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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section 240.14a-11(c) or
Section 240.14a-12
BITSTREAM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(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>
BITSTREAM INC.
215 FIRST STREET
CAMBRIDGE, MASSACHUSETTS 02142
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1999, 10:00 A.M.
NOTICE IS HEREBY GIVEN to the stockholders of BITSTREAM INC., a Delaware
corporation (the "Company"), that the Annual Meeting of Stockholders (the
"Meeting") will be held at the Royal Sonesta Hotel, 5 Cambridge Parkway,
Cambridge, Massachusetts 02142 at 10:00 a.m., Eastern Daylight Time, on June 3,
1999 for the following purposes:
1. To elect a board of four (4) directors to serve until the next Annual
Meeting of Stockholders or until their respective successors are
elected and qualified;
2. To ratify the action of the Board of Directors in appointing Arthur
Andersen LLP as auditors for the Company for the fiscal year ending
December 31, 1999; and
3. To transact such other and further business as may properly come before
the Meeting or any postponement or adjournment thereof.
Only stockholders of record at the close of business on April 23, 1999 are
entitled to notice of and to vote at the Meeting or any adjournment thereof. The
stock transfer books of the Company will not be closed.
A copy of the Company's Annual Report for the fiscal year ended December 31,
1998 accompanies this notice.
By Order of the Board of Directors,
[LOGO]
CHARLES YING
Chairman of the Board
May 3, 1999
RETURN OF PROXIES
A proxy and self-addressed envelope are enclosed for your use. Whether or
not you plan to attend the Meeting, the Board of Directors of the Company
requests that you execute and return your proxy in the enclosed envelope in
order to secure a quorum, to avoid the expense of additional proxy solicitation
and to ensure that your shares will be represented at the Meeting. Your
cooperation is greatly appreciated.
<PAGE>
BITSTREAM INC.
215 FIRST STREET
CAMBRIDGE, MASSACHUSETTS 02142
PROXY STATEMENT
The enclosed proxy ("Proxy") is solicited by the Board of Directors (the
"Board") of Bitstream Inc., a Delaware corporation (the "Company"), for use at
the Company's Annual Meeting of Stockholders (the "Meeting") to be held at the
Royal Sonesta Hotel, 5 Cambridge Parkway, Cambridge, Massachusetts 02142 on June
3, 1999, at 10:00 a.m., Eastern Daylight Time and at any adjournment or
adjournments thereof. Any stockholder giving a Proxy has the power to revoke it
at any time before it is voted by executing another Proxy bearing a later date
or by giving written notice of revocation to the Company addressed to the
Secretary prior to the Meeting or by oral or written notice at the Meeting or by
voting in person by ballot at the Meeting. A stockholder's attendance at the
Meeting will not by itself revoke a Proxy.
The mailing address of the Company's principal executive office is 215 First
Street, Cambridge, Massachusetts 02142, Telephone No. (617) 497-6222. The
approximate date on which this Proxy Statement and form of Proxy are first being
sent or given to stockholders is on or about May 3, 1999.
SOLICITATION OF PROXIES
The persons named as proxies are Charles Ying, Chairman of the Board and
Chief Executive Officer of the Company and Anna M. Chagnon, Executive Vice
President, Chief Financial Officer, Chief Operating Officer and Secretary of the
Company. The stock represented at the Meeting by the enclosed Proxy will be
voted in the manner specified by the stockholder executing the same. In the
absence of specification, the shares of stock will be voted FOR (i) the election
of each of the four persons nominated by the Board to serve as directors and
(ii) the ratification of the action of the Board in appointing Arthur Andersen
LLP as auditors for the Company for the fiscal year ending December 31, 1999,
and in the discretion of the proxies on other business which may properly come
before the Meeting. The cost of preparing, assembling and mailing the Proxy,
this Proxy Statement and the other material enclosed will be borne by the
Company. In addition to the solicitation of proxies by use of the mails,
officers and employees of the Company may solicit proxies by telephone, telegram
or other means of communication. The Company will request brokerage houses,
banking institutions, and other custodians, nominees and fiduciaries, with
respect to shares held of record in their names or in the names of their
nominees, to forward the proxy material to the beneficial owners of such shares
of stock and will reimburse them for their reasonable expenses in forwarding the
proxy material.
SHARES OUTSTANDING AND VOTING RIGHTS
Only holders of shares of Class A Common Stock, $0.01 par value ("Class A
Shares" or "Class A Common Stock"), of record as at the close of business on
April 23, 1999 (the "Record Date") are entitled to vote at the Meeting, or any
adjournment thereof. On the Record Date, there were issued and outstanding
7,170,332 Class A Shares of which 38,549 were designated as treasury shares.
Each Class A Share is entitled to one vote on all matters to be voted upon. The
presence in person or by properly executed Proxy of the holders of a majority of
the issued and outstanding shares of Class A Common Stock entitled to vote at
the Meeting is necessary to constitute a quorum. Directors are elected by a
majority of the votes present in person or by proxy at the Meeting and voting on
such proposal. The affirmative vote of a majority of the votes present in person
or by proxy at the Meeting is required for the ratification of the
<PAGE>
appointment of the auditors and for the approval of any other business which may
properly be brought before the Meeting or any adjournment thereof.
Stockholders of the Company vote at the Meeting by casting ballots (in
person or by proxy) which are tabulated by a person who is appointed by the
Board before the Meeting to serve as the inspector of election at the Meeting
and who has executed and verified an oath of office. For purposes of determining
the number of votes cast with respect to a particular matter, only those cast
"For" or "Against" are included. Abstentions and broker non-votes (i.e. shares
held by a broker or nominee which are represented at the Meeting, but with
respect to which the broker or nominee is not empowered to vote on a particular
proposal) are counted only for purposes of determining whether a quorum is
present at the Meeting.
The stock transfer books of the Company will not be closed. Stockholders who
do not expect to attend the Meeting, but wish to have their shares of stock
voted at the Meeting, are urged to complete, sign, date and return the enclosed
Proxy as promptly as possible.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Four directors of the Company are to be elected to serve until the next
annual meeting of stockholders of the Company or until the election and
qualification of their respective successors. Each of the nominees named below
currently serves as a director of the Company. The persons named in the
accompanying Proxy intend to vote (unless authority to vote for directors is
withheld in such Proxy) all duly executed Proxies unrevoked at the time of the
exercise thereof for the election to the Board of all of the nominees named
below, each of whom consented to be named herein and to serve as a director if
elected at the Meeting. The Board knows of no reason why any of the nominees
will be unavailable or unable to serve as a director, but in the event that any
nominee should become unavailable prior to the Meeting, the Proxy will be voted
for a substitute nominee designated by the Board if a substitute nominee is
designated. Listed below is certain information with respect to each current
nominee for election as a director. For information concerning the number of
shares of Class A Common Stock beneficially owned by each nominee, see
"Principal and Management Stockholders."
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE NOMINEES
LISTED BELOW.
NOMINEES FOR DIRECTORS
The Company's directors and their ages as of April 23, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Charles Ying (1)............................. 52 Chairman of the Board, Chief Executive Officer and Director
George B. Beitzel (2)........................ 70 Director
Amos Kaminski (1)(2)......................... 69 Director
David G. Lubrano (1)(2)...................... 68 Director
</TABLE>
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(1) Member of Executive Committee.
(2) Member of the Audit Committee and Compensation Committee.
2
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Charles Ying has been Chief Executive Officer of the Company since May 1997
and Chairman of the Board since April 1997. From January 1992 to January 1996,
Mr. Ying served as Chief Executive Officer of Information International Inc., a
corporation engaged in the business of designing, manufacturing and marketing
computer-based systems that automate document production and publishing. Mr.
Ying also serves as a member of the Board of Directors of NodeWarrior Networks
Inc., an Internet Service Provider located in Los Angeles, California. Mr. Ying
holds a B.S. and M.S. in Electrical Engineering from Massachusetts Institute of
Technology.
George B. Beitzel has been a director of the Company since April 1989. Mr.
Beitzel retired in 1987 from International Business Machines Corporation where
he had been a Senior Vice President and a director. Mr. Beitzel currently serves
on the Board of Directors of: Bankers Trust New York Corporation, Caliber
System, Inc., Computer Task Group, Inc., Datalogix International, Inc.,
FlightSafety International, Inc., Phillips Petroleum Company, Rohm & Haas Co.,
TIG Holdings, Inc. and Xillix Technologies Corporation.
Amos Kaminski has been a director of the Company since 1985 and was Chairman
of the Board from 1991 through 1996. Mr. Kaminski founded Interfid Ltd.
("Interfid"), a private investment advisory firm, in 1984 and has served as its
President and on its Board of Directors since its formation. Mr. Kaminski is
also the founder, President and Chairman of the Board of Directors of AFA Asset
Services, Inc., a private real estate asset management company.
David G. Lubrano has been a director of the Company since 1987. Mr. Lubrano
retired in 1985 from Apollo Computer Inc., a corporation engaged in
manufacturing workstations, which he co-founded and where he had been a Senior
Vice President of Finance and Administration, Chief Financial Officer and a
director.
The Company's By-laws provide that the Board will be elected at the annual
meeting of the stockholders, or at a special meeting of the stockholders in lieu
thereof, and that all directors shall hold office until the next annual meeting
of stockholders, or next special meeting of the stockholders in lieu thereof, or
until their successors are chosen and qualified.
There are no family relationships among any of the executive officers or
directors of the Company.
BOARD COMMITTEES AND MEETINGS OF THE BOARD
The Board has a standing Audit Committee, a Compensation Committee and an
Executive Committee. The Board does not have a nominating committee. The Audit
Committee reviews the Company's accounting practices, internal accounting
controls and financial results and oversees the engagement of the Company's
independent auditors. The Compensation Committee establishes salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers the
Company's benefit plans and administers the issuance of stock options and other
awards under the 1997 Stock Plan of the Company (the "1997 Plan") to all
employees and directors of the Company, including the members of such committee.
The Executive Committee oversees the management of the business and affairs of
the Company, including mergers and acquisitions, corporate governance and
nominations, and evaluation of strategic business opportunities. In the fiscal
year ended December 31, 1998, Messrs. Beitzel, Lubrano and Kaminski served as
members of both the Audit Committee and the Compensation Committee, and Messrs.
Ying, Kaminski and Lubrano served on the Executive Committee. Mr. Lubrano serves
as the Chairman of the Audit Committee, Mr. Beitzel serves as
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<PAGE>
the Chairman of the Compensation Committee and Mr. Kaminski serves as Chairman
of the Executive Committee.
During the fiscal year ended December 31, 1998, the full Board met three
times and acted by unanimous written consent four times. The Audit Committee,
the Compensation Committee and the Executive Committee did not meet separately
during the fiscal year ended December 31, 1998. All incumbent directors attended
at least 75% of the aggregate number of the meetings of the Board.
DIRECTOR COMPENSATION
For the fiscal year ending December 31, 1998, each director who was not an
employee of the Company was entitled to receive $14,000 in cash compensation for
service as a director, payment of which was waived by such directors during 1998
in light of the Company's financial performance during such year.
On January 23, 1998, the Board, pursuant to the 1997 Plan, awarded
non-qualified stock options ("NQSOs") to purchase 50,000 Class A Shares to each
of Messrs. Beitzel, Kaminski and Lubrano. Each of such options have an exercise
price equal to the fair market value of the Class A Common Stock of the Company
on the date granted and one-third of such options will vest on each of the
first, second and third anniversaries of the date of the grant.
On April 22, 1998, the Board, pursuant to the 1997 Plan, granted NQSOs to
purchase 14,000 Class A Shares to each of Messrs. Beitzel, Kaminski and Lubrano.
These options were issued to the directors in lieu of their cash compensation of
$14,000 each for service as a director during the fiscal year ended December 31,
1998. Each of such options have an exercise price equal to the fair market value
of the Class A Common Stock of the Company on the date granted and vest in
twelve equal monthly installments beginning on April 1, 1999.
On April 22, 1998, the Board, pursuant to the 1997 Plan, granted incentive
stock options ("ISOs") to purchase 50,000 Class A Shares and NQSOs to purchase
100,000 Class A Shares to Mr. Ying. These options were issued to Mr. Ying in
lieu of payment of his salary from April 22, 1998 through January 25, 1999,
which salary Mr. Ying waived, as more fully described in the "Chief Executive
Officer Compensation" section below. The ISOs and the NQSOs have an exercise
price equal to the fair market value of the Class A Common Stock of the Company
on the date granted and vest in twelve equal monthly installments beginning on
April 1, 1999.
On January 25, 1999, the Board, pursuant to the 1997 Plan, awarded NQSOs to
purchase 150,000 Class A Shares to each of Messrs. Beitzel, Kaminski and
Lubrano. Each of such options have an exercise price equal to the fair market
value of the Class A Common Stock of the Company on the date granted and
one-third of such options will vest on each of the first, second and third
anniversaries of the date of grant.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the stock performance graph contained
elsewhere herein shall not be incorporated by reference into any such filings
nor shall they be deemed to be soliciting material or deemed filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or under the Exchange Act.
4
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company at the direction
of the Board has prepared the following report for inclusion in this Proxy
Statement. The Committee is comprised of Messrs. Beitzel, Kaminski and Lubrano,
three non-employee directors who are "disinterested persons" within the meaning
of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Committee has the responsibility for all compensation matters
concerning the Company's executive officers.
The Company's executive compensation program is intended to attract and
retain highly-qualified senior managers by providing compensation opportunities
that reflect the Company's business results and the individual executive's
performance. The Committee believes that these compensation opportunities will
motivate management's efforts by ensuring that the rewards received by Company
executives are consistent with the achievement of the Company's business
objectives and with the value added by management to the stockholders' interests
in the Company. The program provides for base salaries that reflect such factors
as level of responsibility, internal fairness and external competitiveness, and
annual incentive bonus awards that are payable in cash for the achievement of
target levels of sales and earnings, strategic acquisitions and other
initiatives, introduction of innovative products and services, and the
achievement of and progress toward other significant annual financial and
operational objectives as determined by the Committee. In general, the cash
compensation of the Company's executive officers approximates the average of
compensation paid to executives of appropriate comparator companies who occupy
positions of similar responsibilities. The program also provides long-term
incentive opportunities in the form of stock options that strengthen the
mutuality of economic interest between management and the Company's stockholders
and encourage management continuity.
The following is a discussion of each element of the Company's executive
compensation program, including a description of the decisions and actions taken
by the Committee with respect to the 1998 fiscal year compensation for the Chief
Executive Officer (the "CEO") and all executive officers as a group.
MANAGEMENT COMPENSATION PROGRAM
Compensation of the Company's executive officers in the fiscal year ended
December 31, 1998 (as reflected in the tables that follow with respect to the
Named Executive Officers) consisted of the following elements: base salary,
annual incentive bonus and the opportunity for stock option grants under the
Company's stock option plans. Total annual cash compensation for each executive
officer varies each year based on the Company's achievement of its annual
objectives and the individual's performance. Stock options to purchase 385,000
shares were granted to executive officers under the 1997 Plan during the 1998
fiscal year. In addition, stock options that were previously granted to certain
executive officers and employees under the 1994 Stock Plan and the 1996 Stock
Plan continue to be outstanding and unexercised. The potential value of
previously granted long-term stock options varies based upon the fair market
value of the Company's stock.
With respect to determining the base salary of executive officers, the
Committee takes into consideration a variety of factors, including the
executive's level of responsibility and individual performance, the salaries of
similar positions in comparable companies and the financial and operational
performance of the Company in relation to its objectives and its competitive
standing. The Company reviews the results of various industry salary surveys to
ensure its understanding of competitive compensation levels and
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<PAGE>
practices in the marketplace. From time to time, the Committee utilizes the
services of a recognized, independent external consulting firm to determine
marketplace compensation values and practices, and to assess the reasonableness
of the overall compensation program.
The Company's annual incentive bonus to its executive officers (including
the Named Executive Officers) is based on the achievement of objective,
financial and operational performance targets and the discretion of the
Committee. These targets may include sales volume, net operating income,
accomplishment of certain strategic business initiatives, completion of certain
strategic acquisitions or divestitures and other performance objectives as may
be determined annually. In determining individual incentive bonus awards, the
accountability of executive officers and their individual contributions towards
the attainment of these objectives are considered. In determining specific
awards for the most recent performance year, the Committee placed considerable
emphasis on the Company's sales growth, progress toward achievement of earnings
objectives, strategic acquisition activity and new product development. The
calculation of the Company's financial and operational performance with respect
to the determination of these incentive bonus awards is made as soon as is
practicable after the completion of the Company's fiscal year.
In addition to cash compensation, the Committee and the Board believe that
providing executive officers with stock ownership opportunities aligns the
interests of the executives with other stockholders and encourages the
executives' long-term retention in the Company. The long-term incentive element
of the Company's management compensation program is therefore in the form of
stock option grants.
On January 23, 1998, the Board awarded ISOs to purchase 10,000 Class A
Shares to Ms. Chagnon, who is a Named Executive Officer, pursuant to the 1997
Plan. Such options have an exercise price equal to the fair market value of the
Class A Common Stock of the Company on the date of grant, are exercisable for
ten years and vest in one-third increments on each of the first, second and
third anniversaries of the date of the grant.
On April 22, 1998, the Board, pursuant to the 1997 Plan, granted ISOs to
purchase 50,000 Class A Shares and NQSOs to purchase 100,000 Class A Shares to
Mr. Ying. These options were issued to Mr. Ying in lieu of payment of his salary
from April 22, 1998 through January 25, 1999, which salary Mr. Ying waived, as
more fully described in the "Chief Executive Officer Compensation" section
below. The ISOs and the NQSOs have an exercise price equal to the fair market
value of the Class A Common Stock of the Company on the date granted and vest in
twelve equal monthly installments beginning on April 1, 1999.
On April 22, 1998, the Board awarded ISOs to purchase 10,000 Class A Shares
to Ms. Chagnon pursuant to the 1997 Plan. Such options have an exercise price
equal to the fair market value of the Class A Common Stock of the Company on the
date of grant, are exercisable for ten years and vest in one-third increments on
each of the first, second and third anniversaries of the date of the grant.
On July 8, 1998, the Board awarded ISOs to purchase 50,000 Class A Shares to
Paul Trevithick, the President of the Company and who is a Named Executive
Officer, pursuant to the 1997 Plan. Such options have an exercise price equal to
the fair market value of the Class A Common Stock of the Company on the date of
grant, are exercisable for ten years and vest in one-third increments on each of
the first, second and third anniversaries of the date of the grant.
On November 6, 1998, the Board awarded ISOs to each of Ms. Chagnon (65,000
shares) and Mr. Trevithick (100,000 shares) pursuant to the 1997 Plan. Such
options have an exercise price equal to the fair market value of the Class A
Common Stock of the Company on the date of grant, are exercisable for
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<PAGE>
ten years and vest in one-third increments on each of the first, second and
third anniversaries of the date of the grant.
The 1994 Stock Plan, 1996 Stock Plan and 1997 Plan are intended to create
opportunities for executive officers and other key employees of the Company to
acquire a proprietary interest in the Company and thereby enhance their efforts
in the service of the Company and its stockholders. In addition, the vesting
provisions of such awards (which limit the exercisability of such options for
certain periods of time) encourage the continued service and stability of the
management team.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Charles Ying, Chairman of the Board and Chief Executive Officer of the
Company, is eligible to participate in the same executive compensation programs
in which other executive-level employees of the Company participate. His total
annual compensation for the 1998 fiscal year (including compensation derived
from salary and annual incentive bonus) was determined by the Committee in
consideration of the same performance criteria used to establish pay levels for
all other executive-level employees. In particular, Mr. Ying's salary for the
year ended December 31, 1998 was at the rate of $150,000 per annum in
recognition of the Board's overall satisfaction with his performance and
contributions. In April 1998, Mr. Ying waived payment of the remainder of his
annual salary for the fiscal year ended December 31, 1998 in light of the
financial performance of the Company during such year. Mr. Ying received ISOs to
purchase 50,000 Class A Shares and NQSOs to purchase 100,000 Class A Shares in
lieu of payment of his salary from April 22, 1998 through January 25, 1999.
These options are more fully described in the "Option Grants in Last Fiscal
Year" table below. The Committee has determined that Mr. Ying's salary is below
the median salary of Chief Executive Officers in a selected group of comparable
companies.
Compensation Committee
George B. Beitzel
Amos Kaminski
David G. Lubrano
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning
compensation by the Company to its Chief Executive Officer (the "CEO") during
the fiscal year ended December 31, 1998 and the four most highly compensated
executive officers other than the CEO who were serving as executive officers on
December 31, 1998 whose aggregate salary and bonus exceeded $100,000 for the
fiscal year ended December 31, 1998 (together with the CEO, the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- ----------------------
OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS/WARRANTS(#)(1) COMPENSATION($)(2)
- ------------------------------------- ---- --------- -------- ---------------- ---------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Charles Ying......................... 1998 46,154 -- -- 150,000(3) --
Chief Executive Officer 1997 86,538 -- -- 150,000(4) --
1996 -- -- -- -- --
Paul Trevithick...................... 1998 129,896 50,000 -- 150,000(5) 3,606
President 1997(6) 117,724 300,000 -- 165,000(7) --
1996 -- -- -- -- --
Anna M. Chagnon...................... 1998 115,754 25,000 -- 85,000(8) 3,235
Executive Vice President, Chief 1997 38,500 7,500 -- 15,000(9) --
Financial Officer and Chief 1996 -- -- -- -- --
Operating Officer
John S. Collins...................... 1998 135,000 -- -- -- 3,750
Vice President and Chief Technology 1997 130,738 1,200 -- 30,000(10) 3,922
Officer 1996 124,233 30,000 -- -- 1,492
</TABLE>
- ------------------------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during the
fiscal years ended December 31, 1996, December 31, 1997 and December 31,
1998.
(2) Represents matching contributions by the Company for the account of the
Named Executive Officer under the Company's 401(k) Plan.
(3) Represents (i) options to purchase 50,000 shares of Class A Common Stock
with an exercise price of $1.875 per share, which was the fair market value
of the shares on the date of grant (April 22, 1998). These options expire on
April 22, 2008 and vest in twelve monthly installments beginning on April 1,
1999; and (ii) options to purchase 100,000 shares of Class A Common Stock
with an exercise price of $1.875 per share, which was the fair market value
of the shares on the date of grant (April 22, 1998). These options expire on
April 22, 2008 and vest in twelve monthly installments beginning on April 1,
1999.
(4) Represents options to purchase 150,000 shares of Class A Common Stock with
an exercise price of $2.00 per share, which was the fair market value of the
shares on the date of grant (August 5, 1997).
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These options expire on August 5, 2007 and vest in three equal annual
installments on the first, second and third anniversaries of the date of
grant.
(5) Represents (i) options to purchase 50,000 shares of Class A Common Stock
with an exercise price of $1.375 per share, which was the fair market value
of the shares on the date of grant (July 8, 1998). These option expire on
July 8, 2008 and vest in three equal annual installments on the first,
second and third anniversaries of the date of grant; and (ii) options to
purchase 100,000 shares of Class A Common Stock with an exercise price of
$1.56 per share, which was the fair market value of the shares on the date
of grant (November 6, 1998). These options expire on November 6, 2008 and
vest in three equal annual installments on the first, second and third
anniversaries of the date of grant.
(6) In fiscal 1997, all bonus compensation was paid to Mr. Trevithick in
connection with his employment agreement with the Company. See "Executive
Agreements."
(7) Includes options to purchase 100,000 shares of Class A Common Stock with an
exercise price of $3.94 per share, which was the fair market value of the
shares on the date of grant (April 28, 1997). These options expire on April
28, 2004 and vest in three equal annual installments on the first, second
and third anniversaries of the date of grant. Also includes options to
purchase 65,000 shares of Class A Common Stock at a price of $0.90 per share
which were issued on April 28, 1997 in exchange for an equal number of
options originally issued to Mr. Trevithick by Archetype. These options are
fully vested.
(8) Represents (i) options to purchase 10,000 shares of Class A Common Stock
with an exercise price of $2.00 per share, which was the fair market value
of the shares on the date of grant (January 23, 1998). These options expire
on January 23, 2008 and vest in three equal annual installments on the
first, second and third anniversaries of the date of grant; (ii) options to
purchase 10,000 shares of Class A Common Stock with an exercise price of
$1.875 per share, which was the fair market value of the shares on the date
of grant (April 22, 1998). These options expire on April 22, 2008 and vest
in three equal annual installments on the first, second and third
anniversaries of the date of grant; and (iii) options to purchase 65,000
shares of Class A Common Stock with an exercise price of $1.56 per share,
which was the fair market value of the shares on the date of grant (November
6, 1998). These options expire on November 6, 2008 and vest in three equal
annual installments on the first, second and third anniversaries of the date
of grant.
(9) Represents options to purchase 15,000 shares of Class A Common Stock with an
exercise price of $1.50 per share, which was the fair market value of the
shares on the date of grant (July 15, 1997). These options expire on July
15, 2007 and vest in three equal annual installments on the first, second
and third anniversaries of the date of grant.
(10) Represents options to purchase 30,000 shares of Class A Common Stock with
an exercise price of $4.94 per share, which was the fair market value of the
shares on the date of grant (March 10, 1997). These options expire on March
10, 2007 and vest in two equal annual installments on the first and second
anniversaries of the date of grant.
All of the Company's Named Executive Officers, except Mr. Trevithick, are
employed on an at will basis and, except for the compensation arrangements
discussed below with Mr. Trevithick, none of the Named Executive Officers is
party to any employment agreements with the Company. Each of the
9
<PAGE>
executive officers may also receive discretionary bonuses as may be determined
by the Compensation Committee.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all options granted to each of the Named Executive
Officers of the Company during the fiscal year ended December 31, 1998 and the
potential value of stock price appreciation rates, 5% and 10%, over the ten year
term of the options. The 5% and 10% rates of appreciation are required to be
disclosed by the Securities and Exchange Commission and are not intended to
forecast possible future actual appreciation, if any, in the Company's stock
prices. The Company did not use an alternative present value formula permitted
by the Securities and Exchange Commission because the Company is not aware of
any such formula that can determine with reasonable accuracy the present value
based on future unknown or volatile factors.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTION/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTION/SARS EMPLOYEES IN BASE PRICE --------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) EXP. DATE 5%($)(8) 10%($)(8)
- --------------------------------------------- ----------- ------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles Ying................................. 50,000 4.67% $ 1.875 04/22/2008(1) 61,350 164,350
100,000 9.33% $ 1.875 04/22/2008(2) 122,700 328,700
Anna M. Chagnon.............................. 10,000 0.93% $ 2.00 01/23/2008(3) 13,080 35,070
10,000 0.93% $ 1.875 04/22/2008(4) 12,270 32,870
65,000 6.07% $ 1.56 11/06/2008(5) 66,365 177,775
Paul Trevithick.............................. 50,000 4.67% $ 1.375 07/08/2008(6) 45,000 120,550
100,000 9.33% $ 1.56 11/06/2008(7) 102,100 273,500
</TABLE>
- ------------------------
(1) These options were first exercisable on April 1, 1999 at which time the
options were one-twelfth vested with options vesting in additional
one-twelfth increments in monthly installments commencing on May 1, 1999.
(2) These options were first exercisable on April 1, 1999 at which time the
options were one-twelfth vested with options vesting in additional
one-twelfth increments in monthly installments commencing on May 1, 1999.
(3) These options were first exercisable on January 23, 1999 at which time the
options were 33% vested with options vesting in additional 33% increments in
two annual installments commencing on January 23, 2000.
(4) These options are first exercisable on April 22, 1999 at which time the
options will be 33% vested with options vesting in additional 33% increments
in two annual installments commencing on April 22, 2000.
(5) These options are first exercisable on November 6, 1999 at which time the
options will be 33% vested with options vesting in additional 33% increments
commencing on November 6, 2000.
10
<PAGE>
(6) These options are first exercisable on July 8, 1999 at which time the
options will be 33% vested with options vesting in additional 33% increments
in two annual installments commencing on July 8, 2000.
(7) These options are first exercisable on November 6, 1999 at which time the
options will be 33% vested with options vesting in additional 33% increments
in two annual installments commencing on November 6, 2000.
(8) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed rates of share price appreciation set by the
Securities and Exchange Commission of five percent and ten percent
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise. Actual gains, if any, are dependent on the performance of the
Class A Common Stock and the date on which the option is exercised. There
can be no assurance that the amounts reflected will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise of
options by the Named Executive Officers during the last fiscal year and
unexercised options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS
SHARES (#) AT FISCAL YEAR END(2)
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ------------------- ----------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Charles Ying...................... -- -- 99,998 350,002 -- --
Paul Trevithick................... -- -- 98,333 216,667 45,110.00 14,350.00
Anna M. Chagnon................... -- -- 4,999 95,001 469.91 3,150.09
John S. Collins................... -- -- 164,941 15,000 103,982.02 --
</TABLE>
- ------------------------
(1) Value realized equals fair market value on the date of exercise, less the
exercise price, times the number of shares acquired, without deducting taxes
or commissions paid by employee.
(2) Value of unexercised options equals fair market value of the shares
underlying in-the-money options at December 31, 1998 ($1.594 per share),
which was the last trading day of the Company's fiscal year, less the
exercise price, times the number of options outstanding.
11
<PAGE>
EXECUTIVE AGREEMENTS
EMPLOYMENT AGREEMENT WITH MR. TREVITHICK
In April 1997, the Company acquired Archetype, Inc. ("Archetype"), a
Delaware corporation primarily engaged in the business of developing and
marketing server-based information management computer software for the graphic
arts industry. Archetype's products include: MediaBank, a digital asset
management product that allows for the cataloging, archiving, and management of
electronic images, text and documents; InterSep OPI and InterSep Output Manager,
advanced open prepress interface and print management products for raster image
processors and servers; and NuDoc, an advanced document composition technology.
In connection with such acquisition, the Company entered into an employment
agreement with Paul Trevithick, Archetype's President and Chief Executive
Officer.
Pursuant to the employment agreement, Mr. Trevithick serves as Vice
President of the Company or such other position as the Board shall determine for
a period of two years commencing on April 28, 1997. In consideration of such
employment, Bitstream shall pay Mr. Trevithick an annual base salary of at least
$125,000, a $200,000 signing bonus on April 28, 1997, a deferred bonus of
$100,000 on July 17, 1997 and an annual performance bonus of $50,000 per year
for each of the 1997 and 1998 fiscal years so long as Mr. Trevithick has met
certain performance criteria. As of April 23, 1999, Mr. Trevithick has received
all of the bonus compensation set forth in his employment agreement with the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, Messrs. Beitzel, Kaminski
and Lubrano fulfilled all functions of the Compensation Committee with regard to
determining compensation of executive officers of the Company. For a description
of the relationship between Mr. Amos Kaminski, a member of the Board, Interfid
and certain significant principal stockholders of the Company, see "Certain
Relationships and Related Transactions--Interfid."
STOCK PERFORMANCE GRAPH
The line graph below compares the percentage change in cumulative total
stockholder return on the Class A Common Stock assuming an investment of $100 on
October 30, 1996, the date on which the Class A Common Stock was first publicly
traded, with the total cumulative return of the Total Return Index for the
Nasdaq Stock Market (US) and the Nasdaq Computer & Data Processing Services
Stock index for the period from October 31, 1996 to December 31, 1998. The Class
A Common Stock was sold in its initial public offering at a price of $6.00, and
the closing sales price of the Class A Common Stock on the Nasdaq National
Market on December 31, 1998 was $1.594.
12
<PAGE>
COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
AMONG BITSTREAM INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
BITSTREAM INC. NASDAQ STOCK MARKET (U.S.) NASDAQ COMPUTER & DATA PROCESSING
10/96 100 100 100
12/96 108 106 106
12/97 31 130 130
12/98 27 183 233
</TABLE>
* $100 invested on 10/31/96 in stock or index--including reinvestment
of dividends. Fiscal year ending December 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTERFID
Amos Kaminski, a member of the Board, is a director and the controlling
stockholder of Interfid. Interfid renders investment advisory services to
Premier Resources, Ltd., ("Premier"), a Bahamian corporation. Premier serves as
an investment advisor to each of Privest I N.V. and Privest II N.V. and may be
deemed the beneficial owner of the Company's stock owned of record by such
entities. See "Principal and Management Stockholders" and note 4 to the table
contained therein. Interfid has rendered investment advice to Premier in
connection with the investments by Privest I N.V. and Privest II N.V. in the
Company.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of April 23, 1999,
with respect to the Class A Common Stock of the Company owned or deemed
beneficially owned as determined under the rules of the Securities and Exchange
Commission, directly or indirectly, by each stockholder known to the Company to
own beneficially more than 5% of the Company's Class A Common Stock, by each
director, by the executive officers named in the Summary Compensation Table
included elsewhere herein, and by all directors and executive officers of the
Company and its subsidiaries as a group. In accordance with Rule 13d-3 under the
Exchange Act, a person is deemed to be the beneficial owner, for purposes of
this table, of any shares of Class A Common Stock of the Company if he or she
has or shares voting power or
13
<PAGE>
investment power with respect to such security or has the right to acquire
beneficial ownership at any time within 60 days of April 23, 1999. As used
herein "voting power" is the power to vote or direct the voting of shares, and
"investment power" is the power to dispose of or direct the disposition of
shares. Except as indicated in the notes following the table below, each person
named has sole voting and investment power with respect to the shares listed as
being beneficially owned by such person.
<TABLE>
<CAPTION>
PERCENT OF
COMMON
NAME AND ADDRESS(2) NUMBER(1) STOCK(1)
- ------------------------------------------------------------ --------- ----------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS
Privest I N.V. (3).......................................... 668,417 9.30%
c/o Caribbean Management Company N.V.
14, John B. Gorsiraweg
Curacao, Netherland Antilles
Privest II N.V. (3)......................................... 665,244 9.26%
c/o Caribbean Management Company N.V.
14, John B. Gorsiraweg
Curacao, Netherland Antilles
Heartland Advisors Inc...................................... 492,200 6.86%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Bell Lane, LLC.............................................. 437,000 6.09%
2070 Naamans Road, Suite 317
Wilmington, DE 19810
BancBoston Ventures, Inc. (4)............................... 382,608 5.33%
100 Federal Street
Boston, Massachusetts 02110
DIRECTORS AND EXECUTIVE OFFICERS
Paul Trevithick (5)......................................... 284,176 3.89%
Amos Kaminski (6)........................................... 196,447 2.70%
c/o Interfid Ltd.
150 E. 58th Street, 27th Floor
New York, New York 10155-2798
John S. Collins (7)......................................... 180,940 2.46%
David G. Lubrano (8)........................................ 177,539 2.45%
94 Otis Street
Hingham, Massachusetts 02043
George B. Beitzel (9)....................................... 172,437 2.37%
29 King Street
Chippaqua, New York 10514
Charles Ying (10)........................................... 172,787 2.36%
Anna M. Chagnon (11)........................................ 11,665 *
All directors and executive officers as a group (7 persons) 1,195,541 15.12%
(5)(6)(7)(8)(9)(10)(11).....................................
</TABLE>
14
<PAGE>
- ------------------------
* Less than one percent.
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
of Class A Common Stock shown as beneficially owned by them, subject to
community property laws where applicable. The information presented with
respect to the Principal Stockholders is based on reports of beneficial
ownership on Schedules 13D and 13G delivered to the Company pursuant to the
Exchange Act and such other information as may have been provided to the
Company by any such Principal Stockholder. In accordance with the rules of
the Securities and Exchange Commission, Class A Common Stock, subject to
stock options or warrants which are currently exercisable or which become
exercisable within 60 days after April 23, 1999, are deemed outstanding for
computing the share ownership and percentage ownership of the person
holding such options or warrants, but are not deemed outstanding for
computing the percentage ownership of any other person. The inclusion
herein of shares listed as beneficially owned does not constitute an
admission of beneficial ownership.
(2) Unless otherwise indicated, the address of the officer listed is: c/o
Bitstream Inc., 215 First Street, Cambridge, MA 02142.
(3) Includes 14,443 shares and 14,443 shares issuable to Privest I N.V. and
Privest II N.V., respectively, upon the exercise of warrants. Premier may
be regarded as the beneficial owner of these shares because it serves as an
investment advisor to each of Privest I N.V. and Privest II N.V. and has at
times in the past been delegated, and may from time to time in the future
be delegated, the authority to vote or direct the vote or to dispose or
direct the disposition of these shares. Premier, a corporation established
under the laws of the Commonwealth of the Bahamas, has a principal place of
business at IBM House-East Bay Street, Nassau, Bahamas and is a wholly
owned subsidiary of Gesfid International Ltd., a corporation established
under the laws of the Commonwealth of the Bahamas, which is a wholly owned
subsidiary of Gesfid, S.A., a fiduciary corporation established under the
laws of Switzerland, which has a principal place of business at Via
Adamini, 10a, Lugano, Switzerland. Gesfid, S.A. is indirectly controlled by
Mr. Antonio Saladino, a citizen of Switzerland, who has a principal place
of business at Via Adamini, 10a, Lugano, Switzerland. Mr. Saladino may be
deemed to be the beneficial owner of the shares of the Company held by
Privest I N.V. and Privest II N.V. to the extent that Premier is delegated
the authority to vote or direct the vote or to dispose of such shares.
(4) Includes 7,776 shares issuable to BancBoston Ventures, Inc. upon the
exercise of warrants. BancBoston Ventures, Inc. is a subsidiary of
BankBoston Corporation, a Massachusetts holding company, which may be
deemed beneficial owner of any shares of the Company held by BancBoston
Ventures, Inc.
(5) Includes 131,666 shares issuable to Mr. Trevithick upon the exercise of
options.
(6) Includes 54,487 shares issuable to Mr. Kaminski upon the exercise of
warrants and 20,164 shares issuable to Mr. Kaminski upon the exercise of
options. Also includes 20,000 shares and 1,110 shares issuable upon the
exercise of warrants held of record by Interfid of which Mr. Kaminski is
President and a director and, therefore, Mr. Kaminski may be deemed to a
beneficial owner of such shares.
15
<PAGE>
(7) Includes 39,941 shares and 140,000 shares issuable to Mr. Collins upon the
exercise of warrants and options, respectively, and 10,888 shares held by
Mr. and Mrs. Collins as joint tenants.
(8) Includes 54,020 shares and 20,164 shares issuable to Mr. Lubrano upon the
exercise of warrants and options, respectively.
(9) Includes 54,109 shares and 20,164 shares issuable to Mr. Beitzel upon the
exercise of warrants and options, respectively. Also includes 30,002 shares
and 524 shares issuable upon the exercise of warrants, all held of record
by the Beitzel Family Trust. Since Mr. Beitzel and his family are the
beneficiaries of the Beitzel Family Trust and Mr. Beitzel's wife and
children share voting power therein, Mr. Beitzel may be deemed beneficial
owner of such shares.
(10) Includes 137,495 shares issuable to Mr. Ying upon the exercise of options.
(11) Includes 11,665 shares issuable to Ms. Chagnon upon the exercise of
options.
The Company is not aware of any arrangements including any pledge by any
person of securities of the Company, the operation of which may at a subsequent
date result in a change in control of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, executive officers and
stockholders who own more than 10% of the outstanding common stock of the
Company to file with the Securities and Exchange Commission and the NASDAQ
reports of ownership and changes in ownership of voting securities of the
Company and to furnish copies of such reports to the Company.
Based solely on a review of the copies of such forms received by it, and on
written representations from certain reporting persons, the Company believes
that with respect to the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its directors, officers and ten-percent
stockholders were complied with, except that David G. Lubrano, a Director of the
Company, inadvertently failed to report timely on a Form 4, Statement of Changes
in Beneficial Ownership, the purchase of 10,000 shares of the Company's Class A
Common Stock in November 1998 by a marital trust of which Mr. Lubrano is an
indirect beneficial owner. Mr. Lubrano reported these purchase transactions on a
Form 4 filed with the Securities and Exchange Commission in December 1998.
The Company is not aware of any other late filings pursuant to Section 16(a)
of the Exchange Act.
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board has appointed Arthur Andersen LLP as auditors of the Company for
the fiscal year ending December 31, 1999 and has further directed that
management submit the selection of auditors for ratification by the
stockholders. Arthur Andersen LLP were the Company's auditors for the fiscal
year ended December 31, 1998.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
16
<PAGE>
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE CHOICE OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next Annual
Meeting of Stockholders of the Company to be held during 2000, pursuant to Rule
14a-8 promulgated under the Exchange Act, must be received by the Company at its
principal executive office in Cambridge, Massachusetts before January 7, 2000
for inclusion in the Company's proxy and proxy statement relating to said
meeting. Any stockholder desiring to submit a proposal should consult applicable
regulations of the Securities and Exchange Commission. For non-Rule 14a-8
proposals, the Company's By-laws provide that any stockholder of record wishing
to have a stockholder proposal considered at an annual meeting must provide
written notice of such proposal and appropriate supporting documentation, as set
forth in the By-laws, to the Secretary of the Company at its principal executive
office not less than the earlier of 45 days before the date on which the Company
first mailed its proxy materials for the preceding year's Annual Meeting of
Stockholders (if such proxy materials were mailed) and for 60 days prior to the
first anniversary of the preceding year's Annual Meeting of Stockholders, nor
more than 90 days prior to the first anniversary of the preceding year's Annual
Meeting of Stockholders; provided, however, that if the date of the annual
meeting is advanced more than 30 days prior to or delayed by more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90(th) day prior to such annual meeting and not
later than the close of business on the later of the 90(th) day prior to such
annual meeting or the 10(th) day following the day on which public announcement
of the date of such meeting is first made. If a security holder fails to notify
the Company, pursuant to the requirements of the advance notice provisions of
the By-laws, of a non-Rule 14a-8 stockholder proposal which it intends to submit
at the Company's next Annual Meeting of Stockholders of the Company to be held
during 2000, the proxy solicited by the Board with respect to such meeting may
grant discretionary authority to the proxies named therein to vote with respect
to such matter.
ANNUAL REPORT
The Company's Annual Report to Stockholders, including financial statements,
for the fiscal year ended December 31, 1998 is being furnished to stockholders
of record of the Company concurrently with this Proxy Statement. The Annual
Report to Stockholders does not, however, constitute a part of the proxy
soliciting material.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the Company knows
of no business other than that referred to in the foregoing Notice of Annual
Meeting of Stockholders and Proxy Statement which may come before the Meeting.
Should any other matters come before the Meeting, it is the intention of the
persons named in the accompanying Proxy to vote such Proxy in accordance with
their best judgment on such matters.
17
<PAGE>
FORM 10-K AVAILABLE
THE ANNUAL REPORT OF THE COMPANY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K, WHICH INCLUDES CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES FOR THE COMPANY AND ITS SUBSIDIARIES, IS AVAILABLE
TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE EXECUTIVE VICE
PRESIDENT AND GENERAL COUNSEL OF THE COMPANY AT 215 FIRST STREET, CAMBRIDGE,
MASSACHUSETTS 02142.
18
<PAGE>
1582-PS99
<PAGE>
DETACH HERE
PROXY
BITSTREAM INC.
215 First Street, Cambridge, Massachusetts 02142
ANNUAL MEETING OF STOCKHOLDERS - JUNE 3, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles Ying and Anna Chagnon, or
either of them, proxies of the undersigned with full power of substitution, to
vote all the shares of Class A Common Stock, $0.01 par value ("Class A Common
Stock") of Bitstream Inc. (the "Company") held of record by the undersigned on
April 23, 1999, at the Company's Annual Meeting of Stockholders to be held June
3, 1999 and at any adjournment thereof.
-----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
-----------
DETACH HERE
Please mark
/X/ votes as in
this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS
PROXY WILL BE VOTED "FOR" ITEMS (1) AND (2), AND IN THE PROXIES' DISCRETION
ON ANY OTHER MATTERS COMING BEFORE THE MEETING.
1. Election of Directors
Nominees: George B. Beitzel, Amos Kaminski,
David G. Lubrano and Charles Ying
FOR WITHHELD
/ / / /
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE BELOW
<PAGE>
/ / ---------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the action of the Board / / / / / /
of Directors in appointing Arthur
Andersen LLP as auditors for
the Company for the fiscal year
ending December 31, 1999.
3. In their discretion, the proxies are / / / / / /
authorized to vote upon such matters as
may properly come before the meeting or
any postponement or adjournment thereof.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
said attorneys, agents, proxies, their substitutes or any of them may lawfully
do by virtue hereof.
Please date, sign and return this Proxy Card in the enclosed envelope. No
postage required if mailed in the United States.
Please date this Proxy and sign your name exactly as it appears hereon. When
there is more than one owner, each should sign. When signing as an attorney,
administrator, executor, guardian, or trustee, please add your title as such. If
executed by a corporation, this Proxy should be signed by a duly authorized
officer. If a partnership, please sign in partnership name by authorized
persons.
Signature: Date: Signature: Date:
---------- ---------- ---------- -----------
