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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 (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 Rule 14a-11(c) or Rule 14a-12
Adaptec, 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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LOGO
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 9, 1999
To The Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Adaptec,
Inc. (the "Company"), a Delaware corporation, will be held on September 9, 1999
at 9:30 a.m., local time, at the Company's office located at 801 South Milpitas
Boulevard, Milpitas, California 95035, for the following purposes:
1. To elect the following directors to serve for the ensuing year and
until their successors are elected: John G. Adler, Laurence B. Boucher;
Carl J. Conti; John East; Ilene H. Lang; Robert J. Loarie; B.J. Moore; W.
Ferrell Sanders; Robert N. Stephens; and Phillip E. White.
2. To approve the Company's 1999 Stock Plan and the reservation for
issuance thereunder of 1,000,000 shares plus (i) any shares which are
reserved but unissued under the Company's 1990 Stock Plan as of the date of
the stockholder approval of 1999 Stock Plan and (ii) any shares returned to
the 1990 Stock Plan after the date of stockholder approval of the 1999
Stock Plan as a result of the termination of options under the 1990 Stock
Plan.
3. To approve an amendment to the Company's Bylaws to prohibit the
repricing of outstanding stock options to a lower exercise price during the
term of such options without stockholder approval.
4. To ratify and approve the appointment of PricewaterhouseCoopers LLP
as the independent public accountants of the Company for the fiscal year
ending March 31, 2000.
5. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on July 28, 1999 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to deliver your proxy by telephone or the Internet or to complete, sign
and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she returned a proxy.
By Order of the Board of Directors
Henry P. Massey, Jr.
Secretary
Milpitas, California
August 6, 1999
YOUR VOTE IS IMPORTANT
To assure your representation at the Annual Meeting, you are requested to
deliver your proxy by telephone or the Internet or to complete, sign and date
the enclosed proxy as promptly as possible and return it in the enclosed
envelope, which requires no postage if mailed in the United States.
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ADAPTEC, INC.
------------------------
PROXY STATEMENT
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Adaptec, Inc. (the "Company") for use at the Annual Meeting of Stockholders to
be held September 9, 1999 at 9:30 a.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth in this Proxy Statement and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Company's office located at 801 South Milpitas Boulevard,
Milpitas, California 95035. The Company's telephone number at that location is
(408) 945-8600.
These proxy solicitation materials were mailed on or about August 6, 1999
to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on July 28, 1999 are
entitled to notice of and to vote at the Annual Meeting. As of July 28, 1999,
103,299,529 shares of the Company's Common Stock were issued and outstanding. No
shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to ChaseMellon Shareholder
Services, L.L.C., Attention: Paul Collins, Inspector of Elections, at 235
Montgomery Street, 23rd Floor, San Francisco, California 94104, a written notice
of revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person. The mere presence at the Annual Meeting of
the stockholder who has appointed a proxy will not revoke the prior appointment.
If not revoked, the proxy will be voted at the Annual Meeting in accordance with
the instructions indicated on the proxy card, or if no instructions are
indicated, will be voted FOR the slate of directors described herein, FOR
Proposals Two, Three and Four, and as to any other matter that may properly be
brought before the Annual Meeting, in accordance with the judgment of the proxy
holders.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors. Most stockholders have a
choice of voting over the Internet, by telephone or by using a traditional proxy
card. Check your proxy or voting instruction card to see which options are
available to you. Voting instructions are included on the proxy or voting
instruction card.
This solicitation of proxies is made by the Company, and all costs
associated with soliciting proxies will be borne by the Company. The Company has
retained the services of ChaseMellon Shareholder Services, L.L.C. to aid in the
solicitation of proxies from brokers, bank nominees and other institutional
owners. The Company estimates that it will pay ChaseMellon Shareholder Services,
L.L.C. a fee not to exceed $9,500 for its services and will reimburse them for
certain out-of-pocket expenses that are usual and proper. In addition, the
Company will reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, facsimile or telegram.
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QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the record
date. All shares represented at the meeting, whether in person or by a general
or limited proxy, will be counted for the purpose of establishing a quorum.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions (including "Withheld"), the Company
believes that abstentions should be counted for purposes of determining both (i)
the presence or absence of a quorum for the transaction of business and (ii) the
total number of shares present and entitled to vote ("Votes Cast") with respect
to a proposal (other than the election of directors). In the absence of
controlling precedent to the contrary, the Company intends to treat abstentions
in this manner. Accordingly, abstentions will have the same effect as a vote
against the proposal.
Under current Delaware case law, while broker non-votes (i.e. the votes of
shares held of record by brokers as to which the underlying beneficial owners
have given no voting instructions) should be counted for purposes of determining
the presence or absence of a quorum for the transaction of business, broker
non-votes should not be counted for purposes of determining the number of Votes
Cast with respect to the particular proposal on which the broker has expressly
not voted. Accordingly, the Company intends to treat broker non-votes in this
manner. Thus, a broker non-vote will make a quorum more readily obtainable, but
the broker non-vote will not otherwise affect the outcome of the voting on a
proposal.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Company's Bylaws provide that only persons nominated by or at the
direction of the Board of Directors or by a stockholder who has given timely
written notice to the Secretary of the Company prior to the meeting will be
eligible for election as directors. In all cases, to be timely, notice must be
received by the Company not less than twenty (20) days prior to the meeting;
provided, however, if fewer than thirty (30) days notice or prior public
disclosure of the meeting date is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the tenth day
following the day on which such notice was mailed or such public disclosure was
made. In the notice, the stockholder must provide (a) as to each person, whom
the stockholder proposes to nominate for election as a director: (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the corporation which are beneficially owned by such person, (iv) any other
information relating to such person that is required by law to be disclosed in
solicitations of proxies for election of directors; and (b) as to the
stockholder giving the notice: (i) the name and address, as they appear on the
Company's books, of such stockholder, (ii) the class and number of shares of the
Company which are beneficially owned by such stockholder, and (iii) a
description of all arrangements or understandings between such stockholder and
each nominee and any other person or persons (naming such person or persons)
relating to the nomination.
The Company's Bylaws also provide that all business which can be conducted
at the meeting must be properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (a) as specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder. Business to be brought before the meeting
by a stockholder shall not be considered properly brought if the stockholder has
not given timely notice thereof in writing to the Secretary of the Company. To
be timely, a stockholder's notice must be delivered to the principal executive
offices of the Company not less than forty five (45) days prior to the date on
which the Company first mailed proxy materials for the prior year's annual
meeting; provided, however, that if the Company's annual meeting of stockholders
occurs on a date more than thirty (30) days earlier or later than the Company's
prior year's annual meeting, then the Company's Board of Directors shall
determine a date a reasonable period prior to the Company's annual meeting of
stockholders by which date the stockholders notice must be delivered and
publicize such date in a filing pursuant to the Securities Exchange Act of 1934,
as amended, or via press release. Such publication shall occur at least ten (10)
days prior to the date set by the Board of Directors. A stockholder's notice to
the Secretary shall set forth as to each matter the
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stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address of
the stockholder proposing such business, (iii) the class and number of shares of
the Company, which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business, and (v) any other information that
is required by law to be provided by the stockholder in his capacity as
proponent of a stockholder proposal.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders of the Company are entitled to present proposals for
consideration at forthcoming stockholder meetings provided that they comply with
the proxy rules promulgated by the Securities and Exchange Commission and the
Bylaws of the Company. Stockholders wishing to present a proposal at the
Company's 2000 Annual Stockholder Meeting must submit such proposal to the
Company by April 8, 2000 if they wish for it to be eligible for inclusion in the
proxy statement and form of proxy relating to that meeting. In addition, under
the Company's Bylaws, a stockholder wishing to make a proposal at the 2000
Annual Stockholder Meeting must submit such a proposal to the Company prior to
June 22, 2000.
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PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of ten directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's ten nominees named below, all of whom are presently directors
of the Company. Proxies cannot be voted for a greater number of persons than the
number of nominees named. If any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee designated by the present Board of Directors to fill the
vacancy. Management has no reason to believe that any of the nominees will be
unable or unwilling to serve if elected. If additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such manner as will assure the election of as many of the nominees
listed below as possible. In this event, the specific nominees to be voted for
will be determined by the proxy holders. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Stockholders or until his or her successor has been elected and qualified.
All nominees are presently directors of the Company and, with the exception
of Mr. Adler and Mr. Stephens, were last elected at the Annual Meeting of
Stockholders held on August 22, 1998. Mr. Adler and Mr. Stephens were appointed
to the Board of Directors in July 1998 and December 1998, respectively.
The names of the nominees, their ages as of the date of this Proxy
Statement and certain information about them are set forth below:
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
John G. Adler.......................... 62 Independent management consultant 1998
Laurence B. Boucher.................... 56 President and Chief Executive Officer of 1981
Alacritech, Inc., a company engaged in
developing and manufacturing computer
components; Chairman of the Company's Board
of Directors
Carl J. Conti.......................... 61 Independent management consultant 1995
John East.............................. 54 Chief Executive Officer and director of Actel 1995
Corporation, a manufacturer of field
programmable gate arrays
Ilene H. Lang.......................... 55 President and Chief Executive Officer of 1997
Newspage.com, Inc., a provider of news to
business people
Robert J. Loarie....................... 56 Managing Director of Morgan Stanley Dean 1981
Witter & Co., a diversified investment firm
B.J. Moore............................. 63 Independent management consultant 1984
W. Ferrell Sanders..................... 62 Venture partner of Alloy Ventures, Inc., a 1982
venture capital and investment management
firm
Robert N. Stephens..................... 53 President and Chief Executive Officer of the 1998
Company
Phillip E. White....................... 56 Independent marketing consultant 1994
Except as set forth below, each of the nominees has been engaged in his or
her principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Adler is an independent management consultant. He served as President
of the Company from May 1985 to August 1992, as Chief Executive Officer from
December 1986 to July 1995, as a director from February 1986 to August 1997 and
as Chairman of the Board of Directors from May 1990 to August 1997. Mr. Adler is
also a director of MMC Network, Inc.
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Mr. Boucher has, since March 1997, served as President and Chief Executive
Officer of Alacritech, Inc., a company engaged in the development and
manufacture of computer components. Mr. Boucher served as President from
December 1987 to June 1995, as Chief Executive Officer from December 1987 to
March 1996, as Chairman of the Board of Directors from February 1994 to June
1996, as a director from December 1987 to January 1997, and as a consultant from
July 1996 to March 1997 of Auspex Systems, Inc., a manufacturer of computer
systems. He is a founder of the Company and served as interim Chief Executive
Officer from July 1998 to April 1999, Chairman of the Board of Directors from
May 1981 to May 1990 and as Chief Executive Officer from May 1981 to December
1986.
Mr. Conti is an independent management consultant. From 1959 to 1991, he
held a variety of technical and managerial positions with International Business
Machines Corporation, a manufacturer of computer hardware and software,
concluding with four years as a Senior Vice President.
Mr. East has, since December 1988, served as a director, President and
Chief Executive Officer of Actel Corporation, a manufacturer of field
programmable gate arrays.
Ms. Lang has, since May 1999, served as President and Chief Executive
Officer of Newspage.com, Inc. a wholly-owned subsidiary of NewsEdge Corporation,
a provider of news to corporations. From August 1998 to March 1999, Ms. Lang
served as Chief Executive Officer of Etility.com, Inc., an eCommerce company
that sells communication and energy services over the Internet. From July 1996
to August 1997, Ms. Lang served as President and Chief Executive Officer of
AltaVista Internet Software Inc., a wholly-owned subsidiary of Digital Equipment
Corporation, a manufacturer of computer systems. From November 1995 to June
1996, Ms. Lang served as Vice President of the Internet Software Business Unit
of Digital Equipment Corporation. From January 1993 to September 1995, Ms. Lang
served first as Vice President of International Product Development and, more
recently, as Senior Vice President of the Desktop Business Group at Lotus
Development Corporation, a software manufacturer.
Mr. Loarie has served as a Managing Director of Morgan Stanley Dean Witter
& Co., a diversified investment firm, since December 1997, and served as a
Principal of that company from August 1992 until December 1997. Mr. Loarie also
has served as a general partner of several venture capital investment
partnerships affiliated with Morgan Stanley Dean Witter & Co. since August 1992.
Prior to that time, Mr. Loarie was a general partner of Weiss, Peck & Greer, an
investment management firm, and of several venture capital partnerships
affiliated with Weiss Peck & Greer. Mr. Loarie is also a director of Evolving
Systems, Inc.
Mr. Moore is an independent management consultant. Mr. Moore served as
President of Outlook Technology, Inc., a company engaged in the development,
manufacture and marketing of digital test instrumentation, from February 1986 to
July 1991. Mr. Moore is also a director of Dionex Inc. and American XTAL
Technology, Inc.
Mr. Sanders has served as a general or venture partner of Alloy Ventures,
Inc. (formerly known as Asset Management Associates) since March 1987.
Mr. Stephens became Chief Executive Officer of the Company in April 1999.
Mr. Stephens has served as President since October 1998, and from November 1995
to March 1999, he was Chief Operating Officer. From November 1993 until November
1998, Mr. Stephens was Chairman of the Board of Directors of Power I/O, Inc.
Mr. White is an independent marketing consultant. From January 1989 to
August 1997, Mr. White served as President, Chief Executive Officer, director
and Chairman of the Board of Directors of Informix Software, Inc., a software
company. Prior to that time, Mr. White was President of Wyse Technology, Inc., a
manufacturer of computers and computer terminals. Mr. White is also a director
of Legato Systems, Inc.
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BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of twelve meetings
during the fiscal year ended March 31, 1999. The committees of the Board of
Directors include an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Audit Committee of the Board of Directors currently consists of Messrs.
Adler, Conti and Loarie and held eight meetings during the last fiscal year. Mr.
Boucher was a member of the Audit Committee until his resignation in August
1998, when he was replaced by Mr. Adler. The Audit Committee recommends
engagement of the Company's independent accountants and is primarily responsible
for approving the services performed by the Company's independent accountants
and for reviewing and evaluating the Company's accounting principles and its
system of internal accounting controls.
The Compensation Committee of the Board of Directors consists of Messrs.
East, Lang and White and held eight meetings during the last fiscal year. Mr.
Moore was a member of the Compensation Committee until his resignation in July
1998, when he was replaced by Ms. Lang. The Compensation Committee establishes
the Company's executive compensation policy, determines the salary and bonuses
of the Company's executive officers and recommends to the Board of Directors
stock option grants for executive officers.
The Nominating Committee consists of Messrs. Moore and Sanders. The
Nominating Committee is responsible for reviewing the qualifications of
potential candidates for membership on the Board of Directors and recommending
such candidates to the Board of Directors. The Nominating Committee will
consider nominees recommended by management and stockholders. Such
recommendations may be delivered in writing to the attention of the Nominating
Committee in care of the Secretary at the Company's principal executive offices.
The Nominating Committee held no meetings during the prior fiscal year.
No director attended fewer than 75% of the sum of the total number of
meetings of the Board of Directors and committees thereof upon which that
director served, held subsequent to his or her becoming a director or his or her
appointment to such committee.
DIRECTOR COMPENSATION
Cash Compensation
Non-employee directors receive $3,000 per fiscal quarter and $2,000 for
each meeting of the Board of Directors attended other than telephonic meetings
and are reimbursed for their expenses incurred in attending meetings of the
Board of Directors. The chairmen of the Compensation and Audit Committees
receive an additional $5,000 per year as compensation for their services as
chairmen Directors do not receive compensation for committee or telephonic
meetings other than the Company's Special Litigation Committee (see below).
Employee directors do not receive additional compensation for attendance at
meetings of the Board of Directors.
Ms. Lang and Mr. Conti also served on the Company's Special Litigation
Committee, which was formed to investigate the merits of a derivative action
brought against certain current and former officers and directors of the
Company. The Company paid Mr. Conti and Ms. Lang $3,000 per day and reimbursed
them for all expenses incurred in connection with their duties as members of the
Special Litigation Committee. During fiscal 1999 the Company paid $5,250 and
$6,750 to Ms. Lang and Mr. Conti, respectively, for their services on the
Special Litigation Committee.
1990 Directors' Option Plan
Pursuant to the Company's 1990 Directors' Option Plan, Mr. Adler was
granted an option to purchase 40,000 shares of Common Stock on July 30, 1998 at
an exercise price of $11.00 per share. Such option becomes exercisable for 25%
of the shares subject to the option on the first anniversary of the date of
grant and for 6.25% of the shares subject to the option for each full calendar
quarter thereafter that Mr. Adler remains a director. The term of the option is
ten years.
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The 1990 Directors' Option Plan was suspended on March 25, 1999.
1990 Stock Plan
Pursuant to the 1990 Stock Plan, Messrs. Adler, Conti, East, Loarie, Moore,
Sanders and White and Ms. Lang were granted options to purchase 15,000 shares of
Common Stock each on March 31, 1999 at an exercise price of $23.9375 per share.
All such options were immediately exercisable on the grant date and have a term
of five years.
REQUIRED VOTE
If a quorum is present, the ten nominees receiving the highest number of
votes will be elected to the Board of Directors. Votes withheld from any nominee
will have no legal effect.
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PROPOSAL TWO
APPROVAL OF THE 1999 STOCK PLAN
In June 1999, the Board of Directors adopted the Company's 1999 Stock Plan
(the "Plan") and, subject to stockholder approval, reserved for issuance
thereunder of (a) 1,000,000 shares of Common Stock, plus (b) any shares which
are reserved but unissued under the Company's 1990 Stock Plan (the "1990 Plan")
as of the date of stockholder approval of the Plan, and (c) any shares returned
to the 1990 Plan after the date of stockholder approval of this Plan as a result
of the termination of options under the 1990 Plan. The Plan is intended to
replace the 1990 Plan which will terminate with respect to the grant of any new
option upon stockholder approval of the Plan. As of July 2, 1999 , there were
10,737,385 shares available for grant and 18,338,903 shares subject to
outstanding options under the 1990 Plan.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders for the stockholders to approve the Plan. The Board
believes that stock options assist in retaining, motivating and rewarding
employees, executives and consultants by giving them an opportunity to obtain
long-term equity participation in the Company. In addition, stock options are an
important contributor to aligning the incentives of the Company's employees with
the interests of the Company's stockholders. The Board also believes stock
options are essential to attracting new employees. Competition for qualified
employees in the technology market is extremely intense, and, due to the rapid
growth of many successful companies in this sector, such competition is
increasing. The Board of Directors believes that in order to remain competitive
with other technology companies with regard to its long-term incentive plans,
the Company must continue to provide employees with the opportunity to obtain
equity in the Company and that an inability to offer equity incentives to new
and current employees would put the Company at a severe competitive disadvantage
with respect to attracting and retaining qualified personnel.
For a description of the principal features of the Plan, see "Appendix
A -- Description of the Adaptec, Inc. 1999 Stock Plan."
REQUIRED VOTE
Approval of the Plan requires the affirmative vote of a majority of the
Votes Cast on the proposal at the Annual Meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
ADOPTION OF THE 1999 STOCK PLAN AND THE RESERVATION OF SHARES FOR ISSUANCE
THEREUNDER.
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PROPOSAL THREE
AMENDMENT OF THE COMPANY'S BYLAWS.
In January 1998 and October 1998, following significant declines in the
price of the Company's Common Stock, the Company reduced the exercise price of
many outstanding options held by its employees. The Company effected such
repricings because it believed they were necessary to retain and incentivise its
employees. Nonetheless, the Company understands that such repricings are
controversial and that certain stockholders may believe that they are
inappropriate in some or all circumstances. In March 1999, the Company received
a request from the State of Wisconsin Investment Board that the Company present
to its stockholders a proposal to amend the Company's Bylaws to prohibit the
Company from repricing outstanding options without the approval of the Company's
stockholders. In light of the importance of this issue to stockholders, the
Board of Directors of the Company determined to present such an amendment to its
stockholders for their approval.
The proposed amendment would add the following Section 17 to Article II of
the Company's Bylaws:
"The Company shall not reprice to a lower exercise price any issued
and outstanding stock option granted to any employee, consultant or
director of the Company at any time during the term of such option (other
than adjustments for stock splits, stock dividends, recapitalizations and
like events as provided for in the documents governing the grant), without
the prior approval of the Company's stockholders. This section may be
repealed, modified or amended only by the affirmative vote of the holders
of a majority of the Company's outstanding stock."
REQUIRED VOTE
Approval of the amendment to the Company's Bylaws requires the affirmative
vote of a majority of the Votes Cast on the proposal at the Annual Meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
AMENDMENT TO THE COMPANY'S BYLAWS
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PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected
PricewaterhouseCoopers LLP, independent public accountants, to audit the
financial statements of the Company for the fiscal year ending March 31, 2000
and recommends that the stockholders ratify this selection. In the event of a
negative vote on such ratification, the Board of Directors will reconsider its
selection. Representatives of PricewaterhouseCoopers LLP are expected to be
available at the Annual 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF PRICE WATERHOUSE COOPERS LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
The table below sets forth information for the three most recently
completed fiscal years concerning the compensation of (i) all individuals who
served as the Chief Executive Officer of the Company during fiscal 1999, (ii)
the four other most highly compensated executive officers of the Company who
were serving as executive officers at the end of fiscal 1999 and (iii) two
additional individuals who would have been one of the four most highly
compensated executive officers but for the fact that such individuals were not
serving as executive officers at the end of fiscal 1999:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL -------------------------
COMPENSATION SECURITIES
------------------- RESTRICTED UNDERLYING ALL OTHER
FISCAL SALARY BONUS STOCK OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARD($) (#) ($)(1)
--------------------------- ------ ------- -------- ---------- ------------ ------------
Laurence B. Boucher(2)........... 1999 324,309(3) $300,000 400,000 $ 212
Chief Executive Officer and 1998 28,000(4) -- -- 10,000(5) --
Director 1997 24,000(4) -- -- 10,000(5) --
F. Grant Saviers(6).............. 1999 704,741(7) -- -- 350,000 658
1998 598,269 -- -- 615,719 2,440
1997 524,423 560,000 -- 265,719 1,170
Andrew J. Brown.................. 1999 198,769 110,000 -- 215,000 334
Vice President, Finance, 1998 171,077 66,000 -- 59,000 516
Chief Financial Officer and 1997 153,404 87,500 -- 19,000 439
Assistant Secretary
Sam Kazarian..................... 1999 282,862 50,000 -- 170,000 1,275
Vice President, Operations 1998 259,538 -- -- 140,000 2,440
1997 239,519 230,000 -- 64,000 1,170
Michael A. Ofstedahl............. 1999 225,000 100,000 -- 105,000 444
Vice President, Sales 1998 20,769 122,614 -- 80,000 51
1997 -- -- -- -- --
Robert N. Stephens(8)............ 1999 425,000 250,000 -- 330,000 1,682
President, Chief Operating 1998 423,846 -- -- 350,000 1,877
Officer 1997 373,077 337,500 -- 128,000 703
Paul G. Hansen(9)................ 1999 139,171 -- -- -- 217,110(10)
1998 274,654 -- -- 147,600 1,357
1997 259,423 221,500 -- 72,000 644
E.J. Tim Harris(11).............. 1999 236,169 80,000 -- 135,000 1,974
1998 225,000 -- -- 180,000 1,573
1997 69,231 -- -- 100,000 493
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(1) Represents life insurance premiums.
(2) Mr. Boucher served as interim Chief Executive Officer of the Company
between July 30, 1998 and March 31, 1999.
(3) Includes $16,000 that Mr. Boucher received in connection with serving as a
director during the fiscal year ended March 31, 1999.
(4) Represents income that Mr. Boucher received in connection with serving as a
director of the Company.
(5) Represents stock options that Mr. Boucher received in connection with
serving as a director of the Company.
(6) Mr. Saviers resigned as an officer of the Company effective July 30, 1998.
During the fiscal year ended March 31, 1999 and until his resignation, Mr.
Saviers served as Chief Executive Officer of the Company. Mr. Saviers
continued to act as a consultant to the Company through the end of fiscal
1999.
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(7) Represents $335,510 earned by Mr. Saviers while serving as Chief Executive
Officer and $369,231 earned by Mr. Saviers pursuant to a consulting
agreement with the Company. See "Certain Transactions."
(8) Mr. Stephens was appointed Chief Executive Officer of the Company effective
April 1, 1999.
(9) Mr. Hansen resigned as an officer of the Company effective July 24, 1998.
During the fiscal year ended March 31, 1999 and until his resignation, Mr.
Hansen served as Vice President, Finance, Chief Financial Officer and
Assistant Secretary of the Company.
(10) Reflects a severance payment of $216,750 and a term life insurance premium
payment of $360.
(11) Mr. Harris resigned as an officer of the Company effective March 25, 1999.
During the fiscal year ended March 31, 1999 and until his resignation, Mr.
Harris served as Vice President, Administration of the Company.
The table below provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
March 31, 1999 to the persons named in the Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)(3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ------------ ----------- ---------- -------------- --------------
Laurence B.
Boucher............ 400,000 1.89% $11.00 07/30/08 $ 2,522,802 $ 6,623,405
F. Grant Saviers..... 350,000 1.65 14.00 07/06/08 2,725,263 7,241,957
Andrew J. Brown...... 150,000 0.71 9.375 10/15/08 1,281,426 2,873,425
15,000 0.07 10.875 08/07/08 128,549 301,317
30,000 0.14 14.00 07/06/08 233,594 620,739
20,000 0.09 19.0625 12/10/08 192,935 533,044
Sam Kazarian......... 100,000 0.47 14.00 07/06/08 778,647 2,069,131
70,000 0.33 19.0625 12/10/08 675,274 1,865,655
Michael A.
Ofstedahl.......... 75,000 0.35 14.00 07/06/08 583,985 1,551,848
30,000 0.14 19.0625 12/10/08 289,403 799,566
Robert N. Stephens... 200,000 0.95 14.00 07/06/08 1,557,293 4,138,261
130,000 0.61 19.0625 12/10/08 1,254,080 3,464,787
Paul G. Hansen....... -- -- -- -- -- --
E.J. Tim Harris...... 100,000 0.47 14.00 7/06/08 778,647 2,069,131
35,000 0.17 19.0625 12/10/08 337,637 932,827
All Stockholders..... N/A N/A N/A N/A 1,513,707,527 3,836,032,073
- ---------------
(1) These options were granted pursuant to the Company's 1990 Stock Plan. The
option exercise prices were at the fair market value of the Company's Common
Stock on the date of grant. All options expire 10 years from the date of
grant, are not transferable by the optionee (other than by will or the laws
of descent and distribution), and are exercisable during the optionee's
lifetime only by the optionee. The options become exercisable at the rate of
12.5% of the shares subject to the option six months after the date of grant
and at the rate of 6.25% of the shares subject to the option at the end of
each of the next 14 quarters. To the extent exercisable at the time of
employment termination, options may be exercised for an additional three
months unless termination is the result of total and permanent disability,
in which case the options may be exercised within six months following
termination, or unless termination is the result of death, in which case
unvested options become exercisable to a maximum of 50,000 shares per
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15
individual and may be exercised within six months following death by the
individual's estate or other successor.
(2) Potential gains are net of exercise price, but before taxes associated with
exercise. The amounts represent certain assumed rates of appreciation only,
based on the Securities and Exchange Commission rules. Actual gains, if any,
on stock option exercises are dependent on the future performance of the
Common Stock, overall market conditions and the option holders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved and do not reflect the Company's estimate of
future stock price growth.
(3) In the case of all stockholders, indicates the potential stockholder return
over a 10-year period at the respective rate determined from the closing
sale price on the Nasdaq National Market of $22.813 on March 31, 1999. On
March 31, 1999, there were 105,507,100 shares of Common Stock issued and
outstanding.
The table below provides the specified information concerning the exercise
of options to purchase the Company's Common Stock in the fiscal year ended March
31, 1999 and the unexercised options held as of March 31, 1999 by the persons
named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES VALUE OPTIONS AT FY-END(#) MONEY OPTIONS AT FY-END($)
ACQUIRED ON REALIZED --------------------------- ------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(2)
---- ----------- --------- ----------- ------------- ----------- ----------------
Laurence B. Boucher...... 2,500 32,032 168,331 271,669 $1,649,816 $3,150,028
F. Grant Saviers......... 460,000 6,601,252 515,184 679,735 480,859 --
Andrew J. Brown.......... 9,250 89,656 31,312 233,938 89,172 2,469,313
Sam Kazarian............. 85,500 1,409,033 298,550 248,750 1,976,796 1,068,594
Michael A. Ofstedahl..... -- -- 29,375 155,625 82,617 690,820
Robert N. Stephens....... -- -- 220,600 543,126 271,591 2,235,938
Paul G. Hansen........... 98,750 720,781 -- -- -- --
E.J. Tim Harris.......... -- -- 48,750 226,250 128,281 954,219
- ---------------
(1) Market value of underlying securities on date of exercise, minus the
exercise or base price.
(2) Market value of underlying securities at fiscal year end, minus the exercise
or base price.
CHANGE IN CONTROL ARRANGEMENTS
Under the Company's 1990 Plan and the proposed 1999 Stock Plan, in the
event of a Change in Control, any Options or Rights (as such terms are defined
in the 1990 and 1999 Stock Plans) outstanding upon the date of such Change in
Control shall have their vesting accelerated as to an additional 25% of the
shares subject to such Options or Rights as of the date of such Change in
Control. In the event an optionee is Involuntarily Terminated Without Cause (as
defined in the 1990 and 1999 Stock Plan) within 12 months following a Change in
Control, any Options or Rights outstanding upon such Change in Control that are
not yet exercisable and vested on such date shall become 100% exercisable and
vested. Such vesting acceleration may cause part or all of the consideration
involved to be treated as a "parachute payment" under the Code, which may
subject the recipient thereof to a 20% excise tax and which may not be
deductible by the participant's employer.
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REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors
regularly reviews and approves all executive officer pay plans. These include
the following compensation elements: base salaries, annual incentives, stock
options and various benefit plans.
The Committee is composed of three independent, outside directors. It is
the Committee's objective that executive compensation be directly related to the
Company's achievement of its business goals. Specifically, the Company's
executive compensation program is designed to reward exceptional executive
contribution and performance that result in enhanced corporate, economic and
stockholder values over the short and long-term.
The Committee retains independent compensation consultants to provide
objective and expert advice in the review of all executive compensation plans.
Published industry pay survey data is also reviewed and relied upon in the
Committee's assessment of appropriate total compensation levels, including the
Radford Executive Compensation Report for High Technology Industries and data
from a comparable group of companies supplied by the Committee's compensation
consultant, J. Richard & Co.
The Committee recognizes that the industry sector and geographical areas in
which the Company operates are both intensely competitive and are continuing to
undergo rapid globalization with the result that there is heightened demand for
qualified, experienced executive personnel. The Committee considers it crucial
that the Company be assured of retaining and rewarding its top-caliber
executives who are essential to the attainment of the Company's ambitious,
long-term, strategic goals.
For these reasons, the Committee believes the Company's executive
compensation arrangements must remain competitive with those offered by other
higher performing companies of similar size, scope, performance levels and
complexity of operations, including some, but not all, of the companies
comprising the Nasdaq -- 100 Index and the Nasdaq Computer Industry & Data
Processing Index.
ANNUAL CASH COMPENSATION (BASE SALARY, PLUS PERFORMANCE INCENTIVES)
The Committee believes that annual cash compensation should be paid
commensurate with attained performance to plan. For these reasons, the Company's
executive cash compensation consists of base compensation (salary) and variable
incentive compensation (annual bonus).
Base salaries for executive officers are established considering a number
of factors, including the Company's continued, planned, profitable growth; the
executive's individual performance and measurable contribution to the Company's
success; and pay levels of similar positions with comparable companies in the
industry. The Committee supports the Company's compensation philosophy of
moderation for elements such as base salary and benefits. Base salary decisions
are made as part of the Company's formal annual review process. Generally, base
salaries are maintained at approximately the level of the median salaries of
similar size, high-technology companies.
Under the Executive Incentive Plan ( the "EIP"), an executive's incentive
performance award generally depends on three performance factors: the overall
financial performance of the Company; the performance of the business unit or
corporate unit/functions the executive is accountable for; and the executive's
individual performance. The performance objectives of the Company and the
business unit or corporate function derive from the Company's Board-approved
annual business plan that includes specific financial performance targets
relating to revenue and profit growth for the fiscal year. The EIP provides no
payment until threshold earnings per share (EPS) and revenue targets are met.
Long-term strategic goals may also be incorporated for certain executives.
Individual executive performance is measured against an annual incentive target
that represents a percentage of base salary that the executive can earn as bonus
compensation if performance warrants. This target percentage ranges from 50% to
85% of an executive's base salary. The incentive target is set at a higher
percentage for more senior officers, with the result that the more senior
executive officers have a higher percentage of their potential total cash
compensation at risk. If business plans are exceeded, executives can earn
additional bonuses. Earned individual bonuses above a certain level must be
taken in the form of
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incentive stock rights or a premium priced stock option that is priced 10% above
the fair market value of the stock at the date of grant. Both types of stock
grants vest over two years. No executive officer received a cash bonus under the
EIP for the fiscal year ended March 31, 1999 because the Company's earnings per
share ("EPS") and revenue targets were not met. The Committee annually reviews
and approves specific targets, maximums, and performance criteria for each
executive officer.
LONG-TERM INCENTIVE: STOCK OPTIONS
The Committee approves executive stock options under the 1990 Plan to
foster executive officer ownership, to stimulate a long-term orientation in
decisions and to provide direct linkage with stockholder interests. The
Committee considers the total compensation package, options previously granted,
dilution effects, industry practices and trends, the executive's accountability
level, and future potential stock values when granting stock options. The
Committee recommends option grant amounts to provide retention considering
projected earnings to be derived from option gains based upon relatively
aggressive assumptions related to Company growth in revenue and earnings. In
this manner, executive option gains closely parallel those of other stockholders
over the long-term. Therefore, the stock option program serves as an effective,
cost-efficient and competitive long-term incentive and retention tool for the
Company's executives, as well as other employees. The exercise prices of stock
options granted to executive officers are equal to the market value of the stock
on the date of grant. Therefore, stock options provide an incentive to
executives to focus on the Company's profitable growth which ordinarily, over
time, should be reflected in the price of the Company's stock. The Committee
believes that the Company's stock option plan has been administered in a manner
comparable to its peer group and other high performing companies in the high
technology sector. The Committee also regularly reviews the Company's executive
stock purchase/ownership policy to assess progress toward desired ownership
levels.
BENEFITS
The Company provides benefits to the named executive officers that are
generally available to all Company employees. The amount of executive level
benefits and perquisites, as determined in accordance with the rules of the
Securities and Exchange Commission relating to executive compensation, did not
exceed 10% of total salary for the fiscal year ended March 31, 1999 for any
executive officer.
CHIEF EXECUTIVE OFFICER PERFORMANCE AND COMPENSATION
In setting Mr. Saviers' and Mr. Boucher's base salaries for the fiscal year
ended March 31, 1999, the Committee considered the Company's revenue and profit
in the fiscal year ended March 31, 1998, as well as the Company's market
capitalization. While the Company improved its operating income, it did not meet
its EPS or revenue targets as previously established and approved by the
Committee for the fiscal year 1999 EIP. The Committee has estimated the
resulting total cash compensation for both Mr. Saviers and Mr. Boucher to be
between the 50th and 60th percentiles of chief executive officers of other
companies of similar size, complexity and performance in the industry as
reported in the Radford Executive Compensation Report for High Technology
Industries and in data from comparable companies supplied by the Committee's
compensation consultant, J. Richard & Co.
STOCK OWNERSHIP POLICY
The Compensation Committee has established stock ownership requirements for
the Chief Executive Officer and other executive officers of the Company. The
ownership levels are expressed in terms of multiples of base salaries to be
achieved over the next year for current executives and over a two-year period
for newly appointed corporate officers. The Compensation Committee believes that
this policy will further align the interests of the officers with interests of
the stockholders.
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A similar stock ownership policy has been implemented for non-employee
Directors.
The Compensation Committee
Phillip E. White, Chairman
John East
Ilene H. Lang
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither Phillip E. White, John East nor Ilene H. Lang, the members of the
Company's Compensation Committee, is an executive officer of any entity for
which any executive officer of the Company serves as a director or a member of
the Compensation Committee.
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PERFORMANCE GRAPH
The following graph shows a comparison, since March 31, 1994, of cumulative
total return for the Company, the Nasdaq Stock Market -- U.S. and the Nasdaq
Computer and Data Processing Index.
NASDAQ STOCK NASDAQ COMPUTER &
ADAPTEC MARKET - U.S. DP
------- ------------- -----------------
3/94 100 100 100
3/95 182 111 135
3/96 266 151 191
3/97 394 168 209
3/98 217 254 365
3/99 252 342 594
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 Securities
and Exchange Act of 1934, as amended (the "Exchange Act") that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
preceding Compensation Committee Report on Executive Compensation and the
preceding Performance Graph shall not be incorporated by reference into any such
filings, nor shall such Report or Graph be incorporated by reference into any
future filings.
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SECURITY OWNERSHIP OF MANAGEMENT; PRINCIPAL STOCKHOLDERS
The table below sets forth as of May 31, 1999 certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than five percent (5%) of
the outstanding shares of Common Stock; (ii) each director of the Company, (iii)
each executive officer named in the Summary Compensation Table, and (iv) all
directors and executive officers as a group.
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME OF PERSON OR IDENTITY OF GROUP OWNED(1)(2) OWNED
----------------------------------- ------------ -----------
Oppenheimer Capital(3)...................................... 8,769,594 8.4%
Oppenheimer Tower, World Financial Center
New York, NY 10281
Capital Research and Management Company(4).................. 8,406,360(5) 8.1
333 South Hope Street
Los Angeles, CA 90071
MacKay-Shields Financial Corporation(6)..................... 7,616,545(7) 7.3
9 West 57th Street
New York, NY 10019
John G. Adler............................................... 113,750(8) *
Laurence B. Boucher(9)...................................... 238,786 *
Carl J. Conti............................................... 122,250 *
John East................................................... 112,250 *
Ilene H. Lang............................................... 42,500 *
Robert J. Loarie............................................ 128,854 *
B.J. Moore.................................................. 113,720 *
W. Ferrell Sanders.......................................... 157,250 *
Robert N. Stephens.......................................... 328,563 *
Phillip E. White............................................ 76,250 *
F. Grant Saviers............................................ 483,105 *
Andrew J. Brown............................................. 75,984 *
Sam Kazarian................................................ 184,574 *
Michael A. Ofstedahl........................................ 48,971 *
Paul G. Hansen.............................................. -- *
E.J. Tim Harris............................................. 23,748 *
All current directors and officers as a group (19
persons).................................................. 2,340,819 2.2%
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* Less than 1%
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons and entities named in the
table have sole voting and sole investment power with respect to all shares
of Common Stock beneficially owned. Amounts shown include the following
number of shares, options for which are presently exercisable or will become
exercisable within 60 days of May 31, 1999: Mr. Adler, 74,999; Mr. Boucher,
236,246; Mr. Conti, 121,250; Mr. East, 111,250; Ms. Lang, 42,500; Mr.
Loarie, 71,250; Mr. Moore, 71,250; Mr. Sanders, 71,250; Mr. Stephens,
306,725; Mr. White, 71,250; Mr. Saviers, 474,559; Mr. Brown, 72,499; Mr.
Kazarian, 181,300; Mr. Ofstedahl, 47,500; Mr. Harris, 23,125; and all
current executive officers and directors as a group, 2,057,264.
(2) Ownership guidelines have been established for non-employee Directors and
executive management. See "Report of the Compensation Committee -- Stock
Ownership Policy."
(3) Oppenheimer Capital, in its capacity as an investment advisor, may be deemed
to beneficially own 8,769,594 shares. Oppenheimer Capital claims shared
voting and dispositive power as to all 8,769,594 shares. Information
provided herein is based solely on Oppenheimer Capital's Schedule 13G dated
February 12, 1999.
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(4) Capital Research and Management Company, in its capacity as an investment
advisor, may be deemed to beneficially own 8,406,360 shares. Capital
Research and Management Company claims sole dispositive power as to
8,406,360 shares. Capital Research and Management Company disclaims
beneficial ownership of such shares pursuant to Rule 13d-4 under the
Securities Exchange Act of 1934, as amended. Information provided herein is
based solely on Capital Research and Management Company's Schedule 13G dated
February 11, 1999.
(5) Amount shown includes 290,360 shares which may be acquired upon conversion
of convertible notes.
(6) MacKay-Shields Financial Corporation, in its capacity as an investment
advisor, may be deemed to beneficially own 7,616,545 shares. MacKay-Shields
Financial Corporation claims shared voting and dispositive power as to all
7,616,545 shares. Information provided herein is based solely on MacKay-
Shields Financial Corporation's Schedule 13G dated February 8, 1999.
(7) Amount shown includes 254,045 shares of Common Stock which may be acquired
upon conversion of a convertible note.
(8) Includes 38,713 shares of Common Stock which may be acquired upon conversion
of convertible notes.
(9) Includes 40 shares beneficially owned by the Boucher Living Trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the Company's 1990 Plan, Mr. Adler was granted an option to
purchase 100,000 shares of Common Stock on July 30, 1998 at an exercise price of
$11.00 as consideration for Mr. Adler providing consulting services to the
Company.
Mr. Saviers entered into a two-year consulting agreement with the Company,
effective October 29, 1998. Pursuant to this agreement, Mr. Saviers is paid
$50,000 per month and is entitled to receive all vested benefits under the
Company's 1990 Plan. Mr. Saviers provides general consulting services under the
terms of such consulting agreement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 1999, all
officers, directors and greater than ten percent beneficial owners complied with
all Section 16(a) filing requirements, except that Robert N. Stephens reported
the purchase of 10,000 shares of the Company's Common Stock, which was purchased
by Mr. Stephens on September 17, 1998, on Form 4 on February 10, 1999 instead of
on the required reporting date of October 10, 1998.
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22
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the shares they
represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Henry P. Massey, Jr.
Secretary
Dated: August 6, 1999
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23
APPENDIX A
DESCRIPTION OF THE ADAPTEC, INC. 1999 STOCK PLAN
General. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees and consultants of the
Company and its subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be either "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonstatutory stock options.
Administration. The Plan may generally be administered by the Board or a
Committee appointed by the Board (as applicable, the "Administrator"). The
Administrator may make any determinations deemed necessary or advisable for the
Plan.
Eligibility. Nonstatutory stock options may be granted under the Plan to
employees and consultants of the Company and any parent or subsidiary of the
Company. Incentive stock options may be granted only to employees. The
Administrator, in its discretion, selects the employees and consultants to whom
options may be granted, the time or times at which such options shall be
granted, and the exercise price and number of shares subject to each such grant.
Number of Shares. The number of shares of Common Stock reserved for
issuance under the plan is the aggregate of 1,000,000 shares plus (i) any shares
which have been reserved but unissued under the Company's 1990 Plan as of the
date hereof and (ii) any shares returned to the 1990 Plan after the date hereof
as a result of the termination of options under the 1990 Plan.
Limitations. Section 162(m) of the Code places limits on the deductibility
for federal income tax purposes of compensation paid to certain executive
officers of the Company. In order to preserve the Company's ability to deduct
the compensation income associated with options granted to such persons, the
Plan provides that no employee may be granted, in any fiscal year of the
Company, options to purchase more than 1,000,000 shares of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value
of the Common Stock on the date such option is granted and the exercise
price of a nonstatutory stock option may not be less than 75% of the Fair
Market Value on the date such option is granted. The fair market value of
the Common Stock is generally the closing sale price for the Common Stock
(or the closing bid if no sales were reported) on the last market trading
day prior to the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. The means of payment for
shares issued upon exercise of an option is specified in each option
agreement. The Plan permits payment to be made by cash, check, promissory
note, other shares of Common Stock of the Company (with some restrictions),
cashless exercises, any other form of consideration permitted by applicable
law, or any combination thereof.
(c) Term of Option. The term of an incentive stock option may be no
more than ten (10) years from the date of grant. No option may be exercised
after the expiration of its term.
(d) Termination of Employment or Consultancy. If an optionee's
employment or consulting relationship terminates for any reason (excluding
death or disability), then the optionee generally may exercise the option
within 3 months of such termination to the extent that the option is vested
on the date of termination, (but in no event later than the expiration of
the term of such option as set forth in the option agreement). If an
optionee's employment or consulting relationship terminates due to the
optionee's disability, the optionee generally may exercise the option, to
the extent the option was vested
A-1
24
on the date of termination, within six months from the date of such
termination. In the event of the optionee's death, options granted to such
optionee shall become vested and exercisable as to the lesser of the full
number of shares covered by the option or an aggregate of 50,000 shares, in
addition to shares as to which the option would otherwise be vested and
exercisable as of such date.
(e) Nontransferability of Options: Unless otherwise determined by the
Administrator, options granted under the Plan are not transferable other
than by will or the laws of descent and distribution, and may be exercised
during the optionee's lifetime only by the optionee.
(f) Other Provisions: The stock option agreement or restricted stock
purchase agreement may contain other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator.
Adjustments Upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option outstanding under the Plan, and the exercise price of any such
outstanding option.
In the event of a liquidation or dissolution, any unexercised options will
terminate. The Administrator may, in its sole discretion, provide that each
optionee shall have the right to exercise all or any part of the option,
including shares as to which the option would not otherwise be exercisable.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation. If the successor
corporation refuses to assume the options or to substitute substantially
equivalent options, the Administrator shall have the discretion to allow the
optionee to exercise the option as to all the optioned stock, including shares
not otherwise vested or exercisable. In such event, the Administrator shall
notify the optionee that the option is fully exercisable for fifteen (15) days
from the date of such notice and that the option terminates upon expiration of
such period.
Change of Control. In the event of a change of control, any options
outstanding on the date of such change in control that are not yet exercisable
and vested on such date shall have their vesting accelerated as to an additional
25% of the shares subject to such option as of the date of such change in
control, and such option shall continue to otherwise vest at the same rate and
the same number of shares per vesting period as immediately prior to the change
in control, provided optionee maintains his or her continuing status as an
employee or consultant of the Company. If the optionee is involuntarily
terminated without cause within 12 months following a change in control, any
options outstanding on the date of such change in control that are not yet
exercisable and vested on such date shall become fully vested and exercisable.
In the event that vesting acceleration or amounts or benefits payable to an
optionee are subject to the golden parachute excise tax rules, the optionee's
accelerated vesting may be reduced to the extent necessary to avoid the golden
parachute excise tax if such reduction would provide the optionee with a greater
benefit. A change of control is defined as (i) the acquisition of at least 50%
of the Company by a "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934); (ii) certain changes in the composition of the
Board of Directors of the Company, (iii) a merger or consolidation where the
Company's stockholders do not own at least 50% of the voting power after the
transaction or (iv) the sale or disposition of substantially all of the
Company's assets.
Amendment and Termination of the Plan. The Board may amend, alter, suspend
or terminate the Plan, or any part thereof, at any time and for any reason.
However, the Company shall obtain shareholder approval for any amendment to the
Plan to the extent necessary and desirable to comply with applicable law. No
such action by the Board or shareholders may alter or impair any option
previously granted under the Plan without the written consent of the optionee.
Unless terminated earlier, the Plan shall terminate ten years from the date of
its initial adoption, or, if later, the date any amendment to increase the
number of shares reserved under the Plan is adopted by the Board of the Company.
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25
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income. If these
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. Unless limited by Section 162(m) of
the Code, the Company is entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a disposition of
such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
provided above, is treated as long-term or short-term capital gain or loss,
depending on the holding period. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS
UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
EMPLOYEE OR CONSULTANT MAY RESIDE.
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26
ADAPTEC, INC.
1999 STOCK PLAN
1. Purposes of the Plan. The purposes of this Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(e) "Common Stock" means the Common Stock, $.001 par value,
of the Company.
(f) "Company" means Adaptec, Inc., a Delaware corporation.
(g) "Committee" means a Committee, if any, appointed by the
Board in accordance with paragraph (a) of Section 4 of the Plan.
(h) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services
including, without limitation, directors of the Company who are not compensated
for their services or are paid only a director's fee by the Company.
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(i) "Continuous Status as an Employee or Consultant" means
the absence of any interruption or termination of the employment or consulting
relationship by the Company or any Parent or Subsidiary. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of: (i)
sick leave; (ii) military leave; (iii) any other leave of absence approved by
the Board, provided that such leave is for a period of not more than ninety (90)
days, unless reemployment upon the expiration of such leave is guaranteed by
contract or statute, or unless provided otherwise pursuant to Company policy
adopted from time to time; or (iv) in the case of transfers between locations of
the Company or between the Company, its Parent or Subsidiaries or its successor.
If reemployment upon expiration of a leave of absence in excess of ninety (90)
days is not guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
(j) "Disability" means total and permanent disability, as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including officers and
directors, employed by the Company or any Subsidiary. The payment of directors'
fees by the Company shall not be sufficient to constitute "employment" by the
Company.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high and
low asked prices for the Common Stock or on the last market trading day prior to
the day of determination, as reported in the Wall Street Journal or such other
source as the Administrator deems reliable;
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(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "Incentive Stock Option" means an Option that satisfies
the provisions of Section 422 of the Code.
(o) "Nonstatutory Stock Option" means an Option that is not
an Incentive Stock Option.
(p) "Option" means an Option granted pursuant to the Plan.
(q) "Optioned Stock" means the Common Stock subject to an
Option.
(r) "Optionee" means an Employee or Consultant who receives
an Option.
(s) "Parent" corporation shall have the meaning defined in
Section 424(e) of the Code.
(t) "Plan" means this 1999 Stock Plan.
(u) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(v) "Share" means the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(w) "Subsidiary" corporation shall have the meaning defined
in Section 424(f) of the Code.
In addition, the terms "Cause," and "Change of Control" shall have the
meanings set forth, respectively, in Section 9 below.
3. Stock Subject to the Plan. Subject to the provisions of Section
9 of the Plan, the total number of Shares reserved and available for
distribution pursuant to awards made under the Plan shall be (a) 1,000,000 plus
(b) any Shares which have been reserved but unissued under the Company's 1990
Stock Plan (the "1990 Plan") as of the date of stockholder approval of this
Plan, and (c) any Shares returned to the 1990 Plan after the date of stockholder
approval of this Plan as a result of the termination of options under the 1990
Plan.
Subject to Section 9 of the Plan, if any Shares that have been
optioned under an Option cease to be subject to such Option (other than through
exercise of the Option), or if any Option granted hereunder is forfeited, or any
such award otherwise terminates prior to the issuance
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of Common Stock to the participant, the Shares that were subject to such Option
shall again be available for distribution in connection with future Option
grants under the Plan. Shares that have actually been issued under the Plan,
whether upon exercise of an Option, shall not in any event be returned to the
Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options to Employees or Consultants
who are neither directors nor officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy Applicable Laws.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.
(ii) Multiple Administrative Bodies. The Plan may be
administered by different bodies with respect to directors, non-director
officers and Employees who are neither directors nor officers and Consultants
who are not directors.
(iii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iv) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions
of the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
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30
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(m) of the Plan;
(ii) to select the Consultants and Employees to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option or other award and/or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator shall
determine, in its sole discretion);
(vii) to determine whether and under what
circumstances an Option may be settled in cash under subsection 7(a)(vi) instead
of Common Stock;
(viii) to determine whether, to what extent and under
what circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if any)
of any deemed earnings on any deferred amount during any deferral period);
(x) to determine the terms and restrictions
applicable to Options; and
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable and shall be subject to the
consent or disapproval of the Administrator.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding.
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5. Eligibility. Nonstatutory Stock Options may be granted only to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee who has been granted an Option may, if he or she is
otherwise eligible, be granted additional Options. Each Option shall be
evidenced by a written Option agreement, which shall expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options, and which
shall be in such form and contain such provisions as the Administrator shall
from time to time deem appropriate. Without limiting the foregoing, the
Administrator may, at any time, or from time to time, authorize the Company,
with the consent of the respective recipients, to issue Options in exchange for
the surrender and cancellation of any or all outstanding Options, other options.
Neither the Plan nor any Option agreement shall confer upon any
Optionee any right with respect to continuation of employment by the Company,
nor shall it interfere in any way with the Optionee's right or the Company's
right to terminate the Optionee's employment at any time.
6. Term of Plan. Subject to Section 15 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the stockholders of the Company as described in Section 15. It shall
continue in effect for a term of ten (10) years from the date the Plan or any
amendment to add shares to the Plan was last adopted by the Board unless sooner
terminated under Section 11 of the Plan.
7. Options.
(a) Options. The Administrator, in its discretion, may grant
Options to eligible participants and shall determine whether such Options shall
be Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a written Option agreement which shall expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options, and be in
such form and contain such provisions as the Administrator shall from time to
time deem appropriate. Without limiting the foregoing, the Administrator may, at
any time, or from time to time, authorize the Company, with the consent of the
respective recipients, to issue Options in exchange for the surrender and
cancellation of any or all outstanding Options. Option agreements shall contain
the following terms and conditions:
(i) Option Price; Number of Shares. The per Share
exercise price for the Shares issuable pursuant to an Option shall be such price
as is determined by the Administrator, but shall in no event be less than 75% of
the Fair Market Value of Common Stock, determined as of the date of grant of the
Option.
The Option agreement shall specify the number of Shares
to which it pertains.
(ii) Waiting Period and Exercise Dates. At the time
an Option is granted, the Administrator will determine the terms and conditions
to be satisfied before Shares may be purchased, including the dates on which
Shares subject to the Option may first be purchased. The
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Administrator may specify that an Option may not be exercised until the
completion of the service period specified at the time of grant. (Any such
period is referred to herein as the "waiting period.") At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised, which shall not be less than the waiting period, if any, nor, in the
case of an Incentive Stock Option, more than ten (10) years, from the date of
grant.
(iii) Form of Payment. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option either have
been owned by the Optionee for more than six months on the date of surrender or
were not acquired, directly or indirectly, from the Company, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, (5) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) any combination of the foregoing methods
of payment, or (7) such other consideration and method of payment for the
issuance of Shares to the extent permitted under Applicable Laws.
(iv) Special Incentive Stock Option Provisions. In
addition to the foregoing, Options granted under the Plan, which are intended to
be Incentive Stock Options under Section 422 of the Code shall be subject to the
following terms and conditions:
(1) Exercise Price. The per share exercise
price of an Incentive Stock Option shall be no less than 100% of the Fair Market
Value per Share on the date of grant.
(2) Dollar Limitation. To the extent that
the aggregate Fair Market Value of (i) the Shares with respect to which Options
designated as Incentive Stock Options plus (ii) the shares of stock of the
Company, Parent and any Subsidiary with respect to which other incentive stock
options are exercisable for the first time by an Optionee during any calendar
year under all plans of the Company and any Parent and Subsidiary exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of the preceding sentence, (i) Options shall be taken into account in
the order in which they were granted, and (ii) the Fair Market Value of the
Shares shall be determined as of the time the Option or other incentive stock
option is granted.
Except as modified by the preceding provisions of this Section 7(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.
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33
(v) Other Provisions. Each Option granted under the
Plan may contain such other terms, provisions, and conditions not inconsistent
with the Plan as may be determined by the Administrator.
(vi) Buyout Provisions. The Administrator may at any
time offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.
(b) Method of Exercise.
(i) Procedure for Exercise; Rights as a Stockholder.
Any Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator
(and, in the case of an Incentive Stock Option, determined at the time of grant)
and permitted by the Option Agreement consist of any consideration and method of
payment allowable under Section 7(a)(iii) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 9 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter shall be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(ii) Termination of Employment. Upon termination of
an Optionee's Continuous Status as an Employee or Consultant (other than upon
the Optionee's death or Disability), the Optionee may, but only within three (3)
months (or such other period of time as is determined by the Administrator but
in no event later than the expiration of the term of such Option as set forth in
the stock option agreement) after the date of such termination, exercise his or
her Option to the extent that it was exercisable at the date of such
termination.
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(iii) Disability of Optionee. In the event of
termination of an Optionee's Continuous Status as an Employee or Consultant as a
result of the Optionee's Disability, the Optionee may, but only within six (6)
months from the date of such termination (and in no event later than the
expiration of the term of such Option as set forth in the stock option
agreement), exercise the Option to the extent that the Optionee was entitled to
exercise it at the date of such termination.
(iv) Death of Optionee. In the event of the death of
an Optionee, Options granted hereunder to such Optionee shall become vested and
exercisable, in addition to Shares as to which such Options would otherwise be
vested and exercisable, for the lesser of the full number of Shares covered by
the Options or an aggregate of 50,000 Shares. Each Option held by the Optionee
at the time of death may be exercised at any time within six (6) months
following the date of death by the Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance. In no event shall an
Option be exercised later than the expiration of the term of the Option, as set
forth in the stock option agreement.
(c) Option Limitation. The following limitation shall apply
to grants of Options under the Plan:
(i) No Employee shall be granted, in any fiscal year
of the Company, Options under the Plan to purchase more than 1,000,000 Shares.
(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 9(a).
(iii) If an Option is canceled (other than in
connection with a transaction described in Section 9), the canceled Option shall
be counted against the limits set forth in Section 7(c)(i). For this purpose, if
the exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
8. Non-Transferability of Options. Unless determined otherwise by
the Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
9. Adjustments Upon Changes in Capitalization, Merger, Asset Sale
or Change in Control.
(a) Subject to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the Plan but as
to which no Options have yet been granted or which
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35
have been returned to the Plan upon cancellation or expiration of an Option, as
well as the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the aggregate number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of Shares of
stock of any class, or securities convertible into Shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option.
(b) In the event of the proposed dissolution or liquidation
of the Company, all outstanding Options will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable.
(c) In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, each outstanding Option shall be assumed or an equivalent
Option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have the right to exercise the Option as to one hundred
percent (100%) of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For purposes of this paragraph, an
Option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the Option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each Share held on the effective date of the transaction (and if such
holders were offered a choice of consideration, the type of consideration chosen
by the holders if a majority of the outstanding Shares); provided, however, that
if such consideration received in the sale of assets or merger was not solely
Common Stock of the successor corporation or its parent, the Board may, with the
consent of the successor corporation and the participant, provide for the
consideration to be received upon exercise of the Option to be solely Common
Stock of the successor corporation or its parent equal in Fair Market Value to
the per share consideration received by holders of Common Stock in the sale of
assets or merger.
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(d) In the event of a "Change in Control" of the Company (as
such term is defined in paragraph (f) below), then any Options outstanding upon
the date of such Change in Control that are not yet exercisable and vested on
such date shall have their vesting accelerated as to an additional twenty-five
percent (25%) of the unvested Shares subject to such Options as of the date of
such Change in Control, and such Stock Options shall continue to otherwise vest,
(subject to (i) Optionee remaining in Continuous Status as an Employee or
Consultant, and (ii) accelerated vesting as provided for in Sections 9(c) or
9(e) of this Plan) at the same rate and as to the same number of Shares per
vesting period as immediately prior to the Change in Control. For example, if an
Optionee holds an Option that is fifty percent (50%) vested immediately prior to
the date of a Change in Control, which Option ordinarily vests so as to be one
hundred percent (100%) vested four years after the date of grant (subject to
Optionee maintaining his or her Continuous Status as an Employee or Consultant),
the Option would become seventy-five percent (75%) vested upon the date of the
Change in Control and would resume vesting (subject to (i) Optionee maintaining
his or her Continuous Status as an Employee or Consultant, and (ii) accelerated
vesting as provided for in Sections 9(c) or 9(e) of this Plan) so as to be one
hundred percent (100%) vested three years following the date of grant.
(e) In the event an Optionee is involuntarily terminated
without Cause within twelve (12) months following a "Change in Control" of the
Company (as such terms are defined in Section 9(f) below), then any Options
outstanding upon the date of such Change in Control that are not yet exercisable
and vested on such date shall become one hundred percent (100%) exercisable and
vested. Notwithstanding the foregoing, (unless Optionee is party to a duly
authorized written agreement with the Company providing otherwise) this Plan
does not constitute a contract of employment or impose on the Company any
obligation to retain the Optionee, or to change the Company's policies regarding
termination of employment or other provision of services. The employment of
Optionees who are Employees is and shall continue to be at-will, as defined
under applicable law, and may be terminated at any time, with or without cause.
(f) Definitions.
(i) Change in Control. For purposes of this Section,
a "Change in Control" means the occurrence of any of the following:
(A) When any "person," as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act (other than
the Company, a Subsidiary or a Company employee benefit plan, including
any trustee of such plan acting as trustee) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
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37
(B) A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (I) are directors of the Company as of
the date hereof, or (II) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election of
directors to the Company);
(C) The consummation of a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least fifty percent (50%)
of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or
(D) The consummation of the sale or
disposition by the Company of all or substantially all the Company's
assets.
(ii) Cause. For purposes of this Section, "Cause"
shall mean (A) any act of personal dishonesty taken by the Optionee in
connection with his responsibilities as a service provider to the Company and
intended to result in substantial personal enrichment of the Optionee, (B) the
Optionee's conviction of a felony, or (C) a willful act by the Optionee which
constitutes gross misconduct and which is injurious to the Company, or (D)
continued substantial violations by the Optionee of the Optionee's duties to the
Company which are demonstrably willful and deliberate on the Optionee's part
after there has been delivered to the Optionee a written demand for performance
from the Company which specifically sets forth the factual basis for the
Company's belief that the Optionee has committed continued substantial
violations of his or her duties.
(g) Golden Parachute Excise Tax Vesting Acceleration
Limitation. Notwithstanding any other provision of this Plan, in the event that
the vesting acceleration provided for in this Plan or amounts or benefits
otherwise payable to an Optionee (i) constitute "parachute payments" within the
meaning of Section 280G of the Code, and (ii) but for this Section, would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then the Optionee's accelerated vesting hereunder shall be either
(i) made in full, or
(ii) made as to such lesser extent as would result in
no portion of such acceleration, amounts or
benefits being subject to the Excise Tax,
-12-
38
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by the
Optionee on an after-tax basis, of the greatest amount of severance benefits,
notwithstanding that all or some portion of such severance benefits may be
taxable under Section 4999 of the Code. Unless the Company and the Optionee
otherwise agree in writing, any determination required under this Section shall
be made in writing in good faith by the accounting firm serving as the Company's
independent public accountants immediately prior to the Change of Control (the
"Accountants"). In the event of a reduction in benefits hereunder, the Optionee
shall be given the choice of which benefits to reduce. For purposes of making
the calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Optionee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.
10. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Section 422 of
the Code (or any other applicable law or regulation), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) Effect of Amendment or Termination. Any such amendment
or termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
-13-
39
As a condition to the exercise of an Option or the issuance of
Shares on exercise of an Option, the Company may require the person exercising
such Option to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
13. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the non-issuance or sale of such Shares
as to which such requisite authority shall not have been obtained.
14. Agreements. Options shall be evidenced by written agreements in
such form as the Board shall approve from time to time.
15. Stockholder Approval. Continuance of the Plan shall be subject
to approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted as provided in Section 6. Such stockholder
approval shall be obtained in the degree and manner required under applicable
state and federal law.
-14-
40
PROXY
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ADAPTEC, INC.
ADAPTEC, INC.
PROXY FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 9, 1999
The undersigned stockholder(s) of Adaptec, Inc., a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated August 6, 1999, and hereby appoints
Laurence B. Boucher and Andrew J. Brown, and each of them, Proxies and
Attorneys-in-Fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1999 Annual Meeting
of Stockholders of Adaptec, Inc. to be held on September 9, 1999 at 9:30 a.m.,
local time, at the offices of the Company located at 801 South Milpitas
Boulevard, Milpitas, California, 95035 and at any adjournment or postponement
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if personally present on any of the following matters and with
discretionary authority as to any and all other matters that may properly come
before the meeting.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE
THIS PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
41
Please mark
your votes as [X]
indicated in
this example.
FOR WITHHOLD
all nominees authority to vote
listed below (except for all nominees
as indicated). listed below.
1. Election of Directors to [ ] [ ]
serve one year terms.
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
John G. Adler Robert J. Loarie
Laurence B. Boucher B.J. Moore
Carl J. Conti W. Ferrell Sanders
John East Robert N. Stephens
Ilene H. Lang Phillip E. White
FOR AGAINST ABSTAIN
2. To approve the Company's 1999 Stock Plan and the [ ] [ ] [ ]
reservation for issuance thereunder of 1,000,000
shares plus (i) any shares which are reserved but
unissued under the Company's 1990 Stock Plan as
of the date of the stockholder approval of 1999
Stock Plan and (ii) any shares returned to the
1990 Stock Plan after the date of stockholder
approval of the 1999 Stock Plan as a result of
the termination of options under the 1990 Stock
Plan.
FOR AGAINST ABSTAIN
3. To approve an amendment to the Company's Bylaws [ ] [ ] [ ]
to prohibit the repricing of outstanding stock
options to a lower exercise price during the term
of such options without stockholder approval.
FOR AGAINST ABSTAIN
4. To ratify and approve the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as the independent
public accountants of the Company for the fiscal
year ending March 31, 2000.
5. To transact such other business as may properly
come before the meeting or any postponements or
adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE ABOVE PERSONS AND PROPOSALS, AND FOR SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXY HOLDERS DEEM
ADVISABLE.
Signature(s)________________________________________________ Dated________, 1999
(This proxy should be marked, dated and signed by each stockholder exactly as
such stockholder's name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. If shares are held by joint tenants or
as community property, both holders should sign.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
42
PROXY
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ADAPTEC, INC.
ADAPTEC, INC.
PROXY FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 9, 1999
The undersigned stockholder(s) of Adaptec, Inc., a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated August 6, 1999, and hereby appoints
Laurence B. Boucher and Andrew J. Brown, and each of them, Proxies and
Attorneys-in-Fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1999 Annual Meeting
of Stockholders of Adaptec, Inc. to be held on September 9, 1999 at 9:30 a.m.,
local time, at the offices of the Company located at 801 South Milpitas
Boulevard, Milpitas, California, 95035 and at any adjournment or postponement
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if personally present on any of the following matters and with
discretionary authority as to any and all other matters that may properly come
before the meeting.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE
THIS PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
43
Please mark [X]
your vote as
indicated in
this example.
FOR WITHHOLD
all nominees authority to vote
listed below for all
(except as nominees
indicated). listed below.
1. Election of Directors to serve one year terms. [ ] [ ]
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT
NOMINEE'S NAME IN THE LIST BELOW:
01 John G. Adler 06 Robert J. Loarie
02 Laurence B. Boucher 07 B.J. Moore
03 Carl J. Conti 08 W. Ferrell Sanders
04 John East 09 Robert N. Stephens
05 Ilene H. Lang 10 Phillip E. White
FOR AGAINST ABSTAIN
2. To approve the Company's 1999 Stock [ ] [ ] [ ]
Plan and the reservation for issuance
thereunder of 1,000,000 shares plus
(i) any shares which are reserved but
unissued under the Company's 1990
Stock Plan as of the date of the
stockholder approval of 1999 Stock
Plan and (ii) any shares returned to
the 1990 Stock Plan after the date of
stockholder approval of the 1999
Stock Plan as a result of the
termination of options under the 1990
Stock Plan.
FOR AGAINST ABSTAIN
3. To approve an amendment to the [ ] [ ] [ ]
Company's Bylaws to prohibit the
repricing of outstanding stock
options to a lower exercise price
during the term of such options
without stockholder approval.
FOR AGAINST ABSTAIN
4. To ratify and approve the [ ] [ ] [ ]
appointment of PricewaterhouseCoopers
LLP as the independent public
accountants of the Company for
the fiscal year ending March 31, 2000.
_____ 5. To transact such other business as may properly
| come before the meeting or any postponements or
| adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO
SPECIFICATION IS MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE
PERSONS AND PROPOSALS, AND FOR SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING AS THE
PROXY HOLDERS DEEM ADVISABLE.
Signature(s) Dated , 1999
------------------------------------------------- ------
(This proxy should be marked, dated and signed by each stockholder exactly as
such stockholder's name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. If shares are held by joint tenants
or as community property, both holders should sign.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
VOTE BY TELEPHONE
[PHONE] [PHONE]
QUICK *** EASY *** IMMEDIATE
YOUR VOTE IS IMPORTANT -- YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7 days a week
This is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will
hear these instructions:
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the
instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
The instructions are the same for all remaining proposals.
OR
--
2. TO VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: If your vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.