United States
Securities and Exchange Commission
Washington, DC 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
________________________________________________________________________________
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
TELVUE CORPORATION
(Name of Registrant as Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(856) 273-8888
____________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M.,
JUNE 12, 2008
____________________________________________
TO THE STOCKHOLDERS OF TELVUE CORPORATION:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Stockholders of
TelVue Corporation, a Delaware corporation ("TelVue"), will be held at the
executive offices of TelVue located at 16000 Horizon Way, Suite 500, Mt. Laurel,
NJ 08054 on June 12, 2008 at 10:00 A.M. for consideration of and action upon the
following matters:
I. Election of six (6) directors to hold office for the ensuing year and
until their successors have been duly elected and qualified; and
II. Such other matters as may properly come before the Annual Meeting.
The Board of Directors has fixed the close of business on April 25, 2008 as
the Record Date for determination of holders of Common Stock of TelVue 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
TELVUE.
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 TELVUE 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:
/s/ John Fell
--------------------
John Fell, Secretary
April 29, 2008
TELVUE CORPORATION
16000 HORIZON WAY, SUITE 500
MT. LAUREL, NJ 08054
(856) 273-8888
DATED April 29, 2008
PROXY STATEMENT
This Proxy Statement is furnished with the attached Notice of Annual
Meeting and with the accompanying Proxy on or about April 29, 2008, to each
stockholder of record of TelVue Corporation ("TelVue") at the close of business
on April 25, 2008 ("Record Date"), in connection with the solicitation of
proxies by the Board of Directors to be voted at the Annual Meeting of
Stockholders of TelVue to be held on June 12, 2008 at 10:00 A.M. at the
executive offices of TelVue located at 16000 Horizon Way, Suite 500, Mt. Laurel,
NJ 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, 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 TelVue 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 TelVue. 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 TelVue, 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 TelVue.
TelVue 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 TelVue's Common Stock outstanding was 48,433,074 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. The holders
of a majority of the outstanding shares of each class entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a quorum.
If a broker that is a record holder of common stock does not return a signed
Proxy, the shares of common stock represented by such Proxy will not be
considered present at the meeting and will not be counted toward establishing a
quorum. If a broker that is a record holder of common stock does return a signed
Proxy, but is not authorized to vote on one or more matters, each such vote
being a broker non-vote, the shares of Common Stock represented by such Proxy
will be considered present at the meeting for purposes of determining the
presence of a quorum. A plurality of the votes cast is required for the election
of directors. Abstentions and broker non-votes will have no effect on the
outcome of the election of directors.
1
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 TelVue 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 TelVue. 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 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 TelVue to be a beneficial owner of
more than five percent (5%) of TelVue's Common Stock.
================================================================================
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS (1)
- --------------------------------------------------------------------------------
H.F. (Gerry) Lenfest 38,016,586 78.5%
Five Tower Bridge, Suite 460
300 Barr Harbor Drive
West Conshohocken, PA 19428
Chairman of the Board and Director
================================================================================
(1) As of the Record Date, 48,433,074 shares of Common Stock were outstanding.
2
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, the named
executive officers, including a significant employee of TelVue, and by all
directors and officers as a group. With the exception of Mr. Lenfest, the
address of all the persons listed below 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 38,016,586 78.5%
Five Tower Bridge, Suite 460
300 Barr Harbor Drive
West Conshohocken, PA 19428
Chairman of the Board and Director
- --------------------------------------------------------------------------------
Joseph M. Murphy 500,000 (2) 1.0%
President, Chief Executive Officer
and Director
- --------------------------------------------------------------------------------
Jesse Lerman 100,000 (3) .2%
Executive Vice President of
Engineering and Director
- --------------------------------------------------------------------------------
Frank J. Carcione 517,500 (4) 1.1%
Director
- --------------------------------------------------------------------------------
Joy Tartar 71,417 .1%
Director
- --------------------------------------------------------------------------------
Robert Lawrence 25,000 -
Director
- --------------------------------------------------------------------------------
Randy Gilson 411,800 (5) .8%
Vice President of Technical
Services
- --------------------------------------------------------------------------------
John Fell - -
Secretary, Treasurer and
Controller
- --------------------------------------------------------------------------------
All Directors, Officers and
Significant Employees as a Group
(8 Persons) 39,642,303 (2)(3)(4)(5) 81.8%
================================================================================
(1) As of the Record Date, 48,433,074 shares of Common Stock were outstanding.
(2) Includes 340,000 shares issuable to Joseph Murphy upon exercise of vested
stock options held by Mr. Murphy.
(3) Includes 100,000 shares issuable to Jesse Lerman upon exercise of vested
stock options held by Mr. Lerman.
(4) Includes 325,000 shares issuable to Frank Carcione upon exercise of vested
stock options held by Mr. Carcione.
(5) Includes 150,000 shares issuable to Randy Gilson upon exercise of vested
stock options held by Mr. Gilson.
3
EQUITY COMPENSATION PLAN INFORMATION
===================================================================================================================
WEIGHTED-AVERAGE
NUMBER OF SECURITIES TO EXERCISE PRICE OF NUMBER OF SECURITIES
BE ISSUED UPON EXERCISE OUTSTANDING OPTIONS, REMAINING AVAILABLE FOR
OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS FUTURE ISSUANCE UNDER
PLAN CATEGORY WARRANTS AND RIGHTS COMPENSATION PLANS EQUITY
- -------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Approved 4,126,667 $.089 5,501,250
by Security Holders
- -------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Not 200,000 (b) .06 -
Approved by Security Holders (a)
- -------------------------------------------------------------------------------------------------------------------
Total 4,326,667 $.089 5,501,250
===================================================================================================================
(a) In December 1997, TelVue adopted a director compensation plan. Under this
plan, each non-employee director, other than the majority stockholder, is
compensated $500 for each meeting attended by receiving shares of Common
Stock issued at the higher of per share fair market value of the Common
Stock as of the Board of Directors meeting date or $.05 per share.
(b) Shares issued by TelVue to certain consultants of its TelVue Virtual
Television Network (TVTN) business segment.
PROPOSAL 1
ELECTION OF DIRECTORS
Effective January 4, 2008, TelVue's Board of Directors increased from five
to six. Six (6) directors will be elected to hold office subject to the
provisions of TelVue's bylaws until the next Annual Meeting of Stockholders, and
until their respective successors are duly elected and qualified. A plurality of
the votes cast is required for the election of directors. Abstentions and broker
non-votes will have no effect on the outcome of the election of directors. The
following table sets forth the name, age, position with TelVue and respective
director service dates of each person who has been nominated to be a director of
TelVue:
================================================================================
POSITION(S)
NAME AGE WITH TELVUE DIRECTOR SINCE
- --------------------------------------------------------------------------------
H. F. (Gerry) Lenfest 77 Chairman and Director 1989
- --------------------------------------------------------------------------------
Joseph M. Murphy 54 President, Chief Executive 1997
Officer and Director
- --------------------------------------------------------------------------------
Jesse Lerman 35 Executive Vice President of
Engineering and Director 2008
- --------------------------------------------------------------------------------
Frank J. Carcione 67 Director 1990
- --------------------------------------------------------------------------------
Joy Tartar 45 Director 2001
- --------------------------------------------------------------------------------
Robert Lawrence 49 Director 2004
- --------------------------------------------------------------------------------
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.
4
PRINCIPAL OCCUPATION OF THE DIRECTOR NOMINEES
H. F. Lenfest has been a director of TelVue since 1989. Mr. Lenfest has
interests in various privately held companies and has been the Chairman of the
Lenfest Group, LLC since January 2000. From 1974 until January 2000, Mr. Lenfest
was the President, CEO and a director of Lenfest Communications, Inc. and each
of its subsidiaries. Lenfest Communications, Inc. and its subsidiaries were
engaged in operating cable television systems, and providing cable advertising
and programming. Mr. Lenfest has been a director of Environmental Tectonics
Corporation since March 2003.
Joseph M. Murphy has been a director of TelVue since 1997. On January 1,
2005, Mr. Murphy was appointed to the position of President and Chief Executive
Officer of TelVue. Mr. Murphy held the position of Executive Vice President of
Sales and Operations of TelVue from September 1994 through December 31, 2004 and
also the position of Division President of Source Communications Group
("Source") from March 2001 through December 31, 2004. Prior to these
appointments, Mr. Murphy had been the Vice President of Sales since joining
TelVue in 1986 through August 1994.
Jesse Lerman has been a director of TelVue since January 2008. He has
served as Executive Vice President of Engineering for TelVue Corporation since
March 12, 2007 when Princeton Server Group, Inc. was acquired by TelVue. Prior
to joining TelVue, Mr. Lerman was CEO of Princeton Server Group, Inc., a digital
video server company which he co-founded in 2003. Prior to that, he served a
number of technical roles including Director of Software at Cable
Video-on-Demand pioneers Sarnoff Real-Time Corporation and DIVA Systems, Inc.
from July 1994 to October 2002.
Frank J. Carcione has been a director of TelVue since 1990. Since January
1, 2005, Mr. Carcione has been an advisor to TelVue Corporation. From May 1991
through December 31, 2004, Mr. Carcione was the President and Chief Executive
Officer of TelVue. Mr. Carcione retired from this position on January 1, 2005.
Mr. Carcione held the position of Executive Vice President of TelVue from May
1990 through 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.
Joy Tartar, CPA, has been a director of TelVue since 2001. She has been the
Chief Financial Officer for the Lenfest Group, LLC since January 2000. From
January 1996 through December 1999, Ms. Tartar was the Vice President of Finance
for Radius Communications, a cable advertising and sales company serving the
greater Philadelphia and Harrisburg, PA areas, and a former subsidiary of
Lenfest Communications, Inc. From January 1994 through December 1995, Ms. Tartar
was the Controller for Starnet, Inc., a national satellite distributor of cable
programming and digital video, and a former subsidiary of Lenfest
Communications, Inc.
Robert Lawrence has been a director of TelVue since 2004. He has been the
Chief Operating Officer of the Lenfest Media Group since June 2005. Mr. Lawrence
held the position of Senior Vice President of Operations of Starnet LP, a
national satellite distributor of cable programming and digital video, and a
former subsidiary of Lenfest Communications, Inc. from October 2003 through May
2005. One of the limited partners in StarNet, LP was H.F. Lenfest. Mr. Lawrence
worked as a consultant from June 2000 to October 2003. From 1996 to June 2000,
Mr. Lawrence was the Executive Vice President of Suburban Cable, a subsidiary of
Lenfest Communications, Inc. Prior to this appointment, Mr. Lawrence held
various positions with increasing responsibility since joining Suburban Cable in
1978.
CORPORATE GOVERNANCE
The Board of Directors held two meetings during the year ended December 31,
2007, and acted by unanimous consent on several other occasions during 2007. All
directors attended 100% of the Board meetings, with the exception of Frank
Carcione, who did not attend one of the two meetings. All members of the Board
of Directors are strongly encouraged, but not required, to attend TelVue
Corporation's annual meeting of stockholders. All Board members attended the
2007 annual meeting of stockholders.
5
The employee directors of TelVue receive no compensation for serving as
directors. Non-employee directors (other than Mr. Lenfest) receive $500 paid in
shares of common stock of TelVue for each meeting of the Board attended. H.F.
Lenfest receives no compensation for serving as a director.
TelVue has a standing Audit Committee consisting of two members, Joy Tartar
and Robert Lawrence. The Board of Directors has determined that Ms. Tartar, the
Chairman of the Audit Committee is independent (as that term is defined by Rule
4200 of the Nasdaq Stock Market, Inc.'s audit committee independence rules (as
currently in effect)). Ms. Tartar possesses the attributes of an audit committee
financial expert (as that term is defined in Item 407(d)(5) of Regulation S-K of
the regulations promulgated by the Securities and Exchange Commission ("SEC").
The Audit Committee is responsible for monitoring the integrity of TelVue's
financial reporting process and systems of internal controls for finance,
accounting and regulatory compliance and reviewing the independence and
performance of TelVue's independent auditors and internal auditing functions,
and related matters. There were two meetings of the Audit Committee in 2007.
TelVue has not adopted an audit committee charter. The Stock Option Committee
consists of Joy Tartar and Robert Lawrence. There was one meeting of the Stock
Option Committee held in 2007. TelVue does not have a standing Nominating
Committee. The Board of Directors has determined not to create a standing
Nominating Committee because the Board has and will continue to serve the
functions of such a committee. TelVue does not have a nominating committee
charter.
TelVue does not have a standing compensation committee. Based on the small
size of the company and the related number of employees, the Board of Directors
has determined that a compensation committee is not currently necessary. The
Chairman of the Board of Directors has served and will continue to serve the
functions of such a committee. The Chairman has sole authority in determining
director compensation and the President and CEO's compensation using company
performance and market conditions as an aid. The President and CEO makes
recommendations regarding compensation for other executives based on the same
parameters. These recommendations are reviewed and approved by the Chairman of
the Board on an annual basis. TelVue has not adopted a compensation committee
charter.
The Board of Directors consisted of Messrs. Lenfest, Murphy, Carcione,
Lawrence and Ms. Tartar from October 2004 to present; Mr. Lerman joined the
Board in January 2008. Mr. Lawrence and Ms. Tartar are independent (as that term
is defined by Nasdaq Rule 4200). By virtue of his stock ownership and their
employment status, Messers. Lenfest, Murphy, Lerman and Carcione, respectively,
are not independent.
DESCRIPTION OF DIRECTOR QUALIFICATIONS, NOMINATING PROCESS AND SHAREHOLDER
NOMINATIONS
Members of TelVue's Board of Directors should meet certain minimum
qualifications including being at least 21 years old and possessing (1) the
ability to read and understand corporate financial statements, (2) relevant
business experience and professional skills, (3) high moral character and
personal and professional integrity, and (4) the willingness to commit
sufficient time to attend to his or her duties and responsibilities as a
director of a public corporation. In addition, the Board of Directors may
consider a variety of other qualities and skills, including (i) expertise in the
businesses in which TelVue and divisions may engage, (ii) the ability to
exercise independent decision-making, (iii) the absence of conflicts of
interest, (iv) diversity of gender, ethnic background, and experience, and (v)
the ability to work effectively with other directors in collectively serving the
long-term interests of all shareholders. Nominees must also meet any applicable
requirements of SEC regulations, state law, and TelVue's charter and bylaws.
The Board of Directors will annually assess the qualifications, expertise,
performance and willingness to serve of existing directors. If at this time or
at any other time during the year the Board of Directors determines a need to
add a new director with specific qualifications or to fill a vacancy on the
Board, the Chairman of the Board will then initiate the search, working with
staff support and seeking input from other directors and senior management,
considering nominees previously submitted by shareholders, and, if deemed
necessary or appropriate, hiring a search firm. An initial slate of candidates
satisfying the specific qualifications, if any, and otherwise qualifying for
membership on the Board, will then be identified and presented to the Board of
Directors which will then prioritize the candidates and determine if any of the
members of the Board or senior management have relationships with the
6
preferred candidates and can initiate contacts. If not, contact would be
initiated by a search firm. The Chairman, President and CEO and at least one
member of the Board of Directors will interview the prospective candidate(s).
Evaluations and recommendations of the interviewers will be submitted to the
Board of Directors for final evaluation. The Board of Directors will meet to
consider such recommendations and to approve the final candidate, and will
evaluate all nominees for director, including nominees recommended by a
shareholder, on the same basis.
The Board of Directors will consider director candidates recommended by
TelVue's shareholders in accordance with the following procedures. Shareholders
may make recommendations with regard to nominees for election to the Board of
Directors at future annual meetings of shareholders by submitting in writing a
notice, received by the Secretary of TelVue at least 60 days prior to the date
on which TelVue first mailed its proxy materials for the prior year's annual
meeting of shareholders, or, if TelVue did not have an annual meeting of
shareholders in the prior year, 90 days prior to the date of the annual meeting.
Each notice of nomination must set forth (i) the name, age, business address
and, if known, residence address of each nominee, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of common stock
of TelVue which are beneficially owned by each such nominee, (iv) the
qualifications of such nominee for service on the Board of Directors, (v) the
name and residence address of the proposing shareholder(s), and (vi) the number
of shares of common stock owned by the proposing shareholder(s). All nominees
for director, including nominees recommended by a shareholder, shall be
evaluated on the same basis.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
TelVue has established procedures for shareholders to communicate directly
with the Board of Directors on a confidential basis. Shareholders who wish to
communicate with the Board or with a particular director may send a letter to
the Secretary of TelVue Corporation at 16000 Horizon Way, Suite 500, Mt. Laurel,
NJ 08054. The mailing envelope must contain a clear notation indicating that the
enclosed letter is a "Shareholder-Board Communication" or "Shareholder-Director
Communication." All such letters must identify the author as a shareholder and
clearly state whether the intended recipients are all members of the Board or
just certain specified individual directors. The Secretary will make copies of
all such letters and circulate them to the directors addressed. To the extent
that a shareholder wishes the communication to be confidential, such shareholder
must clearly indicate on the envelope that the communication is "confidential."
The Secretary will then forward such communication, unopened, to the Chairman of
the Board of Directors.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed TelVue's audited financial
statements with management. The Audit Committee has discussed the matters
required to be discussed by SAS 61 (Communication with Audit Committee) with
Pressman Ciocca Smith LLP, TelVue's independent accountants.
The Audit Committee has received written disclosures from Pressman Ciocca
Smith LLP required by Independence Standards Board Standard No. 1 (which relate
to the accountant's independence from TelVue) and has discussed with Pressman
Ciocca Smith LLP their independence from TelVue. The Audit Committee has
considered whether the provision of the foregoing services is compatible with
maintaining Pressman Ciocca Smith LLP's independence.
Based on the review and discussions referenced above, the Audit Committee
recommended that TelVue's audited financial statements be included in its Annual
Report on Form 10-KSB for the year ended December 31, 2007, for filing with the
Securities and Exchange Commission.
Audit Committee:
Joy Tartar
Robert Lawrence
7
CODE OF ETHICS
TelVue has adopted a Code of Ethics (as that term is defined in Item 406 of
Regulation S-K of the regulations promulgated by the SEC) that applies to
TelVue's chief executive officer and senior financial officers. A copy of the
Code of Ethics is available, without charge, by requesting it from the Secretary
of TelVue Corporation at 16000 Horizon Way, Suite 500, Mount Laurel, NJ 08054 or
by calling 1-856-273-8888. TelVue will publicly disclose any waivers or
amendments to the Code of Ethics that applies to its chief executive officer and
senior financial officers pursuant to the requirements of the SEC.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEE OF TELVUE
================================================================================
POSITION(S)
NAME AGE WITH TELVUE
- --------------------------------------------------------------------------------
Joseph M. Murphy 54 President and Chief Executive Officer
- --------------------------------------------------------------------------------
Jesse Lerman 35 Executive Vice President of Engineering
- --------------------------------------------------------------------------------
Frank J. Carcione 67 Advisor
- --------------------------------------------------------------------------------
John Fell 44 Secretary, Treasurer, Controller
- --------------------------------------------------------------------------------
Randy Gilson 47 Vice President of Technical Services
================================================================================
BIOGRAPHICAL AND OTHER INFORMATION REGARDING THE EXECUTIVE OFFICERS AND A
SIGNIFICANT EMPLOYEE OF TELVUE
Executive officers are appointed by the Board of Directors. Each executive
officer is appointed to serve until his successor is duly elected and qualified.
Joseph M. Murphy. See "Election of Directors."
Jesse Lerman. See "Election of Directors."
Frank J. Carcione. See "Election of Directors."
John Fell has served as Secretary, Treasurer and Controller of TelVue since
April 2, 2007. Prior to joining TelVue, Mr. Fell was the Controller of WPHL-TV
in Philadelphia, a Division of Tribune Television Company from April 2003 to
March 2007. He also served as an Assistant Treasurer of Tribune Television
Company during the same time period. Prior to that, he was Assistant Controller
for WPHL-TV from September 2000 to March 2003.
Randy Gilson is a significant employee of TelVue. Mr. Gilson has been the Vice
President of Technical Services since July 1993. Prior to that appointment, Mr.
Gilson held positions of increasing responsibility since joining TelVue in 1986.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of compensation paid or accrued by
TelVue for services rendered during the fiscal years ended December 31, 2007 and
2006, respectively, by each of the named executive officers, including an
advisor and a significant employee.
================================================================================
NAME AND
PRINCIPAL ANNUAL ALL OTHER
POSITION YEAR SALARY ($) COMPENSATION (1) TOTAL ($)
- --------------------------------------------------------------------------------
Joseph Murphy 2007 $205,000 $5,125 $210,125
President and CEO 2006 $194,808 $4,943 $199,751
- --------------------------------------------------------------------------------
Jesse Lerman 2007 $150,577 $2,683 $153,260
Executive VP of 2006 - - -
Engineering
- --------------------------------------------------------------------------------
Frank J. Carcione 2007 $ 50,000 - $ 50,000
Advisor (2) 2006 $ 60,108 - $ 60,108
- --------------------------------------------------------------------------------
John Fell 2007 $ 84,375 $1,406 $ 85,781
Controller 2006 - - -
- --------------------------------------------------------------------------------
Randy Gilson 2007 $125,872 $3,147 $129,019
VP of Technical 2006 $121,774 $3,329 $125,103
Services
================================================================================
(1) For 2007, consists of company funded contributions to TelVue's 401k Plan
for the period January 1, 2007 though December 31, 2007. For 2006, consists
of company funded contributions to TelVue's Simplified Pension Plan for the
period January 1, 2006 through February 28, 2006 and company funded
contributions to TelVue's 401k Plan for the period March 1, 2006 through
December 31, 2006.
(2) Frank Carcione retired as President and Chief Executive Officer of TelVue
on January 1, 2005. He continues to serve as a director and advisor to
TelVue. Pursuant to a retirement package, TelVue paid Mr. Carcione a
onetime exit bonus of $100,000 in January 2005, and salary during the
following years of: Year 2005 - $75,000, Year 2006 - $60,108, Year 2007 -
$50,000, Year 2008 - $50,000, Year 2009 - $40,000. In addition Mr. Carcione
will receive benefits in each of these years.
9
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information of outstanding equity awards of each
named executive officers, including an advisor and a significant employee, of
TelVue during the fiscal year ended December 31, 2007.
OPTION AWARDS
================================================================================
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING
UNEXERCISED UNEXERCISED OPTION OPTION
OPTIONS (#) OPTIONS (#) EXERCISE EXPIRATION
NAME EXERCISABLE UNEXERCISABLE PRICE ($) DATE
- --------------------------------------------------------------------------------
Joseph M. Murphy 190,000 - $.070 6/29/09
President and CEO 150,000 - .025 8/03/14
- --------------------------------------------------------------------------------
Jesse Lerman 100,000 - $.13 3/30/17
Exec VP of
Engineering
- --------------------------------------------------------------------------------
Frank J. Carcione 225,000 - $.070 6/29/09
Advisor 100,000 - .025 8/03/14
- --------------------------------------------------------------------------------
Randy Gilson 50,000 - $.070 6/29/09
VP of 100,000 - .025 8/03/14
Technical
Services
================================================================================
DIRECTOR COMPENSATION
==================================================
NAME STOCK AWARDS/TOTAL
--------------------------------------------------
Joy Tartar $500
--------------------------------------------------
Robert Lawrence $500
==================================================
10
TRANSACTIONS WITH RELATED PERSONS AND CERTAIN CONTROL PERSONS
Since November 2, 1989, TelVue has funded its expansion and operating
deficit from the proceeds of the sale of shares of TelVue's Common Stock and
Preferred Stock to Mr. H.F. Lenfest, TelVue's majority stockholder, and from
loans from Mr. Lenfest. From November 1989 to February 1996, TelVue borrowed an
aggregate of $6,128,712 from Mr. Lenfest. These loans and accrued interest were
repaid in their entirety during 2003. On March 5, 2001, TelVue borrowed $650,000
from Mr. Lenfest to fund a portion of the Source acquisition, at an interest
rate of prime plus one percent (1%) compounded and due on or before January 1,
2004. This loan was repaid in its entirety in 2001.
In addition to the borrowings noted above, during January 1995, Mr. Lenfest
purchased from Science Dynamics Corporation ("Science"), TelVue's non-interest
bearing note in the amount of $541,000 (the "Science Note"). The Science Note
was originally issued by TelVue to Science and was payable December 31, 1996.
The maturity date of the Science Note had been extended by TelVue and Mr.
Lenfest on a yearly basis. On June 16, 2005, the members of the Board of
Directors of TelVue and Mr. Lenfest, extended the maturity date of the
non-interest bearing Science Note in the principal amount of $541,000 to January
1, 2011.
On March 9, 2001, with the acquisition of the assets of Source for
$1,300,000, TelVue paid $1,000,000 in cash and $300,000 pursuant to a promissory
note (the "Source Note"). The Source Note had a term of three years. Interest
only was payable monthly during year one at the rate of 8% per annum. Beginning
in year two, both principal and interest were payable monthly at the rate of
5.06% per annum. During the first quarter of 2004, TelVue paid the remaining
balance on the Source Note in its entirety.
On April 27, 2005, TelVue entered into a Line of Credit Note (the "2005
Note") with Mr. Lenfest. The 2005 Note was secured to provide funding to grow
the TVTN Network. Under the terms of the 2005 Note, TelVue may borrow, from time
to time, up to the maximum principal amount of the 2005 Note which is
$3,800,000. The minimum advance under the 2005 Note is $100,000 and the interest
rate of the 2005 Note is equal to the prime rate plus one percent (1%). The 2005
Note contains customary events of default, including, among others, non-payment
of principal and interest and in the event TelVue is involved in certain
insolvency proceedings. In the event of a default, all of the obligations of
TelVue under the 2005 Note may be declared immediately due and payable. The 2005
Note is unsecured and will expire six years from the date of the first advance,
which is November 23, 2011, unless extended or renewed. Principal and interest
on the 2005 Note are also due and payable on November 23, 2011. During the year
ended December 31, 2007, TelVue borrowed $1,600,000 under the terms of the 2005
Note, bringing outstanding borrowings under the 2005 Note to $3,800,000 and
accrued interest on the borrowings to $444,727 as of December 31, 2007, fully
exhausting this note.
As a result of the anticipated exhaustion of the credit under the 2005
Note, TelVue entered into an additional Line of Credit (the "2006 Note") with
Mr. Lenfest on November 3, 2006, in the principal amount of Ten Million Dollars
($10,000,000). Under the 2006 Note, TelVue may request up to $5,000,000 for
general working capital. TelVue may request up to an additional $5,000,000
available under this Line of Credit for purposes other than general working
capital upon mutual agreement by TelVue and Mr. Lenfest. The minimum advance
under the 2006 Note is $100,000 and the interest rate on the 2006 Note is equal
to the prime rate plus one percent (1%). The 2006 Note contains customary events
of default, including, among others, non-payment of principal and interest and
in the event TelVue is involved in certain insolvency proceedings. In the event
of a default, all of the obligations of TelVue under the 2006 Note may be
declared immediately due and payable. The 2006 Note is unsecured and will expire
six years from the date of the first advance under the 2006 Note unless extended
or renewed. Principal and interest on the 2006 Note are also due and payable six
years from the date of the first advance under the 2006 Note, which was December
26, 2006. As of December 31, 2007, the Company had borrowed $8,400,000 under the
2006 Note with accrued interest in the amount of $547,551. TelVue is borrowing
approximately $300,000 per month under the 2006 Note and anticipates that the
funds will be exhausted by May 2008 or sooner.
As a result of the anticipated exhaustion of the line of credit under the
2006 Note, TelVue entered into an additional Line of Credit (the "2007 Note")
with Mr. Lenfest on December 21, 2007, in the principal amount of $2,300,000.
The minimum advance under the 2007 Note is $100,000 and the interest
11
rate on the 2007 Note is equal to the prime rate plus one percent (1%). The 2007
Note contains customary events of default, including, among others, non-payment
of principal and interest and in the event TelVue is involved in certain
insolvency proceedings. In the event of a default, all of the obligations of
TelVue under the 2007 Note may be declared immediately due and payable. The 2007
Note is unsecured and will expire six years from the date of the first advance
under the 2007 Note unless extended or renewed. Principal in interest on the
2007 Note are also due and payable six years from the date of the first advance
under the 2007 Note.
On December 26, 2006, TelVue borrowed $400,000 from Mr. Lenfest under the
2006 Note, to loan to Princeton Server Group, Inc. ("PSG") to fund their
operating expenses (the "PSG Note"). The PSG Note was a convertible note that
bore interest at a rate of six percent (6%) per annum. No payments of principal
or interest were due until July 1, 2007. Under the PSG Note interest accrued
through July 1, 2007 was to be added to the principal. Interest was payable
monthly from July 1, 2007 through January 1, 2008. The remaining balance was
payable in forty eight (48) monthly installments of principal and interest
commencing February 1, 2008. The note was scheduled to mature in January 2012.
The Company had the option to convert the unpaid principal balance of the note
and all accrued interest into common stock of PSG. In connection with the PSG
Note the TelVue received a warrant, which entitled TelVue to purchase 129,629
shares of common stock of PSG for $1.08 per share. The warrant was to commence
on July 1, 2007 and expire on December 31, 2016. The PSG Note was forgiven on
March 12, 2007, in connection with TelVue's acquisition of all of the
outstanding stock of PSG (see below).
On March 12, 2007, PSG was acquired by TelVue, for $6.1 million and the
forgiveness of the PSG Note (described above). TelVue borrowed $6.1 million from
Mr. Lenfest under the 2006 Note. PSG develops high performance digital video
systems, appliances, and software that support capture, storage, manipulation
and play-out of digital media in multiple popular formats. PSG markets their
product to PEG TV and local origination broadcast stations, professional
broadcast stations and schools and universities. TelVue acquired PSG as a
complement to its TVTN Network with the objective being to offer towns,
municipalities and schools a packaged turnkey product of hardware and software.
On June 16, 2005, Mr. Lenfest, the holder of all of TelVue's outstanding
Class A Redeemable Convertible Preferred Stock (the "Preferred Stock"), informed
TelVue of his intent to convert all of his 3,518,694 shares of Preferred Stock
into TelVue's common stock. Each share of Preferred Stock was convertible into
6.667 shares of common stock. The conversion of the Preferred Stock to common
stock occurred on August 2, 2005, upon Mr. Lenfest's delivery of the Preferred
Stock in the form of a lost certificate affidavit. As a result of the
conversion, TelVue issued 23,459,133 shares of Common stock to Mr. Lenfest. Mr.
Lenfest's beneficial ownership interest in the common stock of TelVue, after the
cancellation of the Warrants to purchase common stock described below, was
approximately 78.3 percent as of December 31, 2006. The Preferred Stock was
eliminated and is included as 23,459,133 shares of common stock in the
stockholders' equity section of the balance sheet. On August 21, 2006, the Board
of Directors, with Mr. Lenfest abstaining from the action, waived the two year
holding period required to receive the full voting power of ten votes per share
for the 23,459,133 shares of common stock Mr. Lenfest received for the
conversion of his preferred stock. The Preferred Stock had a par value of $1 per
share and provided for a cumulative six percent (6%) semiannual dividend. The
dividend was payable in cash or additional shares of Preferred Stock at $1 per
share, at TelVue's option. TelVue had accrued dividends on the Preferred Stock
since the beginning of 1998, but no dividends had been paid. On June 16, 2005,
Mr. Lenfest agreed to relinquish his right to all accrued but unpaid dividends
attributable to the Preferred Stock. Therefore, $3,061,269 of accrued dividends
was reversed and is included in stockholders' equity as a decrease to TelVue's
accumulated deficit.
On June 16, 2005, the members of the Board of Directors of TelVue and Mr.
Lenfest agreed to terminate a Warrant Agreement between Mr. Lenfest and TelVue.
Pursuant to the Warrant Agreement, Mr. Lenfest had the right to purchase up to
29,915,160 shares of TelVue's common stock for $.01 per share, the fair market
value of the common stock on the grant date. The Warrant Agreement was entered
into on March 15, 1991, in connection with a prior line of credit to TelVue
provided by Mr. Lenfest.
At December 31, 2007, TelVue was indebted to Mr. Lenfest in the principal
amount of $12,200,000 and accrued interest of $992,278. Other related
transactions are described in Notes 4, 7, 8, 10 and 14 of the financial
statements of TelVue's 2007 Annual Report.
12
On January 1, 2005, Frank J. Carcione retired from his position as
President and Chief Executive Officer of TelVue and Joseph Murphy was appointed
to this position. Mr. Carcione continues to serve as a director and advisor to
TelVue. Pursuant to his retirement package, TelVue paid Mr. Carcione a onetime
exit bonus of $100,000 in January 2005, and salary during the following years
of: $75,000 in Year 2005, $60,000 in Year 2006, $50,000 in Year 2007, $50,000 in
Year 2008 and $40,000 in Year 2009. In addition, Mr. Carcione will receive
benefits in each of these years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the TelVue's officers and directors, and persons who own more than ten percent
of a registered class of TelVue's equity securities, to file reports of
ownership and changes in ownership with SEC. Officers, directors and greater
than ten percent stockholders are required by SEC regulations to furnish TelVue
with copies of all Section 16(a) forms they file.
Based solely on TelVue's review of such forms received by it, or written
representation from certain reporting persons that no Forms 5 were required for
such persons, TelVue believes that during the fiscal year ended December 31,
2007 all filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Stockholders intending to submit proposals to be included in TelVue's next
Proxy Statement must send their proposal to the Secretary of TelVue at 16000
Horizon Way, Suite 500, Mt. Laurel, New Jersey, 08054 not later than December
30, 2008. Such proposals must relate to matters appropriate for stockholder
action and be consistent with regulations of the SEC.
Stockholders intending to present proposals at the next annual meeting of
TelVue, and not intending to have such proposals included in TelVue's next Proxy
Statement must send their proposal to the Secretary of TelVue at 16000 Horizon
Way, Suite 500, Mt. Laurel, New Jersey, 08054 not later than March 13, 2009. If
notification of a stockholder proposal is not received by the above date, TelVue
may vote, in its discretion, any and all of the proxies received in its
solicitation against such proposal.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The accounting firm of Pressman Ciocca Smith LLP served as TelVue's
independent registered public accountants for the years ended December 31, 2007
and 2006, and will serve as TelVue's independent registered public accountants
for the year ending December 31, 2008. 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.
The following table sets forth the aggregate fees for services rendered by
Pressman Ciocca Smith LLP to TelVue for the years ended December 31, 2007 and
2006.
2007 2006
-------- --------
Audit fees $ 67,255 $ 45,591
Audit related fees 10,800 18,113
Tax fees 12,284 8,888
All other fees - -
-------- --------
Total $ 90,339 $ 72,592
======== ========
13
AUDIT FEES: These amounts include fees for professional services rendered
in auditing TelVue's financial statements set forth in TelVue's Forms
10-KSB for the years ended December 31, 2007 and 2006 and the reviews of
TelVue's quarterly financial statements set forth in TelVue's Forms 10-QSB
in 2007 and 2006.
AUDIT-RELATED FEES: These amounts consisted of fees for due diligence in
connection with the Princeton Server Group, Inc. acquisition.
TAX FEES: These amounts consisted of fees for tax consultation and tax
compliance services.
Pressman Ciocca Smith LLP did not render any other services to TelVue in
2007 and 2006.
The Audit Committee has considered and determined that the non-audit
services provided by Pressman Ciocca Smith LLP in 2007 and 2006 are compatible
with maintaining the auditor's independence.
All of the 2007 services described above were approved by the Audit
Committee pursuant to the SEC rule that requires audit committee pre-approval of
audit and non-audit services provided by TelVue's independent auditors, to the
extent that rule was applicable during fiscal year 2007. On an ongoing basis,
management will communicate specific projects and categories of services for
which advance approval of the Audit Committee is required. The Audit Committee
will review these requests and advise management and the independent auditors if
the Audit Committee pre-approves the engagement of the independent auditors for
such projects and services. On a periodic basis, the independent auditors will
report to the Audit Committee the actual spending for such projects and services
compared to the approved amounts. The Audit Committee may delegate the ability
to pre-approve audit and permitted non-audit services to a sub-committee of the
Audit Committee, provided that any such pre-approvals are reported at the next
Audit Committee meeting.
OTHER INFORMATION
A COPY OF TELVUE'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING EXHIBITS, FOR
2007 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.
14
PROXY TELVUE CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 12, 2008
The undersigned hereby appoints Joseph M. Murphy and John Fell 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 the
executive offices of TelVue Corporation located at 16000 Horizon Way, Suite 500,
Mt. Laurel, NJ 08054 on June 12, 2008 at 10:00 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 PROPOSAL 1. BY RETURNING THIS PROXY CARD, THE UNDERSIGNED GIVES THE
PROXIES DISCRETIONARY AUTHORITY REGARDING ANY OTHER BUSINESS WHICH MAY PROPERLY
COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF, AND
ANY MATTER INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
1. ELECTION OF DIRECTORS
H.F. LENFEST, JOSEPH M. MURPHY, FRANK J. CARCIONE,
JOY TARTAR, ROBERT LAWRENCE, JESSE LERMAN
[ ] 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. 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
15
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
Officers, 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:______________________________, 2008
_________________________________________
_________________________________________
Signature(s) of stockholder(s)
16