the Option Shares under the Securities Act or to take any action
which would make available to the Optionee any exemption from such
registration, (iii) such Option Shares may not be transferred
without compliance with all applicable federal and state securities laws,
and (iv) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the Option Documents may
be endorsed on the certificates. Notwithstanding the above, should the
Company be advised by counsel that the issuance of Option Shares upon the
exercise of an Option should be delayed pending (A) registration under
federal or state securities laws, (B) the receipt of an opinion that an
appropriate exemption therefrom is available, (C) the listing or inclusion
of the Option Shares on any securities exchange or in an automated
quotation system or (D) the consent or approval of any governmental
regulatory body whose consent or approval is necessary in connection with
the issuance of such Option Shares, the Company may defer the exercise of
any Option granted hereunder until either such event in A, B, C or D has
occurred.
(c) NOTICE OF DISQUALIFYING DISPOSITION. An Optionee
shall notify the Committee if any Option Shares received upon the exercise of
an ISO are sold within one year of exercise or two years from the Grant Date.
ARTICLE VI
ADMINISTRATION
6.1 STOCK OPTION COMMITTEE. The Plan shall be administered by
the Board of Directors of the Company, without participation by any
director on any matter pertaining to him. The Board of Directors may
appoint a Stock Option Committee composed of two or more non-employee
directors (as the term "non-employee directors" is defined under Rule 16b-
3(b)(3) of the Exchange Act) to operate and administer the Plan in its
stead. The Stock Option Committee or the Board of Directors in its
administrative capacity with respect to the Plan is referred to herein as
the "Committee".
6.2 MEETINGS. The Committee shall hold meetings at such times and
places as it may determine. Acts approved at a meeting by a majority of
the members of the Committee or acts approved in writing by the unanimous
consent of the members of the Committee shall be the valid acts of the
Committee.
6.3 DISCRETION OF COMMITTEE AND THE BOARD OF DIRECTORS. The
Committee shall from time to time at its discretion grant Options pursuant
to the terms of the Plan. The Committee shall have plenary authority to
determine the Optionees to whom and the times at which Options shall be
granted, the number of Option Shares to be covered by such grants and the
price and other terms and conditions thereof, including a specification
with respect to whether an Option is intended to be an ISO, subject,
however, to the express provisions of the Plan and compliance with Rule
16b-3(d) under the Exchange Act. In making such determinations the
Committee may take into account the nature of the Optionee's services and
responsibilities, the Optionee's present and potential contribution to the
Company's or its Affiliates success and such other factors as it may deem
relevant. The interpretation and construction by the Committee of any
provision of the Plan or of any benefit granted under it shall be final,
binding and conclusive.
6.4 NO LIABILITY. No member of the Board of Directors or the
Committee shall be personally liable for any action or determination with
respect to the Plan or any benefit thereunder, or for any act or omission
of any other member of the Board of Directors or the Committee, including
but not limited to the exercise of any power and discretion given to him
under the Plan, except those resulting from (i) any breach of such
person's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or involving intentional misconduct or a
knowing violation of law or (iii) any transaction from which such person
derived an improper personal benefit.
6.5 INDEMNIFICATION. In addition to such other rights of
indemnification as he may have as a member of the Board of Directors or
the Committee, and with respect to the administration of the Plan and the
granting of Options hereunder, each member of the Board of Directors and
of the Committee shall be entitled to be indemnified by the Company to the
fullest extent permitted by applicable law, for all expenses (including
but not limited to reasonable attorneys' fees and expenses), judgments,
fines and amounts paid in settlement reasonably incurred by him in
connection with or arising out of any action, suit or proceeding with
respect to the administration of the Plan or the granting of Benefits
hereunder (each a "Proceeding") in which he may be involved by reason of
his being or having been a member of the Board of Directors or the
Committee, whether or not he continues to be such member of the Board of
Directors or the Committee at the time of the incurring of such expenses;
provided however, that such indemnity shall not include any expenses
incurred by such member of the Board of Directors or Committee in respect
of any matter in which any settlement is effected in an amount in excess
of the amount approved by the Company on the advice of its legal counsel;
and provided further that no right of indemnification under the provisions
set forth herein shall be available to or accessible by any such member of
the Committee unless within ten (10) days after institution of any such
action, suit or proceeding he shall have offered the Company in writing
the opportunity to handle and defend such action, suit or proceeding at
its own expense. The foregoing right of indemnification shall inure to
the benefit of the heirs, executors or administrators of each such member
of the Board of Directors or the Committee and shall be in addition to all
other rights to which such member of the Board of Directors or the
Committee would be entitled to as a matter of law, contract or otherwise.
Expenses (including attorneys' fees) incurred by a member of the Board of
Directors or the Committee in defending any Proceeding may be paid by the
Company in advance of the final disposition of such Proceeding upon
receipt of an undertaking by or such person to repay all amounts advanced
if it should be ultimately be determined that such person is not entitled
to be indemnified under this Article or otherwise, except that no such
advance payment will be required if it is determined by the Board of
Directors that there is a substantial probability that such person will
not be able to repay the advance payments.
6.6 ADJUSTMENTS ON CHANGES IN COMMON STOCK. The aggregate number
of shares of Common Stock as to which Options may be granted under the
Plan, the number of Option Shares covered by each outstanding Option and
the Option Price per Option Share specified in each outstanding Option
shall be appropriately adjusted in the event of a stock dividend, stock
split or other increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from a subdivision or
consolidation of the Common Stock or other capital adjustment (not
including the issuance of Common Stock on the conversion of other
securities of the Company which are convertible into Common Stock)
effected without receipt of consideration by the Company. The Committee
shall have the authority to determine the adjustments to be made under
this Section and any such determination by the Committee shall be final,
binding and conclusive, provided that no adjustment shall be made which
will cause an ISO to lose its status as such.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT OF THE PLAN. The Committee may terminate, suspend,
amend or otherwise modify the Plan from time to time in such manner as it
may deem advisable. Notwithstanding the foregoing, any amendment to the
Plan which would change the eligibility of employees or the class of
employees eligible to receive an Option or increase the maximum number of
Option Shares as to which Options may be granted, will only be effective
if such action is approved by the holders of common stock of the Company
having a majority of the vote.
7.2 CONTINUED EMPLOYMENT. The grant of an Option pursuant to the
Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company to continue the
employment of the Optionee with the Company or any of its Affiliates.
7.3 WITHHOLDING OF TAXES. Whenever the Company proposes or is
required to issue or transfer Option Shares, the Company shall have the
right to (a) require the recipient or transferee to remit to the Company
an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares, or (b) take whatever
action it deems necessary to protect its interests, including withholding
a portion of such Option Shares.
