<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
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<S> <C> <C>
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
</TABLE>
WHITE PINE SOFTWARE, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[WHITE PINE
LOGO]
WHITE PINE SOFTWARE, INC.
542 Amherst Street
Nashua, New Hampshire 03063
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
We invite you to attend our 1999 Annual Meeting of Stockholders, which is
being held as follows:
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<S> <C>
DATE: Wednesday, July 28, 1999
TIME: 10 A.M.
LOCATION: Foley, Hoag & Eliot LLP
One Post Office Square
Sixteenth Floor
Boston, Massachusetts 02109
</TABLE>
At the Meeting, we will ask you and our other stockholders to:
- elect four directors, who would constitute our entire board of
directors;
- approve the amendment of our Employee Stock Purchase Plan,
principally to increase the number of available shares; and
- consider any other business properly presented at the Meeting.
You may vote on these matters in person or by proxy. Whether you plan to
attend the Meeting or not, we ask that you complete and return the enclosed
proxy card promptly in the enclosed addressed, stamped envelope so that your
shares will be represented and voted at the Meeting in accordance with your
wishes. If you attend the Meeting, you may withdraw your proxy and vote your
shares in person. Only stockholders of record at the close of business on
May 31, 1999 may vote at the Meeting.
By order of the board of directors,
Mark L. Johnson
SECRETARY
Boston, Massachusetts
June 15, 1999
<PAGE>
PROXY STATEMENT
FOR THE
WHITE PINE SOFTWARE, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
INFORMATION ABOUT THE MEETING
<S> <C>
This Proxy Solicitation................................................................. 2
How to Vote............................................................................. 2
Quorum Required to Transact Business.................................................... 3
Availability of Auditors................................................................ 3
DISCUSSION OF PROPOSALS
Proposal to Elect Directors............................................................. 4
Proposal to Approve the Amendment of Our Employee Stock Purchase Plan...................... 5
Other Matters........................................................................... 9
Stockholder Proposals for 2000 Annual Meeting........................................... 9
ADDITIONAL INFORMATION ABOUT DIRECTORS
Board Meetings.......................................................................... 10
Board Committees........................................................................ 10
Director Compensation................................................................... 10
INFORMATION ABOUT EXECUTIVE OFFICERS
Background Information About Executive Officers......................................... 12
Executive Officer Compensation.......................................................... 12
Summary Compensation Table for 1996, 1997 and 1998................................... 12
Option Grants in 1998................................................................ 13
Aggregated Option Exercises in 1998 and Option Values at December 31, 1998........... 14
Related Party Transactions.............................................................. 14
INFORMATION ABOUT STOCK OWNERSHIP
Stock Owned by Directors, Executive Officers and Greater-than-5% Stockholders........... 15
Section 16(a) Beneficial Ownership Reporting Compliance................................. 17
EXHIBIT A. 1996 Amended and Restated Employee Stock Purchase Plan...................... A-1
</TABLE>
<PAGE>
INFORMATION ABOUT THE MEETING
THIS PROXY SOLICITATION
We have sent you this proxy statement and the enclosed proxy card because
our board of directors is soliciting your proxy to vote at the Meeting
(including any adjournment or postponement of the Meeting).
- THIS PROXY STATEMENT summarizes information about the proposals to be
considered at the Meeting and other information you may find useful in
determining how to vote.
- THE PROXY CARD is the means by which you actually authorize another
person to vote your shares in accordance with your instructions.
We are paying the costs of soliciting these proxies. Our directors,
officers and employees may solicit proxies in person or by mail, telephone or
telegraph. We expect that the expense of any solicitation will be nominal. We
will reimburse brokers and other nominee holders of shares for expenses they
incur in forwarding proxy materials to beneficial owners of those shares. We
have not retained the services of any proxy solicitation firm to assist us in
this solicitation.
We mailed this proxy statement and the enclosed proxy card to stockholders
for the first time on or about June 15, 1999. In this mailing, we included a
copy of our 1998 Annual Report to Stockholders, which includes a copy of our
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998 as
filed with the Securities and Exchange Commission.
HOW TO VOTE
You are entitled to one vote at the Meeting for each share of common stock
registered in your name at the close of business on May 31, 1999. The proxy card
states the number of shares you are entitled to vote at the Meeting.
You may vote your shares at the Meeting in person or by proxy:
- TO VOTE IN PERSON, you must attend the Meeting, and then complete and
submit the ballot provided at the Meeting.
- TO VOTE BY PROXY, you must complete and return the enclosed proxy
card. Your proxy will be valid only if you sign, date and return it
before the Meeting. By completing and returning the proxy card, you
will direct the designated persons to vote your shares at the Meeting
in the manner you specify in the proxy card. If you complete all of
the proxy card except the voting instructions, then the designated
persons will vote your shares for the election of the nominated
directors and for the approval of the amendment of our Employee Stock
Purchase Plan. If any other business properly comes before the
meeting, the designated persons will have the discretion to vote as
they deem appropriate.
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If you complete and return a proxy, you may revoke it at any time before
it is exercised by taking one of the following actions:
- send written notice of your revocation to our Secretary at the
following address:
Mark L. Johnson
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
- send us another signed proxy with a later date; or
- attend the Meeting, notify the Secretary that you are present, and
then vote in person.
QUORUM REQUIRED TO TRANSACT BUSINESS
At the close of business on May 31, 1999, 10,626,163 shares of common stock
were outstanding. Our by-laws require that a majority of the outstanding common
stock be represented, in person or by proxy, at the Meeting in order to
constitute the quorum we need to transact business. We will count abstentions
and broker non-votes in determining whether a quorum exists.
AVAILABILITY OF AUDITORS
Our board of directors has selected Ernst & Young LLP as independent public
accountants to audit our financial statements for the fiscal year ending
December 31, 1999. Ernst & Young LLP have served as our auditors since February
1994. We expect that representatives of Ernst & Young LLP will attend the
Meeting and will have an opportunity to make a statement if they desire to do
so. We also expect that these representatives will be available to respond to
appropriate questions.
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DISCUSSION OF PROPOSALS
PROPOSAL TO ELECT DIRECTORS
The first proposal on the agenda for the Meeting is the election of four
persons to serve as directors for one-year terms beginning at the Meeting and
ending at our 2000 Annual Meeting of Stockholders. Our board of directors is not
classified.
Our board has nominated our four current directors for re-election. Brief
biographies of the nominees, as of June 15, 1999, follow. You will find
information about their stock holdings on page 15.
<TABLE>
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ARTHUR H. BRUNO Mr. Bruno has served as a director since February 1994 and as Chairman of the
Board since June 1997. He is a member of our board's Audit and Compensation
Committees. He has been Chairman of Castelle, Inc., a networking and
telecommunications company, since October 1993 and has been its Chief
Executive Officer since November 1997. He was Castelle's Chief Executive
Officer from October 1993 through April 1997 and its President from October
1993 through April 1997. Mr. Bruno was our Chairman and Chief Executive
Officer from 1991 to 1993. He is 65 years old.
KILLKO A. CABALLERO Mr. Caballero has served as a director since November 1995. He has been
Chief Executive Officer since December 1998 and President since August
1997. He served as interim President during June and July 1997 and as
Senior Vice President of Research and Development and Chief Technology
Officer from November 1995 until June 1997. Mr. Caballero was a
co-founder of White Pine Software, Europe and served as President,
Chief Executive Officer and Chairman of the Board of White Pine
Software, Europe from July 1991 until November 1995. He is 39 years
old.
JONATHAN G. MORGAN Mr. Morgan has served as a director since May 1996 and is a member of our
board's Audit and Compensation Committees. He has been Managing Director/
Group Head of Investment Banking-Technology of Prudential Securities
Incorporated, an investment banking firm, since June 1993. He is 44 years old.
ADAM STETTNER Mr. Stettner has served as a director since March 1999. He has been Managing
Director of the Special Situations Technology Fund, an investment fund,
since April 1997 and President of Stettner Consultants, Inc., a
computer consulting company, since 1989. He is 35 years old.
</TABLE>
If for any reason any of the nominees becomes unavailable for election, the
persons designated in the proxy card may vote the proxy to elect a substitute.
Each of the four nominees has consented to serve as a director if elected, and
we have no reason to believe that any of the nominees will become unavailable
for election.
The four nominees receiving the greatest number of votes cast will be
elected as directors. We will not count abstentions or broker non-votes when we
tabulate votes cast for the election of directors.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF
MESSRS. BRUNO, CABALLERO, MORGAN AND STETTNER.
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<PAGE>
PROPOSAL TO APPROVE THE AMENDMENT OF OUR EMPLOYEE STOCK PURCHASE PLAN
The second proposal on the agenda for the Meeting is the approval of
certain amendments to our Employee Stock Purchase Plan.
Our board adopted the plan in July 1996 and our stockholders approved it
later that month. The plan became effective on October 17, 1996. We adopted the
plan in order to provide a means for our employees and the employees of certain
of our subsidiaries to acquire or increase their ownership interests in our
company.
In December 1998, our board amended the plan to:
- increase the total number of shares available for issuance under
the plan from 100,000 to 200,000;
- remove restrictions on the eligibility of officers who
are "highly compensated employees" within the meaning of
Section 414(q) of the Internal Revenue Code to participate
in the plan;
- clarify that, in the event of a vacancy in the office of
Treasurer, our chief financial officer will fulfill the
responsibilities of the Treasurer under the plan;
- reduce from 20 days to 5 business days the amount of advance
notice that employees must provide to us in order to participate
in any offering under the plan; and
- provide for the automatic re-enrollment of participants in the
plan.
The full text of the plan, as amended by our board in December 1998, is attached
as EXHIBIT A to this proxy statement.
Our board believes that these amendments will enable us to attract,
motivate and retain valued employees and will ease some of the administrative
burdens of the plan. Accordingly, our board recommends that stockholders approve
the amendments to the plan. A majority of the votes properly cast by
stockholders on the proposal at the Meeting is necessary to approve these
amendments. We will not count abstentions and broker non-votes when we tabulate
votes cast on the approval of these amendments.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE
THE AMENDMENTS TO OUR EMPLOYEE STOCK PURCHASE PLAN.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
The following discussion is a summary of the material terms and provisions
of the plan, as amended by our board. This summary, however, does not purport to
be a complete description of the plan. For the full text of the plan, please see
EXHIBIT A.
5
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GENERAL INFORMATION
The plan, which is intended to qualify under Section 423 of the Internal
Revenue Code, permits eligible employees to purchase, in one or more six-month
offerings, shares of our common stock through payroll deductions at a discount
from market price. On June 8, 1999, the closing sale price of our common stock
on the Nasdaq National Market was $4.375 per share.
ADMINISTRATION
The plan is administered by the Compensation Committee of our board of
directors. Under the plan, the Compensation Committee has the authority to
interpret and construe the plan and to adopt rules and regulations for
administering the plan.
ELIGIBILITY AND PARTICIPATION
The plan provides that employees are eligible to participate in the plan
if, on the first day of a six-month offering period, they have completed six
months of continuous service as an employee of our company or of any subsidiary
of our company designated by our board. An employee is not eligible to
participate in the plan, however, if the employee would own stock and/or hold
options to purchase stock (including options granted under the plan) having 5%
or more of the total combined voting power or value of all classes of stock of
our company or any of our subsidiaries. Moreover, an employee is not eligible to
participate in the plan if his or her participation in the plan would permit his
or her rights to purchase stock under the plan (and any other stock purchase
plans of our company or any subsidiary of our company) to exceed $25,000 of the
fair market value of the stock for each calendar year.
Before the amendment of the plan in December 1998, officers who were
"highly compensated employees" within the meaning of Section 414(q) of the
Internal Revenue Code were not eligible to participate in the plan. Our board
concluded that this restriction was unnecessary for the plan to qualify under
Section 423 of the Internal Revenue Code and, accordingly, voted to remove the
restriction.
Participation in the plan is entirely voluntary. Eligible employees
participate in the plan through a series of payroll deductions. Participants may
elect to contribute up to 6% of their compensation toward the purchase of shares
under the plan. We do not pay interest on any amounts in participants' payroll
deduction accounts.
At May 31, 1999, 95 employees were eligible to participate in the plan.
SHARES SUBJECT TO THE EMPLOYEE STOCK PURCHASE PLAN
The maximum number of shares of common stock available for purchase by
employees under the plan is 200,000, subject to adjustment for certain changes
in our capitalization. If any option granted under the plan terminates without
having been exercised, the stock not purchased under the option will again
become available for purchase under the plan. The shares subject to the plan may
be unissued shares, reacquired shares bought on the market or otherwise, or
shares purchased by a designated broker. If the total number of shares for which
employees have exercised their options exceeds the number of shares available
for purchase under the plan, the Compensation Committee will make a PRO RATA
allocation of the shares available for distribution in an equitable manner.
6
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GRANTS OF OPTIONS AND PURCHASE PRICE
Under the plan, the Compensation Committee determines the first and last
day of each offering period. To date, offering periods have begun in the second
week of May and November in each year.
On the first day of each six-month offering period, we grant each
participant an option to purchase a specific number of shares of our common
stock. We determine the number of shares subject to the option by dividing the
participant's aggregate withheld compensation by 85% of the fair market value of
our common stock on the date of grant, and then multiplying the resulting number
by two.
The purchase price of options granted under the plan is 85% of the lower of
the last trading price of the common stock on the Nasdaq National Market on the
first day or on the last day of each six-month offering period.
EXERCISE OF OPTIONS
Under the plan, we deem each participant to have exercised his or her
option on the last day of the offering period unless the participant has
previously given the appropriate officer written notice that he or she wishes to
withdraw the payroll deductions credited to his or her account under the plan.
We deem the participant to have purchased the maximum number of whole shares of
our common stock that the accumulated payroll deductions in the participant's
account will purchase at the applicable option price, but not more than the
number of shares subject to the option granted to the participant.
In general, we return to the participants any cash in their payroll
deduction accounts in excess of the aggregate purchase price of the shares they
purchase.
WITHDRAWAL AND TERMINATION
A participant may voluntarily withdraw from an offering under the plan by
giving written notice of withdrawal to the appropriate officer. Following
withdrawal, we will make no further payroll deductions from the participant's
pay during the offering period. A participant who withdraws from an offering
will be eligible to participate in subsequent offerings under the plan if he or
she is otherwise eligible.
Upon termination of a participant's employment for any reason, including
retirement but excluding death, we will return all amounts in the participant's
payroll deduction account to the participant or, in the event of death, to his
or her designated beneficiaries or estate. Upon termination of employment
because of death, the participant's designated beneficiaries may elect, within
90 days of the participant's death, either to withdraw all amounts in the
participant's payroll deduction account or to exercise the participant's option
to purchase stock on the last day of the offering period.
TRANSFER AND ASSIGNMENT
No participant may assign, transfer, pledge or otherwise dispose of any
payroll deductions credited to the participant's account under the plan, nor any
rights to purchase or receive common stock under the plan, except by will or the
laws of descent and distribution. The plan permits us to treat any attempt to do
so as an election to withdraw funds from the plan.
7
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ADJUSTMENT UPON CHANGES IN CAPITALIZATION
The plan provides for adjustments to the shares subject to the plan upon
certain changes in our capitalization. If we subdivide or reclassify our common
stock, declare dividends payable in shares of common stock or take any other
action of a similar nature affecting our common stock, then the number and class
of shares subject to the plan will be adjusted accordingly. The plan further
provides that, if any options are outstanding under the plan at the time the
action takes place, the number, class and purchase price of shares subject to
the options will be adjusted to the extent that the Compensation Committee
determines is necessary to preserve the rights of the holders of the options.
The plan also provides that if we merge into or consolidate with another
corporation, the holders of outstanding options will be entitled to receive upon
exercise of the options the same securities or property that the holders of our
common stock were entitled to receive in the merger or consolidation. The plan
permits the Compensation Committee to determine, in accordance with the plan,
the kind and amount of such securities or property that the holders of options
will receive. For these purposes, the plan deems a sale of all or substantially
all of our assets to be a merger or consolidation.
AMENDMENT AND TERMINATION OF THE EMPLOYEE STOCK PURCHASE PLAN
Our board of directors may amend or terminate the plan at any time. No
amendment may make any change in any outstanding option that would adversely
affect the rights of the holder of the option. Termination of the plan will
not affect any outstanding options.
ERISA AND OTHER QUALIFICATIONS
The plan is not subject to the provisions of the Employee Retirement Income
Security Act and is not qualified as an employee pension benefit plan under
Section 401(a) of the Internal Revenue Code.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
A participant in the plan recognizes no taxable income either as a result
of participation in the plan or upon exercise of an option to purchase shares of
common stock under the plan.
If a participant disposes of shares purchased upon exercise of an option
granted under the plan within two years from the first day of the applicable
offering period or within one year from the exercise date (a "disqualifying
disposition"), the participant will realize ordinary income in the year of
disposition equal to the amount by which the fair market value of the shares on
the date the participant purchased the shares exceeded the purchase price. The
amount of any ordinary income will be added to the participant's basis in the
shares, and any additional gain or resulting loss recognized on the disposition
of the shares after this basis adjustment will be a capital gain or loss. A
capital gain or loss will be long-term if the participant's holding period is
more than 12 months or short-term if the participant's holding period is 12
months or less.
If the participant disposes of shares purchased upon exercise of an option
granted under the plan at least two years after the first day of the applicable
offering period and at least one year after the exercise date, the participant
will realize ordinary income in the year of disposition equal to the lesser of
(a) the excess of the fair market value of the shares on the date of disposition
over the exercise price or (b) the excess of the fair market value of the shares
on the first day of the applicable offering period over the exercise price. The
amount of any ordinary income will be added to the participant's basis in the
shares, and any additional gain recognized upon the disposition of the shares
after this basis adjustment will be a
8
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capital gain, long-term or otherwise, depending upon the holding period measured
from the exercise date. If the fair market value of the shares on the date of
disposition is less than the exercise price, there will be no ordinary income,
and any loss recognized will be a capital loss, long-term or otherwise,
depending upon the holding period measured from the exercise date.
If the participant still owns the shares at death, the lesser of (a) the
excess of the fair market value of the shares on the date of death over the
exercise price or (b) the excess of the fair market value of the shares on the
first day of the offering period in which the shares were purchased over the
exercise price will constitute ordinary income in the year of death.
We will generally be entitled to a tax deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of such disposition. In all other cases, we are not
entitled to any tax deduction.
The foregoing discussion is only a summary of the effect of the United
States income tax laws and regulations upon an employee and us with respect to
an employee's participation in the plan. This summary does not purport to be a
complete description of all federal tax implications of participation in the
plan, nor does it discuss the income tax laws of any municipality, state or
foreign country in which a participant may reside or otherwise be subject to
tax. WE STRONGLY URGE PARTICIPANTS TO CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE APPLICATION OF THE VARIOUS TAX LAWS THAT MAY APPLY TO THEIR PARTICULAR
SITUATIONS.
OTHER MATTERS
Neither we nor our board of directors intends to propose any matters at the
Meeting other than the election of directors and approval of the amendment of
our Employee Stock Purchase Plan. Neither we nor our board knows of any matters
to be proposed by others at the Meeting.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A stockholder who intends to present a proposal at the 2000 Annual Meeting
of Stockholders for inclusion in our 2000 proxy statement must submit the
proposal by February 16, 2000 or, if we hold the 2000 Annual Meeting more than
30 days before or after July 27, 2000, a reasonable time before we begin to
print and mail our proxy statement. In order for the proposal to be included in
the proxy statement, the stockholder submitting the proposal must meet certain
eligibility standards and must comply with certain procedures established by the
Securities and Exchange Commission, and the proposal must comply with the
requirements as to form and substance established by applicable laws and
regulations. The proposal must be mailed to our Secretary at the address set
forth on page 3.
In addition, in accordance with our by-laws, a stockholder wishing to bring
an item of business before the 2000 Annual Meeting or to nominate any person for
election to our board of directors at the 2000 Annual Meeting must deliver
proper notice of the item of business or nomination to us at our offices no
later than May 27, 2000, even if the item or nomination is not to be included in
our proxy statement. If we hold the 2000 Annual Meeting before July 26, 2000 and
we give less than 70 days' notice or prior public disclosure of the date of the
meeting, then the stockholder must deliver such notice to us at our offices no
later than the tenth day after the earlier of (1) the day on which we mailed
notice of the date of the meeting and (2) the day on which we publicly disclosed
the date of the meeting. The notice must include certain specific information
regarding the proposed item of business or nominee, the stockholder making the
proposal, other stockholders known to support the proposal, their stock
ownership and their interest in the proposal.
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ADDITIONAL INFORMATION ABOUT DIRECTORS
BOARD MEETINGS
During 1998 our board of directors held three meetings and acted by
unanimous written consent two times. During his tenure, each of our directors
attended at least 75% of the meetings held by our board and board committees on
which he served.
BOARD COMMITTEES
Our board of directors has appointed an Audit Committee and a Compensation
Committee. Our board has not appointed a standing Nominating Committee.
The Audit Committee reviews the results and scope of the annual audit of
our financial statements conducted by our independent auditors and our policies
and procedures with respect to our internal accounting and financial controls.
The Audit Committee also makes recommendations to our board on the engagement of
our independent auditors, as well as other matters referred by our board. The
Audit Committee met once in 1998. The Audit Committee consists of Arthur Bruno
and Jonathan Morgan, each of whom attended the meeting of the Audit Committee
held in 1998.
The Compensation Committee provides recommendations concerning salaries,
incentives and other compensation for our directors, officers, employees and
consultants. The Compensation Committee also administers our stock option plans
and our Employee Stock Purchase Plan. During 1998 the Compensation Committee met
four times. The Compensation Committee consists of Arthur Bruno and Jonathan
Morgan, each of whom attended each of the meetings of the Compensation Committee
held in 1998.
DIRECTOR COMPENSATION
We do not pay fees to our directors, and we presently have no plans to pay
directors' fees. We grant stock options to our non-employee directors pursuant
to our Director Stock Option Plan. The purpose of the Director Stock Option Plan
is to encourage ownership of common stock by our non-employee directors in order
to help us attract and retain directors of exceptional competence and to furnish
an added incentive for non-employee directors to increase their efforts on our
behalf. Arthur Bruno, Jonathan Morgan and Adam Stettner are non-employee
directors for purposes of the Director Stock Option Plan.
Under the terms of the Director Stock Option Plan, we grant automatic
formula stock options to non-employee directors as follows:
- upon a non-employee director's initial election, he or she is entitled
to receive a stock option to purchase 15,000 shares of common stock;
and
- upon a non-employee director's re-election, he or she is entitled to
receive a stock option to purchase 10,000 shares of common stock, as
long as he or she has served as a non-employee director for at least
the three months immediately preceding the meeting at which he or she
is re-elected.
The exercise price of the options granted under the Director Stock Option Plan
must equal the fair market value of our common stock on the grant date. Each
option granted under the Director Stock Option Plan
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is subject to vesting under the terms of such plan and expires upon the earlier
of (a) the tenth anniversary of the grant date and (b) the first anniversary of
the date on which the option holder ceased serving as a non-employee director.
Pursuant to the Director Stock Option Plan, Messrs. Bruno and Morgan each
received an option to purchase 15,000 shares of common stock in September 1997
upon the adoption of the Director Stock Option Plan by our stockholders. Mr.
Stettner received an option to purchase 15,000 shares of common stock in March
1999 upon his election to our board.
In addition, on December 16, 1998, our board voted to grant to each of
Messrs. Bruno and Morgan, as the only non-employee directors then serving,
options to purchase 35,000 shares of common stock at an exercise price of $1.875
per share, which represented the closing price of common stock on the grant
date. These options were issued under our Incentive and Nonqualified Stock
Option Plan. They vest over a two-year period, except that vesting will
accelerate in full in the event the Financial Accounting Standards Board adopts
certain proposed changes to the method of accounting for options granted to
non-employee directors. Based on publicly available reports, we believe those
changes may be adopted in or around September 1999.
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INFORMATION ABOUT EXECUTIVE OFFICERS
BACKGROUND INFORMATION ABOUT EXECUTIVE OFFICERS
Brief biographies of our executive officers, as of June 15, 1999, follow.
You will find information about their holdings of common stock on page 15.
<TABLE>
<S> <C>
KILLKO A. CABALLERO You will find background information about Mr. Caballero on page 4.
CHIEF EXECUTIVE OFFICER
AND PRESIDENT
DAVID O. BUNDY Mr. Bundy has been Chief Technology Officer since July 1998. He was
CHIEF TECHNOLOGY OFFICER Vice President of Engineering from January 1994 to July 1998 and Vice
President and Principal Engineer from September 1991 to December 1993.
CHRISTINE J. COX Ms. Cox has been Chief Financial Officer since December 1998 and Vice
CHIEF FINANCIAL OFFICER President of Finance since August 1997. She was Corporate Controller
AND VICE PRESIDENT OF FINANCE from October 1996 to August 1997. Ms. Cox served as Division Controller
and Treasurer of Sequoia Systems, Inc., a fault-tolerant and business-critical
microcomputer company, from May 1996 to October 1996, Operations Controller of
Sequoia from June 1995 to May 1996, and held other financial management
positions at Sequoia from August 1993 to June 1995.
JOHN E. KELLY Mr. Kelly has been Vice President of Worldwide Sales and Marketing since
VICE PRESIDENT OF March 1999. He founded Aura Networks, a developer of datacentric digital
WORLDWIDE SALES Worldwide Sales loop carrier products, in May 1997 and was President of
AND MARKETING Aura from May 1997 until November 1998. From 1993 to April 1997, Mr. Kelly
was Vice President of Marketing at Intraplex, Incorporated, a developer of
digital network products for broadcast and wireless communications, which was
acquired by Harris Corporation in November 1998.
</TABLE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE FOR 1996, 1997 AND 1998
The following table summarizes certain information with respect to the
annual and long-term compensation that we paid for the past three fiscal years
to the following persons (the "Named Officers"):
- Killko Caballero, our only chief executive officer in 1998; and
- David Bundy and Christine Cox, our other two executive officers whose
compensation for services rendered in all capacities to White Pine
exceeded $100,000 during 1998.
All of the options described in the following table have a maximum term of
seven to ten years, subject to earlier termination in the event of the
optionee's cessation of service with us. The options are exercisable during the
optionee's lifetime only by the optionee. They are exercisable by the optionee
only while the optionee is one of our employees or advisors and for certain
limited periods of time after termination of employment.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
AWARDS
ANNUAL ----------------
COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- -------------------------------- ------ ------------ ----------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Killko A. Caballero ..................... 1998 $150,445 -- 35,000 --
Chief Executive Officer and 1997 124,347 $20,000 50,000 --
President 1996 90,420 15,000 -- --
David O. Bundy .......................... 1998 132,405 -- 20,000 $20,000
Chief Technology Officer 1997 119,909 15,000 60,000 --
1996 110,000 15,000 10,000 --
Christine J. Cox ........................ 1998 105,467 -- 20,000 --
Chief Financial Officer and 1997 83,384 15,000 37,000 --
Vice President of Finance 1996 11,688 1,000 6,000 --
</TABLE>
The other compensation paid to Mr. Bundy in 1998 consisted of amounts paid
in connection with Mr. Bundy's relocation, at our request, to New Hampshire.
OPTION GRANTS IN 1998
The following table summarizes (a) option grants to the Named Officers
during 1998 and (b) the value of options held by the Named Officers at December
31, 1998. The amounts shown in the last two columns represent hypothetical gains
that could be achieved for the respective options if exercised at the end of
their option terms. These gains are based on assumed rates of stock appreciation
of five percent and ten percent, compounded annually from the date the
respective options were granted to the date of their expiration. The gains shown
are net of the option price, but do not include deductions for taxes or other
expenses that may be associated with the exercise. Actual gains, if any, on
stock option exercises will depend on the future performance of our common
stock, the option holders' continued employment through the option term, and the
date on which the options are exercised.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS EXERCISE OR APPRECIATION FOR
UNDERLYING GRANTED TO BASE PRICE OPTION TERM
OPTIONS EMPLOYEES IN PER EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR SHARE($/SH) DATE 5%($) 10%($)
- ------- ------------- --------------- --------------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Killko A. Caballero ...... 35,000 7% $1.875 12/16/08 $41,271 $104,589
David O. Bundy ........... 20,000 4 1.875 12/16/08 23,584 59,765
Christine J. Cox ......... 20,000 4 1.875 12/16/08 23,584 59,765
</TABLE>
13
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
The following table summarizes information about options exercised during
1998, and the value of unexercised options held at the end of 1998, by the Named
Officers. The closing sale price for our common stock as reported on the Nasdaq
National Market on December 31, 1998 was $2.375. For purposes of the last column
in the table, value is calculated on the basis of the difference between the
option exercise price and $2.375, multiplied by the number of shares of common
stock underlying the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------- ------------ ------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Killko A. Caballero .... -- -- 12,500/72,500 --/$17,500
David O. Bundy ......... -- -- 60,485/59,515 $58,125/$10,000
Christine J. Cox ....... -- -- 11,375/42,625 --/$10,000
</TABLE>
RELATED PARTY TRANSACTIONS
We entered into a nondisclosure and noncompetition agreement with David O.
Bundy dated February 15, 1996. Pursuant to the agreement, Mr. Bundy agreed that
while employed by us and for a period of 19 months following the termination of
his employment with us for any reason, he will not, directly or indirectly,
compete with us or solicit any of our contractors, suppliers, existing customers
or prospective customers on behalf of himself or any other entity that engages
in the sale, distribution or development of or research concerning computer
software and technology. If Mr. Bundy's employment is terminated without cause
during the term of the agreement, he will be entitled to his base salary for six
months or until he becomes employed elsewhere, whichever occurs first; PROVIDED,
HOWEVER, that if his new salary is lower than his base salary at White Pine, we
will pay the difference for the balance of the six-month period. Pursuant to the
agreement, Mr. Bundy was granted a stock option on February 29, 1996 to purchase
5,000 shares of common stock at an exercise price of $2.50 per share.
On March 16, 1998, Robert Hadden resigned as our Vice President of Sales.
In connection with the resignation, we entered into a separation agreement with
Mr. Hadden, effective as of March 16, 1998, under which we paid him severance
fees totalling $50,000 over the six-month period following the termination of
his employment.
We entered into a letter agreement with Christine J. Cox dated August 5,
1997 with respect to Ms. Cox's employment as our Vice President of Finance. The
letter agreement establishes a base salary of $100,000 per year and provides for
a maximum annual incentive bonus of $15,000, based upon achievement of specific
milestones to be established by us. If Ms. Cox's employment is terminated
without cause during the term of the agreement, she will be entitled to her base
salary for six months. The letter agreement does not provide for any minimum
period of employment, and therefore Ms. Cox continues to be an at-will employee
of White Pine.
14
<PAGE>
INFORMATION ABOUT STOCK OWNERSHIP
STOCK OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-5% STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock as of May 31, 1999, by (a) each of our directors,
(b) each of the Named Officers, (c) all of our directors and executive officers
as a group and (d) each of the persons (or groups of affiliated persons) known
by us to own beneficially more than five percent of the outstanding shares of
common stock. Unless otherwise noted:
- The address of our directors and executive officers is in care of
White Pine Software, Inc., 542 Amherst Street, Nashua, New Hampshire
03063.
- Each person or group identified in the table possesses sole voting and
investment power with respect to such shares, subject to community
property laws, where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or group to
acquire them within 60 days of May 31, 1999 are treated as outstanding
only for purposes of determining the amount and percentages
beneficially owned by that person or group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED OWNED
- --------------------- ------------- -------------
<S> <C> <C>
Austin W. Marxe and David Greenhouse ........................................ 1,237,500 11.6%
153 East 53 Street, 51st Floor
New York, New York 10022
Adam Stettner ............................................................... 1,237,500 11.6
153 East 53 Street, 51st Floor
New York, New York 10022
Hambrecht & Quist Group ..................................................... 868,028 8.2
One Bush Street
San Francisco, California 94104
Labtam Communications Pty. Ltd.,
Dawson N. Johns and Anthony J. Oxley ........................................ 841,000 7.9
33 Malcolm Road
Braeside, Victoria, Australia
Consortium de Realisation ................................................... 820,330 7.7
27-29 rue Le Peletier
75009 Paris, France
Charles Lingel .............................................................. 562,340 5.3
c/o Infoconix Inc.
704 228th Avenue, N.E., #414
Redmond, Washington 98053
Killko A. Caballero ......................................................... 426,449 4.0
Arthur H. Bruno ............................................................. 158,874 1.5
David O. Bundy .............................................................. 51,630 *
Jonathan G. Morgan .......................................................... 28,611 *
Christine J. Cox ............................................................ 19,672 *
All directors and executive officers as a group (7 persons) ................. 1,923,736 17.7
</TABLE>
- ----------------
* Represents less than 1% of the outstanding shares of common stock.
15
<PAGE>
The information reported regarding Messrs. Marxe and Greenhouse is based
on Amendment No. 2 to Schedule 13D filed with the Securities and Exchange
Commission on February 11, 1999 by Special Situations Fund III, L.P.,
MGP Advisers Limited Partnership, Special Situations Technology Fund, L.P.,
SST Advisers, L.L.C., Special Situations Cayman Fund, L.P., AWM Investment
Company, Inc., Austin W. Marxe and David Greenhouse. Of the 1,237,500 shares,
(a) 824,200 shares are beneficially owned by Special Situations Fund III, L.P.
and MGP Advisers Limited Partnership (the general partner of and investment
advisor to Special Situations Fund III, L.P.), (b) 143,600 shares are
beneficially owned by Special Situations Technology Fund, L.P. and
SST Advisers, L.L.C. (the general partner of and investment advisor to
Special Situations Technology Fund, L.P.), and (c) 269,700 shares are
beneficially owned by Special Situations Cayman Fund,L.P. and
AWM Investment Company, Inc. (the general partner of and investment
advisor to Special Situations Cayman Fund, L.P.). Messrs. Marxe and Greenhouse,
who serve as officers, directors and members or principal shareholders of the
three investment advisors, claim sole voting and dispositive powers for all of
the 1,237,500 shares.
The 1,237,500 shares deemed to be beneficially owned by Mr. Stettner
consist solely of the shares described in the preceding paragraph. Mr. Stettner
is an employee of an entity controlled by Messrs. Marxe and Greenhouse.
Mr. Stettner disclaims ownership of all of these shares, other than the
143,600 shares owned by Special Situations Technology Fund, L.P., of which he
is the managing director.
The information reported regarding Labtam Communications, Dawson N. Johns
and Anthony J. Oxley relates to shares issued to Labtam Communications in
exchange for certain assets sold to us. Labtam Communications is controlled by
Messrs. Johns and Oxley.
The information reported regarding the Hambrecht & Quist Group is based on
Amendment No. 2 to Schedule 13G filed with the Securities and Exchange
Commission on February 12, 1999 by H&Q London Ventures, Venture Associates (BVI)
Limited, Hamquist, Hambrecht & Quist Venture Partners, H&Q Venture Partners LLC,
Hambrecht & Quist California and Hambrecht & Quist Group. Of the 868,028 shares,
(a) 623,167 shares are directly owned by H&Q London Ventures, (b) 243,861 shares
are directly owned by Hambrecht & Quist Venture Partners and (c) 1,000 shares
are directly owned by Hambrecht & Quist Group. All of the reporting parties
claim shared voting and dispositive powers for all of the 868,028 shares.
The information reported regarding the Consortium de Realisation is based
on a Schedule 13G filed with the Securities and Exchange Commission on October
2, 1997 by Consortium de Realisation, CDR Enterprises and Land Free Investment.
All of the 820,330 shares are directly owned by Land Free Investment, which is a
direct subsidiary of CDR Enterprises and an indirect subsidiary of Consortium de
Realisation. All of the reporting parties claim shared voting and dispositive
powers for all of the 820,330 shares.
The information reported regarding Mr. Lingel is based on an Amendment
No. 1 to Schedule 13G filed with the Securities and Exchange Commission on
February 11, 1998 by Mr. Lingel.
16
<PAGE>
The information reported regarding our directors and executive officers
includes options, exercisable by the following, within 60 days of May 31, 1999,
to purchase the indicated numbers of shares of common stock:
<TABLE>
<S> <C>
Killko A. Caballero .......................... 23,125
Arthur H. Bruno .............................. 108,750
David O. Bundy ............................... 50,625
Jonathan G. Morgan ........................... 28,611
Christine J. Cox ............................. 17,125
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission reports of ownership
on Form 3 and reports of changes in ownership on Forms 4 and 5. These directors,
executive officers and ten-percent stockholders must furnish us with copies of
all Section 16(a) reports they file. Based solely on our review of the copies of
the forms furnished to us, we believe that all Section 16(a) reports applicable
to our directors, executive officers and ten-percent stockholders with respect
to reportable transactions during 1998 were filed on a timely basis, except that
Arthur Bruno filed in December 1998 a Form 4 with respect to one transaction due
on September 10, 1998 and each of Mr. Bruno, Jonathan Morgan, Killko Caballero,
David Bundy and Christine Cox filed in June 1999 a Form 5 due on February 14,
1999 with respect to one transaction.
17
<PAGE>
EXHIBIT A
WHITE PINE SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
(AMENDED AND RESTATED AS OF DECEMBER 16, 1998)
SECTION 1. PURPOSE
This White Pine Software, Inc. 1996 Employee Stock Purchase Plan, as
amended and restated as of December 16, 1998 (the "Plan"), is intended to
provide a method whereby employees of White Pine Software, Inc. and certain of
its subsidiaries will have an opportunity to acquire ownership interests (or
increase their existing ownership interests) in White Pine Software, Inc.
through the purchase of shares of common stock, $.01 par value, of White Pine
Software, Inc. ("Common Stock"). It is the intention of White Pine Software,
Inc. that the Plan qualify as an "employee stock purchase plan" under Section
423 of the Internal Revenue Code of 1986, as amended (the "Code"), and the
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code.
SECTION 2. DEFINITIONS
As used herein, the following terms shall have the indicated meanings:
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the Compensation Committee of the Board.
(c) "Company" means White Pine Software, Inc., as well as any
Subsidiary designated as a participant in the Plan by the Board,
unless the context otherwise requires.
(d) "Compensation" means, for the purpose of any Offering pursuant to
the Plan, base pay in effect as of the Offering Commencement Date,
PROVIDED that "Compensation" shall not include any deferred
compensation other than contributions by an individual through a
salary reduction agreement to a cash or deferred plan pursuant to
Section 401(k) of the Code or to a cafeteria plan pursuant to
Section 125 of the Code.
(e) "Designated Officer" means the Treasurer of White Pine Software,
Inc. or, if there is no person serving as Treasurer, the chief
financial officer of White Pine Software, Inc. (whether or not the
person serving in such capacity has the title of Chief Financial
Officer).
(f) "Employee" means any person who is customarily employed by the
Company for more than twenty hours per week and more than five
months in any calendar year.
(g) "Offering," "Offering Commencement Date" and "Offering Termination
Date" have the respective meanings set forth in Section 4.
A-1
<PAGE>
(h) "Subsidiary" means any present or future corporation that is or
would constitute a "subsidiary corporation" of White Pine
Software, Inc., as that term is defined in Section 424(f) of the
Code.
SECTION 3. ELIGIBILITY
(a) Participation in the Plan is completely voluntary. Participation in any
one or more of the Offerings under the Plan shall neither limit nor require
participation in any other Offering.
(b) Each employee of the Company shall be eligible to participate in the
Plan on the first Offering Commencement Date following the completion of six
months of continuous service with the Company. Notwithstanding the foregoing, no
employee shall be granted an option under the Plan:
(i) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing five percent
or more of the total combined voting power or value of all classes of stock
of the Company or any Subsidiary (it being understood that, for purposes of
this Section, the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee); or
(ii) that permits his rights to purchase stock under all Section 423
employee stock purchase plans of the Company and its Subsidiaries to exceed
$25,000 of the fair market value of the stock (determined at the time such
option is granted) for each calendar year in which such option is
outstanding (it being understood that, for purposes of this Section, the
rules of Section 423(b)(8) of the Code shall apply).
SECTION 4. OFFERING DATES
The right to purchase stock hereunder shall be made available by a series
of six-month offerings (each an "Offering" and collectively "Offerings") to
employees eligible in accordance with Section 3. The Committee will, in its
discretion, determine the applicable date of commencement ("Offering
Commencement Date") and termination date ("Offering Termination Date") for each
Offering. Participation in any one or more of the Offerings shall neither limit
nor require participation in any other Offering.
SECTION 5. PARTICIPATION
Any eligible employee may become a participant in an Offering by completing
a payroll deduction authorization form provided by the Company and filing it
with the Designated Officer of the Company at least five business days prior to
the applicable Offering Commencement Date, as determined by the Committee
pursuant to Section 4. A participant who obtains shares of Common Stock in one
Offering will be deemed to have elected to participate in each subsequent
Offering, PROVIDED such participant is eligible to participate in the subsequent
Offering and has not specifically elected not to participate in the Offering.
Such participant will also be deemed to have authorized the same payroll
deductions under Section 6 for each such subsequent Offering as in the
immediately preceding Offering; PROVIDED, HOWEVER, that, during the enrollment
period prior to each new Offering, the participant may elect to change such
participant's payroll deductions by submitting a new payroll deduction
authorization form.
A-2
<PAGE>
SECTION 6. PAYROLL DEDUCTIONS
(a) At the time a participant files a payroll deduction authorization form
with respect to an Offering, the participant shall elect to have deductions made
from the participant's pay on each payday during the Offering in which he or she
is a participant, at a specified percentage of the participant's Compensation
as determined on the applicable Offering Commencement Date. The specified
percentage shall be in increments of one percent up to a maximum percentage
of six percent.
(b) Payroll deductions for a participant shall commence on the Offering
Commencement Date when the applicable authorization for a payroll deduction
becomes effective and, subject to the last sentence of Section 6, shall end
on the Offering Termination Date of the Offering to which such authorization
is applicable, unless sooner terminated by the participant as provided in
Section 9.
(c) All payroll deductions made for a participant shall be credited to the
participant's account under the Plan. A participant may not make any separate
cash payment into such account.
SECTION 7. GRANTING OF OPTION
(a) Except as provided in Section 3(b)(ii), on the Offering Commencement
Date of each Offering, a participating employee shall be deemed to have been
granted an option to purchase a maximum number of shares of the Common Stock
determined as follows: (i) 85% of the market value per share of the Common Stock
(determined as provided in Section 7(b)(i)) on the applicable Offering
Commencement Date shall be divided into the percentage of the employee's
Compensation which the employee has elected to have withheld (multiplied by the
employee's Compensation over the Offering Period), multiplied by (ii) two.
(b) The option price of the Common Stock purchased with payroll deductions
made during each such Offering for a participant therein shall be the lower of:
(i) 85% of the average of the bid and asked prices as reported by
Nasdaq Stock Market, Inc. in THE WALL STREET JOURNAL, or, if the Common
Stock is designated as a Nasdaq National Market security, the last trading
price of the Common Stock as reported on the Nasdaq National Market in THE
WALL STREET JOURNAL, or, if the Common Stock is listed on an exchange, the
closing price of the Common Stock on the exchange on the Offering
Commencement Date applicable to such Offering (or on the next regular
business date on which shares of the Common Stock shall be traded, in the
event that no shares of the Common Stock have been traded on the Offering
Commencement Date); or if the Common Stock is not quoted by Nasdaq Stock
Market, Inc., not designated as a Nasdaq National Market security and not
listed on an exchange, 85% of the fair market value on the Offering
Commencement Date as determined by the Committee; and
(ii) 85% of the average of the bid and asked prices as reported by
Nasdaq Stock Market, Inc. in THE WALL STREET JOURNAL, or, if the Common
Stock is designated as a Nasdaq National Market security, the last trading
price of the Common Stock as reported by the Nasdaq National Market in THE
WALL STREET JOURNAL, or, if the Common Stock is listed on an exchange, the
closing price of the Common Stock on the exchange on the Offering
Termination Date applicable to such Offering (or on the next regular
business date on which shares of the Common Stock shall be traded, in the
event that no shares of the Common
A-3
<PAGE>
Stock shall have been traded on the Offering Termination Date); or if the
Common Stock is not quoted by Nasdaq Stock Market, Inc., not designated
as a Nasdaq National Market security and not listed on an exchange,
85% of the fair market value on the Offering Termination Date as
determined by the Committee.
SECTION 8. EXERCISE OF OPTION
(a) Unless a participant gives written notice to the Designated Officer as
hereinafter provided, the participant's option for the purchase of Common Stock
with payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering for the purchase of the number of full shares of Common Stock which the
accumulated payroll deductions in the participant's account at that time will
purchase at the applicable option price (but not in excess of the number of
shares for which options have been granted to the participant pursuant to
Section 7(a)), and any excess in the participant's account at that time will be
returned to the participant, without interest.
(b) Fractional shares will not be issued under the Plan and any accumulated
payroll deductions that would have been used to purchase fractional shares shall
be automatically carried forward to the next Offering unless the participant
elects, by written notice to the Designated Officer, to have the excess cash
returned to the participant.
SECTION 9. WITHDRAWAL AND TERMINATION
(a) Prior to the Offering Termination Date for an Offering, any participant
may withdraw the payroll deductions credited to the participant's account for
such Offering under the Plan by giving written notice to the Designated Officer.
All of the participant's payroll deductions credited to such account will be
paid to the participant promptly after receipt of notice of withdrawal, without
interest, and no future payroll deductions will be made from the participant's
pay during such Offering. The Company will treat any attempt to borrow by a
participant on the security of accumulated payroll deductions as an election to
withdraw such deductions.
(b) A participant's election not to participate in, or withdrawal from, any
Offering will not have any effect upon the participant's eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death, the payroll deductions credited to the
participant's account will be returned to the participant, or, in the case of
the participant's death, to the person or persons entitled thereto under Section
13.
(d) Upon termination of the participant's employment because of death, the
participant's beneficiary (as designated pursuant to Section 13) shall have the
right to elect, by written notice given to the Designated Officer prior to the
expiration of a period of ninety days commencing with the date of the death of
the participant, either:
(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or
A-4
<PAGE>
(ii) to exercise the participant's option for the purchase of stock on
the Offering Termination Date next following the date of the participant's
death for the purchase of the number of full shares which the accumulated
payroll deductions in the participant's account at the date of the
participant's death will purchase at the applicable option price (subject
to the limitation contained in Section 7(a)), and any excess in such
account will be returned to said beneficiary. In the event that no such
written notice of election shall be duly received by the office of the
Designated Officer, the beneficiary shall automatically be deemed to have
elected to withdraw the payroll deductions credited to the participant's
account at the date of the participant's death and the same will be paid
promptly to said beneficiary.
SECTION 10. INTEREST
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participating employee.
SECTION 11. STOCK
(a) The maximum number of shares of Common Stock available for issuance and
purchase by employees under the Plan (including shares issued prior to the
amendment and restatement hereof on December 16, 1998), subject to adjustment
upon changes in capitalization of the Company as provided in Section 16, shall
be 200,000 shares. If the total number of shares for which options are exercised
on any Offering Termination Date in accordance with Section 8 exceeds the number
of shares that remain available for issuance and purchase by employees under the
Plan, the Company shall make a pro rata allocation of the shares available for
delivery and distribution in an equitable manner, with the balances of payroll
deductions credited to the account of each participant under the Plan returned
to each participant.
(b) The participant will have no interest in the stock covered by the
participant's option until such option has been exercised.
SECTION 12. ADMINISTRATION
The Plan shall be administered by the Committee. The interpretation and
construction of any provision of the Plan and adoption of rules and regulations
for administering the Plan shall be made by the Committee. Determinations made
by the Committee with respect to any matter or provision contained in the Plan
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives. Any rule or regulation
adopted by the Committee shall remain in full force and effect unless and until
altered, amended or repealed by the Committee.
SECTION 13. DESIGNATION OF BENEFICIARY
A participant shall file with the Designated Officer a written designation
of a beneficiary who is to receive any Common Stock and/or cash under the Plan.
Such designation of beneficiary may be changed by the participant at any time by
written notice. Upon the death of a participant and upon receipt by the Company
of proof of the identity and existence of a beneficiary validly designated by
the participant under the Plan, the Company shall deliver such Common Stock
and/or cash to such beneficiary. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such Common
Stock and/or cash to the executor or administrator of the estate of the
A-5
<PAGE>
participant. No beneficiary shall, prior to the death of the participant by whom
he or she has been designated, acquire any interest in the Common Stock and/or
cash credited to the participant under the Plan.
SECTION 14. TRANSFERABILITY
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Common Stock under
the Plan may be assigned, transferred, pledged or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 9(a).
SECTION 15. USE OF FUNDS
All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
SECTION 16. EFFECT OF CHANGES OF COMMON STOCK
If at any time after the effective date of the Plan the Company shall
subdivide or reclassify the Common Stock which has been or may be optioned under
the Plan, or shall declare thereon any dividend payable in shares of such Common
Stock, or shall take any other action of a similar nature affecting such Common
Stock, then the number and class of shares of Common Stock which may thereafter
be optioned (in the aggregate and to any participant) shall be adjusted
accordingly and in the case of each option outstanding at the time of any such
action, the number and class of shares which may thereafter be purchased
pursuant to such option and the option price per share shall be adjusted to such
extent as may be determined by the Committee, following consultation with the
Company's independent public accountants and counsel, to be necessary to
preserve the rights of the holder of such option.
SECTION 17. AMENDMENT OR TERMINATION
The Board may at any time terminate or amend the Plan. No such termination
shall affect options previously granted, nor may an amendment make any change in
any option theretofore granted which would adversely affect the rights of any
participant holding options under the Plan.
SECTION 18. NOTICES
All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received by the Designated Officer.
SECTION 19. MERGER OR CONSOLIDATION
If the Company shall at any time merge into or consolidate with another
corporation, the holder of each option then outstanding will thereafter be
entitled to receive at the next Offering Termination Date, upon the exercise of
such option and for each share as to which such option shall be exercised, the
securities or property which a holder of one share of the Common Stock was
entitled to upon and
A-6
<PAGE>
at the time of such merger or consolidation. In accordance with this Section
and Section 16, the Committee shall determine the kind and amount of such
securities or property which such holder of an option shall be entitled to
receive. A sale of all or substantially all of the assets of the Company
shall be deemed a merger or consolidation for the foregoing purposes.
SECTION 20. APPROVAL OF STOCKHOLDERS
The Plan is subject to the approval of the stockholders of the Company by
written consent or at their next annual meeting or at any special meeting of the
stockholders for which one of the purposes of such a special meeting shall be to
act upon the Plan.
SECTION 21. GOVERNMENTAL AND OTHER REGULATIONS
The Plan, and the grant and exercise of the rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Plan shall be governed by, and construed and enforced
in accordance with, the provisions of Sections 421, 423 and 424 of the Code and
the substantive laws of the State of New Hampshire. In the event of any
inconsistency between such provisions of the Code and any such laws, the
provisions of the Code shall govern to the extent necessary to preserve the
favorable federal income tax treatment afforded employee stock purchase plans
under Section 423 of the Code.
A-7
<PAGE>
WHITE PINE SOFTWARE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned, revoking all prior proxies, hereby authorizes and appoints
Killko A. Caballero and Christine J. Cox, and each them, as proxies with full
power of substitution in each, to vote all shares of common stock, par value
$.01 per share, of White Pine Software, Inc. held of record by the undersigned
as of the close of business on May 31, 1999, at the 1999 Annual Meeting of
Stockholders to be held at 10:00 A.M. on Wednesday, July 28, 1999 at the offices
of Foley, Hoag & Eliot LLP, Sixteenth Floor, One Post Office Square, Boston,
Massachusetts 02109, and at any adjournments thereof, on all matters that may
properly come before said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED ON THE REVERSE
OR, IN THE ABSENCE OF SUCH DIRECTION, WILL BE VOTED FOR EACH PROPOSAL LISTED ON
THE REVERSE. UPON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT
OF THE PROXIES.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
/X/ Please mark your votes as in this example.
<TABLE>
<S> <C> <C>
PROPOSAL ONE: Election of four directors
NOMINEES: ARTHUR H. BRUNO KILLKO A. CABALLERO
JONATHAN G. MORGAN ADAM STETTNER
/ / FOR all of the nominees listed above / / WITHHOLD AUTHORITY to vote
for the nominees listed above
</TABLE>
<TABLE>
<S> <C>
INSTRUCTIONS: To withhold authority to vote for one or more nominees, write his name or their
names on the lines below:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
THE DIRECTORS RECOMMEND A VOTE FOR EACH NOMINEE.
PROPOSAL TWO: Approval of the amendments to the 1996 Employee Stock
Purchase Plan
/ / FOR / / AGAINST / / ABSTAIN
THE DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE 1996 EMPLOYEE STOCK PURCHASE PLAN.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<TABLE>
<S> <C>
Signature: Signature:
---------------------------- ----------------------------
(IF HELD JOINTLY)
Dated: , 1999 Dated: , 1999
-------------------- --------------------
</TABLE>
NOTE: This Proxy Card must be signed exactly as the name of the stockholder(s)
appears on the label above. Executors, administrators, trustees, etc.
should give full title as such. If the signatory is a corporation, please
sign full corporate name by duly authorized officer.
