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
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Filed by a Party other than the Registrant / /
Check the appropriate box:
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by Rule 14a-6(e)(2))
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14a-12
CUSEEME NETWORKS, INC.
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(Name of Registrant as Specified In Its Charter)
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[LOGO]
CUSEEME NETWORKS, INC.
542 AMHERST STREET
NASHUA, NEW HAMPSHIRE 03063
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
We invite you to attend the 2000 Annual Meeting of Stockholders of CUseeMe
Networks, Inc. (formerly White Pine Software, Inc.), which is being held as
follows:
DATE: Wednesday, August 2, 2000
TIME: 10 A.M.
LOCATION: Crowne Plaza
Trafalgar Square Suite
2 Somerset Parkway
Nashua, New Hampshire 03063-1036
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 1996 Incentive and Nonqualified Stock
Option Plan in order to increase the aggregate number of shares of
common stock available for grant thereunder from 1,000,000 to
2,400,000; 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, postage-paid 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
June 14, 2000 may vote at the Meeting.
By order of the board of directors,
/s/ Mark L. Johnson
Mark L. Johnson
SECRETARY
June 19, 1999
PROXY STATEMENT
FOR THE
CUSEEME NETWORKS, INC.
(FORMERLY WHITE PINE SOFTWARE, INC.)
2000 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
PAGE
----
INFORMATION ABOUT THE MEETING
This Proxy Solicitation..................................... 2
How to Vote................................................. 2
Quorum Required to Transact Business........................ 3
Availability of Auditors.................................... 3
DISCUSSION OF PROPOSALS
Proposal One: Election of Directors......................... 4
Proposal Two: Approval of Amendment of Stock Option Plan.... 5
Other Matters............................................... 8
Stockholder Proposals for 2001 Annual Meeting............... 8
ADDITIONAL INFORMATION ABOUT DIRECTORS
Board Meetings.............................................. 9
Board Committees............................................ 9
Director Compensation....................................... 9
INFORMATION ABOUT EXECUTIVE OFFICERS
Background Information About Executive Officers............. 11
Executive Officer Compensation.............................. 12
Related Party Transactions.................................. 14
INFORMATION ABOUT STOCK OWNERSHIP
Stock Owned by Directors, Executive Officers and
Greater-than-5% Stockholders.............................. 15
Compliance with Reporting Requirements...................... 16
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, facsimile or
electronic mail. 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 are mailing this proxy statement and the enclosed proxy card to
stockholders for the first time on or about June 19, 2000. In this mailing, we
are including a copy of our 1999 Annual Report to Stockholders, which includes a
copy of our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999 as filed with the SEC.
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 June 14, 2000. 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 1996 Incentive and Nonqualified Stock Option Plan. If any
other business properly comes before the meeting, the designated persons
will have the discretion to vote as they deem appropriate.
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
Hale and Dorr LLP
60 State Street
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.
2
QUORUM REQUIRED TO TRANSACT BUSINESS
At the close of business on June 14, 2000, 12,214,169 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, 2000. Ernst & Young LLP have served as our auditors since 1994. We
expect that representatives of Ernst & Young LLP will attend the Meeting, will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
3
DISCUSSION OF PROPOSALS
PROPOSAL ONE: ELECTION OF 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 2001 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 14, 2000, follow. You will find
information about their stock holdings on page 15.
KILLKO A. CABALLERO......... Mr. Caballero has served as one of our directors since
November 1995 and was appointed as our Chairman in
January 2000. He has been our Chief Executive Officer since
December 1998 and our President since August 1997. He served
as our interim President during June and July 1997, and as
our 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 40 years old.
JOSEPH J. ESPOSITO.......... Mr. Esposito has served as one of our directors since
January 2000. From 1997 until December 1999, he was the
President and Chief Executive Officer of Tribal Voice, Inc.,
a provider of instant messaging, interactive communications
and online community solutions, until it was acquired by
CMGI, Inc. Currently he works as a consultant for our
company and others, focusing on strategy for the
communications and information industries. Prior to joining
Tribal Voice, Mr. Esposito worked in the publishing
industry, with tenures at Simon & Schuster and Random House.
Mr. Esposito also served as Chief Executive Officer of
Encyclopaedia Britannica. He is 48 years old.
JONATHAN G. MORGAN.......... Mr. Morgan has served as one of our directors since May
1996. He has been a Managing Director of Prudential
Securities Incorporated, an investment banking firm, since
June 1993 and currently serves in the Prudential Volpe
Technology Group, a division of Prudential Securities. He is
46 years old.
ADAM STETTNER............... Mr. Stettner has served as one of our directors 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 36 years old.
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. CABALLERO, ESPOSITO, MORGAN AND STETTNER.
4
PROPOSAL TWO: APPROVAL OF AMENDMENT OF STOCK OPTION PLAN
Our 1996 Incentive and Nonqualified Stock Option Plan, which we refer to as
the Plan, currently provides that the total number of shares of common stock
that may be issued pursuant to options granted thereunder shall not exceed
1,000,000, subject to adjustment upon certain changes in our capitalization. Our
board proposes that the Plan be amended to increase the number of shares of
common stock that may be issued pursuant to options granted under the Plan from
1,000,000 to 2,400,000.
All of the 1,000,000 shares of common stock covered by the Plan have been
issued upon option exercises or are the subject of currently outstanding
options. In December 1999, our board voted, subject to stockholder approval, to
amend the Plan to increase the number of shares of common stock that may be
issued pursuant to options granted thereunder from 1,000,000 to 1,600,000. In
June 2000, our board voted, subject to stockholder approval, to further amend
the Plan to increase the shares issuable thereunder from 1,600,000 to 2,400,000.
Our board's votes were based on its determination that it was desirable to have
additional shares available to cover future option grants to employees and that
increasing the number of shares available under the Plan would further align the
interests of our stockholders and management and would assist us in attracting
and retaining executives and other employees. To date, we have granted options
to new and existing employees to acquire a total of 1,066,995 of the 1,400,000
additional shares. In the event that Proposal Two is not approved, we anticipate
that the options purported to have been issued under the Plan for such 1,066,995
shares would be replaced with options that (1) would constitute nonqualified
options, as defined below, (2) would be issued under a new stock option plan,
and (3) would otherwise have terms, including exercise prices and vesting
conditions identical to the options that they are replacing.
Stockholder approval of the amendment is required under the terms of the
Plan. Under Section 422 of the Internal Revenue Code, stockholder approval of
the amendment is necessary for stock options issued under the Plan to qualify as
incentive options, as defined below. Stockholder approval also is required to
qualify compensation received under the Plan as "performance-based compensation"
for purposes of Section 162(m) of the Internal Revenue Code.
If Proposal Two is approved at the Meeting, we intend to file, as soon as
practicable after the meeting, a registration statement on Form S-8 under the
Securities Act of 1933 covering the additional shares of common stock issuable
pursuant to stock options granted under the Plan, as amended.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
AMENDMENT TO OUR 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN.
SUMMARY OF THE PLAN
As of June 14, 2000, 1,872,857 shares of common stock were subject to
outstanding options granted under the Plan and 194,138 shares had been purchased
upon exercise of options granted thereunder. If Proposal Two is adopted, a total
of 333,005 shares would be available for future grants under the Plan. As of
June 14, 2000, option prices and expiration dates for outstanding options
granted under the Plan ranged from $0.8438 to $45.375 per share and from
July 1, 2006 to June 5, 2010, respectively.
The Plan authorizes the grant of (a) options to purchase common stock
intended to qualify as incentive stock options as defined in Section 422 of the
Code, which we refer to as incentive options and (b) options that do not so
qualify, which we refer to as nonqualified options. The exercise price of
incentive options granted under the Plan must be at least equal to the fair
market value of the common stock on the date of grant. The exercise price of
incentive options granted to an optionee who owns stock possessing more than 10%
of the voting power of our outstanding capital stock must equal at least 110% of
the fair market value of the common stock on the date of grant. The exercise
price of
5
nonqualified options granted under the Plan must not be less than 85% of the
fair market value of the common stock on the grant date.
The Plan is administered by our board's Compensation Committee. The
Compensation Committee selects the individuals to whom options are granted and
determines the option exercise price and other terms of each award, subject to
the provisions of the Plan. Incentive options may be granted under the Plan to
employees, including officers and directors who are also employees. As of
June 14, 2000, 158 employees were eligible to participate in the Plan.
Nonqualified options may be granted under the Plan to employees, officers,
individuals providing services to us, and directors, whether or not they are our
employees.
No option may extend for more than 10 years from the date of grant, and any
option granted to an optionee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of our company or any parent
or subsidiary of our company may not extend for more than five years from the
date of grant. The aggregate fair market value, determined at the time of grant,
of shares issuable pursuant to incentive options that first become exercisable
by an employee or officer in any calendar year may not exceed $100,000.
Options are non-transferable except by will or by the laws of descent or
distribution and are exercisable, during the optionee's lifetime, only by the
optionee. Options generally may not be exercised after (a) 30 days after
termination of the optionee's employment with us other than as a result of death
or permanent or total disability, including upon the optionee's retirement, and
(b) 12 months after termination of the optionee's employment with us as a result
of the death of the optionee or the permanent and total disability of the
optionee under our then-established rules.
Payment of the exercise price of the shares of common stock subject to the
option may be made with (a) cash, check, bank draft or money order for an amount
equal to the option price for the shares, (b) if permitted by the instrument
evidencing the option (or, in the case of a nonqualified option, with the
consent of the Compensation Committee), shares of common stock having a fair
market value equal to the option price of such shares, (c) delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to us
sufficient funds to pay the option price, (d) if permitted by the instrument
evidencing the option (or, in the case of a nonqualified option, with the
consent of the Compensation Committee), delivery of a promissory note of the
optionee to us, payable on such terms as are specified by the Compensation
Committee, or (e) with the consent of the Compensation Committee, a combination
of the foregoing. In any event, however, a portion of the exercise price equal
to the par value of the shares being acquired must be paid other than by the
optionee's promissory note or personal check.
The Board may modify, revise or terminate the Plan at any time and from time
to time, except that the class of persons eligible to receive options and the
aggregate number of shares issuable pursuant to the Plan may not be changed or
increased without the consent of our stockholders.
NEW PLAN BENEFITS
Because the grant of options under the Plan is discretionary, we are unable
to determine the dollar value and number of options that we will grant as a
result of the proposed amendment to any person, including any executive officer,
director or director-nominee, or any associate of any executive officer,
director or director-nominee. If the proposed amendment had been in effect
during 1999, it would not have affected the determination of the number of
options received by or allocated to participants in 1999.
6
To date, grants of options under the Plan to our employees, officers and
directors have been:
OPTIONS GRANTED
----------------------------------------------
FROM INITIAL FROM ADDITIONAL
1,000,000 SHARES SHARES TOTAL
---------------- --------------- ---------
Killko A. Caballero.................................. 85,000 189,750 274,750
Christine J. Cox..................................... 70,000 82,500 152,500
David O. Bundy....................................... 75,000 49,500 124,500
John E. Kelly........................................ 75,000 -- 75,000
All non-employee directors as a group................ 40,000 25,000 65,000
All executive officers as a group.................... 305,000 321,750 626,750
All non-executive officer employees as a group....... 620,000 526,107 1,146,107
All such options were granted at the then current fair market value (as
determined by the board) and each additional option will be granted at an
exercise price equal to the fair market value of common stock (as determined by
the board) on the date of grant.
FEDERAL INCOME TAX INFORMATION WITH RESPECT TO THE PLAN
The holder of a nonqualified option recognizes no income for federal income
tax purposes on the grant of the option. On the exercise of a nonqualified
option, the difference between the fair market value of the underlying shares of
common stock on the exercise date and the option exercise price is treated as
compensation to the holder of the option taxable as ordinary income in the year
of exercise. Such fair market value becomes the basis for the underlying shares
that will be used in computing any capital gain or loss upon disposition of such
shares.
The holder of an incentive option recognizes no income for federal income
tax purposes on the grant of the option. Except as provided below with respect
to the alternative minimum tax, there is no tax upon exercise of an incentive
option. If the option holder does not dispose of shares acquired upon exercise
of the incentive option within two years from the date of the grant of the
incentive option or within one year after exercise of the incentive option, any
gain realized by the option holder on the subsequent sale of such shares will be
treated for federal income tax purposes as a long-term capital gain if the
shares were held for at least one year. If the option holder sells the shares
before the expiration of such periods, the difference between the lesser of the
value of the shares at the date of exercise or at the date of sale and the
exercise price of the incentive option will be treated as compensation to the
employee taxable as ordinary income and the excess gain, if any, will be treated
as capital gain. That capital gain will be long-term capital gain if the shares
were held for more than one year.
The excess of the fair market value of the underlying shares over the
exercise price at the time of exercise of an incentive option will constitute an
item of tax preference for purposes of the alternative minimum tax. Taxpayers
who incur the alternative minimum tax will be allowed a credit that may be
carried forward indefinitely to be used as a credit against the taxpayer's
regular tax liability in a later year. The minimum tax credit cannot, however,
reduce the regular tax below the alternative minimum tax for that carryover
year.
Generally, subject to certain limitations, we may deduct on our corporate
income tax returns, in the year in which an option holder recognizes ordinary
income upon the exercise of a nonqualified option or a disqualifying disposition
of an incentive option, an amount equal to the amount recognized by the option
holder as ordinary income upon the occurrence of such exercise or disqualifying
disposition.
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act, nor is the Plan qualified under Section 401(a) of the Internal
Revenue Code.
7
OTHER MATTERS
Neither we nor our board of directors intends to propose any matters at the
Meeting other than as described in this proxy statement. Neither we nor our
board knows of any matters to be proposed by others at the Meeting.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
A stockholder who intends to present a proposal at the 2001 Annual Meeting
of Stockholders for inclusion in our 2001 proxy statement must submit the
proposal by February 21, 2001 or, if we hold the 2001 Annual Meeting of
Stockholders more than thirty days before or after August 2, 2001, 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 eligibility standards and must comply with procedures
established by the SEC, 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 2.
In addition, in accordance with our by-laws, a stockholder wishing to bring
an item of business before the 2001 Annual Meeting or to nominate any person for
election to our board of directors at the 2001 Annual Meeting must deliver
proper notice of the item of business or nomination to us at our offices no
later than June 1, 2001, even if the item or nomination is not to be included in
our proxy statement. If we hold the 2001 Annual Meeting before August 2, 2001
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 (a) the day on which we mailed
notice of the date of the meeting and (b) 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.
8
ADDITIONAL INFORMATION ABOUT DIRECTORS
BOARD MEETINGS
During 1999 our board of directors held seven meetings. 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 twice in 1999. During 1999, the Audit Committee consisted of
Arthur Bruno and Adam Stettner, each of whom attended the meetings of the Audit
Committee held in 1999. Mr. Bruno, our former chairman, resigned from the Board
and all its committees in January 2000. Since that time, the Audit Committee has
consisted of Jonathan Morgan and Adam Stettner.
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 1999 the Compensation Committee met
once and acted by unanimous written consent 22 times. During 1999, the
Compensation Committee consisted of Arthur Bruno and Jonathan Morgan, each of
whom attended each of the meetings of the Compensation Committee held in 1999.
Since Mr. Bruno's resignation in January 2000, the Compensation Committee has
consisted of Joseph Esposito and Jonathan Morgan.
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. Joseph Esposito, 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 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.
9
Pursuant to the Director Stock Option Plan, Mr. Stettner and Mr. Esposito
each received an option to purchase 15,000 shares of common stock upon election
to our board in March 1999 and January 2000, respectively.
Pursuant to the Director Stock Option Plan, each of Messrs. Morgan and
Stettner received, upon re-election to our board in July 1999, an option to
purchase 10,000 shares of common stock at a price of $6.9375 per share, which
represented the closing price of the common stock on such date.
In addition, on April 24, 2000, our board voted to grant to Mr. Esposito
options to purchase 25,000 shares of common stock at an exercise price of
$14.625 per share, which represented the market value on the date of grant. This
option was issued under the 1996 Incentive and Nonqualified Stock Option Plan.
It vests over a one year period.
10
INFORMATION ABOUT EXECUTIVE OFFICERS
BACKGROUND INFORMATION ABOUT EXECUTIVE OFFICERS
Brief biographies of our executive officers, as of June 14, 1999, follow.
You will find information about their holdings of common stock on page 15.
KILLKO A. CABALLERO.......................... You will find background information about
CHIEF EXECUTIVE OFFICER, PRESIDENT AND Mr. Caballero on page 4.
CHAIRMAN
CHRISTINE J. COX............................. Ms. Cox has been our Vice President of
CHIEF FINANCIAL OFFICER, VICE PRESIDENT OF Finance since August 1997, our Chief
FINANCE, TREASURER AND ASSISTANT SECRETARY Financial Officer since December 1998, and
our Treasurer and Assistant Secretary since
May 2000. She was our Corporate Controller
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, served as
Operations Controller of Sequoia from June
1995 to May 1996, and held other financial
management positions at Sequoia from August
1993 to June 1995.
DAVID O. BUNDY............................... Mr. Bundy has been our Chief Technology
CHIEF TECHNOLOGY OFFICER Officer since July 1998. He was our Vice
President of Engineering from January 1994 to
July 1998 and our Vice President and
Principal Engineer from September 1991 to
December 1993.
JOHN E. KELLY................................ Mr. Kelly has been our Vice President of
VICE PRESIDENT OF WORLDWIDE SALES AND Worldwide Sales and Marketing since March
MARKETING 1999. He founded Aura Networks, a developer
of datacentric digital Worldwide Sales loop
carrier products, in May 1997 and was
President of 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.
11
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE FOR 1997, 1998 AND 1999
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 A. Caballero, our only chief executive officer in 1999; and
- David O. Bundy, Christine J. Cox and John E. Kelly, our other three
executive officers whose compensation for services rendered in all
capacities to us exceeded $100,000 during 1999.
All of the options described in the following table have a maximum term of
ten years, subject to earlier termination in the event of the optionee's
cessation of service with us. The options are exercisable during the optionee's
lifetime only by the optionee. They are exercisable by the optionee only while
the optionee is one of our employees or advisors and for limited periods of time
after termination of employment.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- --------------------------- -------- --------- -------- ------------ ---------------
Killko A. Caballero..................... 1999 $155,140 $45,000 115,000 --
Chief Executive Officer, President and 1998 150,445 -- 35,000 --
Chairman 1997 124,347 20,000 50,000 --
Christine J. Cox........................ 1999 112,470 20,000 66,000 --
Chief Financial Officer, Vice 1998 105,467 -- 20,000 --
President of Finance, Treasurer and 1997 83,384 15,000 37,000 --
Assistant Secretary
David O. Bundy.......................... 1999 128,546 25,000 30,000 --
Chief Technology Officer 1998 132,405 -- 20,000 $20,000
1997 119,909 15,000 60,000 --
John F. Kelly........................... 1999 140,905 -- 75,000 --
Vice President of Worldwide Sales and
Marketing
The other compensation paid to Mr. Bundy in 1998 consisted of amounts paid
in connection with his relocation, at our request, to New Hampshire. Mr. Kelly
joined our Company in March 1999. His salary in 1999 included commissions paid
to him in 1999.
12
OPTION GRANTS IN 1999
The following table summarizes (a) option grants to the Named Officers
during 1999 and (b) the value of options held by the Named Officers at
December 31, 1999. The amounts shown in the last two columns represent
hypothetical gains that could be achieved for the respective options if
exercised at the end of their option terms. These gains are based on assumed
rates of stock appreciation of five percent and ten percent, compounded annually
from the date the respective options were granted to the date of their
expiration. The gains shown are net of the option price, but do not include
deductions for taxes or other expenses that may be associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the future
performance of our common stock, the option holders' continued employment
through the option term, and the date on which the options are exercised.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE PER EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR SHARE($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ -------------- ---------- ---------- ----------
Killko A. Caballero............ 115,000 13% $25.375 12/17/09 $1,835,193 $4,650,740
Christine J. Cox............... 50,000 6 25.375 12/17/09 797,910 2,022,061
16,000 2 6.625 7/23/09 66,663 168,937
David O. Bundy................. 30,000 3 25.375 12/17/09 478,746 1,213,236
John E. Kelly.................. 75,000 8 2.8125 3/15/09 132,657 336,180
AGGREGATED OPTION EXERCISES IN 1999 AND OPTION VALUES AT DECEMBER 31, 1999
The following table summarizes information about options exercised during
1999, and the value of unexercised options held at the end of 1999, by the Named
Officers. The closing sale price for our common stock as reported on the Nasdaq
National Market on December 31, 1999 was $24.50. For purposes of the last column
in the table, value is calculated on the basis of the difference between the
option exercise price and $24.50, multiplied by the number of shares of common
stock underlying the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Killko A. Caballero...... -- -- 33,750 166,250 $ 747,969 $1,143,906
Christine J. Cox......... -- -- 23,875 96,125 528,375 958,125
David O. Bundy........... 35,000 $405,000 45,625 69,375 1,006,875 875,625
John E. Kelly............ -- -- 9,375 65,625 203,320 1,423,242
13
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 employees, 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 in breach of the agreement. Either
party may terminate the agreement by giving the other party thirty days' prior
written notice. 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 our company, we will pay
the difference for the balance of this six-month period.
We entered into a letter agreement dated August 5, 1997 with Christine J.
Cox with respect to her 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.
In December 1999, we sold 78,125 shares of common stock to Special
Situations Private Equity Fund, L.P., 65,104 shares of common stock to Special
Situations Cayman Fund, L.P., and 182,292 shares of common stock to Special
Situations Fund III, L.P., at a price of $15.36 per share. Under SEC
regulations, these funds may be deemed to be affiliated with Austin W. Marxe and
David Greenhouse, who beneficially owned 9.1% of our common stock as of
June 14, 2000, and Adam Stettner, one of our directors. The shares sold to these
funds were sold on terms identical to the terms under which we sold an
additional 976,563 shares of common stock to third parties in December 1999.
14
INFORMATION ABOUT STOCK OWNERSHIP
STOCK OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-5% STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of common stock as of June 14, 2000, by (a) each person (or
group of affiliated persons) known by us to own beneficially more than five
percent of the outstanding shares of common stock, (b) each of our directors,
(c) each of the Named Officers and (d) all of our directors and executive
officers as a group. Unless otherwise noted:
- The address of all persons who are executive officers or directors is in
care of CUseeMe Networks, 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 June 14, 2000 are treated as outstanding only for
purposes of determining the amount and percentages beneficially owned by
such person or group.
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED OWNED
- ---------------- ------------ ------------
Austin W. Marxe and David Greenhouse........................ 1,108,421 9.1 %
153 East 53 Street, 51st Floor
New York, New York 10022
Adam Stettner............................................... 1,133,421 9.3
153 East 53 Street, 51st Floor
New York, New York 10022
Consortium de Realisation................................... 820,330 6.7
27-29 rue Le Peletier
75009 Paris, France
Killko A. Caballero......................................... 411,075 3.4
David O. Bundy.............................................. 73,206 *
Joseph J. Esposito.......................................... 6,250 *
Jonathan G. Morgan.......................................... 57,708 *
Christine J. Cox............................................ 40,548 *
John E. Kelly............................................... 22,750 *
All directors and executive officers as a group (seven 1,744,958 14.3
persons)..................................................
- ------------------------
* Represents less than 1% of the outstanding shares of common stock.
The information reported regarding Messrs. Marxe and Greenhouse is based on
Amendment No. 2 to Schedule 13G, filed with the Securities and Exchange
Commission on March 2, 2000 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.,
Special Situations Private Equity Fund, L.P., MG Advisors L.L.C., Austin W.
Marxe and David Greenhouse. Of the 1,108,421 shares, (a) 665,192 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.), (c) 221,504
shares are beneficially owned by Special Situations Cayman Fund,
15
L.P. and AWM Investment Company Inc. (the general partner of and investment
advisor to Special Situations Cayman Fund, L.P.), and (d) 78,125 shares are
beneficially owned by Special Situations Private Equity Fund, L.P., and MG
Advisors, L.L.C. Messrs. Marxe and Greenhouse, who serve as officers, directors
and members or principal shareholders of the four investment advisers, claim
sole voting and dispositive powers for all of the 1,108,421 shares.
Of the 1,133,421 shares deemed to be beneficially owned by Mr. Stettner,
1,108,421 consist 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 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 the directors and executive officers
includes options, exercisable by the following, within 60 days of June 14, 2000,
to purchase the indicated numbers of shares of common stock:
Adam Stettner............................................... 25,000
Killko A. Caballero......................................... 58,751
Joseph J. Esposito.......................................... 6,250
David O. Bundy.............................................. 57,501
Jonathan G. Morgan.......................................... 57,708
Christine J. Cox............................................ 38,001
John E. Kelly............................................... --
COMPLIANCE WITH REPORTING REQUIREMENTS
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 1999 were filed on a timely basis. Each of
David O. Bundy, Killko A. Caballero, Christine J. Cox and Jonathan G. Morgan
filed on August 21, 1999 a Form 5 due on February 14, 1999; these Forms 5
applied to transactions during 1998.
16
CUSEEME NETWORKS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR 2000 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 CUseeMe Networks, Inc. held of record by the undersigned
as of the close of business on June 14, 2000, at the 2000 Annual Meeting of
Stockholders to be held at 10:00 A.M. on Wednesday, August 2, 2000 at the
Crowne Plaza-Trafalgar Square Suite, 2 Somerset Parkway, Nashua, New
Hampshire 03063-1036, 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)
/X/ Please mark your votes as in this example.
PROPOSAL ONE: Election of four directors
NOMINEES: JOSEPH J. ESPOSITO KILLKO A. CABALLERO
JONATHAN G. MORGAN ADAM STETTNER
/ / FOR all of the nominees listed above / / WITHHOLD AUTHORITY to vote
for the nominees listed above
INSTRUCTIONS: To withhold authority to vote for one or more nominees, write his name or their
names on the lines below:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
THE DIRECTORS RECOMMEND A VOTE FOR EACH NOMINEE.
PROPOSAL TWO: Approval of the amendments to the CUseeMe Networks, Inc.
(formerly known as, White Pine Software, Inc.) 1996 Incentive
and Nonqualified Stock Option Plan in order to increase the
aggregate number of Shares of Common Stock available for grant
thereunder from 1,000,000 to 2,400,000.
/ / FOR / / AGAINST / / ABSTAIN
THE DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE CUSEEME NETWORKS, INC. (FORMERLY KNOWN AS, WHITE
PINE SOFTWARE, INC.) 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION
PLAN.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
Signature: Signature:
---------------------------- ----------------------------
(IF HELD JOINTLY)
Dated: , 2000 Dated: , 2000
-------------------- --------------------
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.