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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
ADEPT TECHNOLOGY, INC.
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(Name of Registrant as Specified in Its Charter)
ADEPT TECHNOLOGY, INC.
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(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)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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ADEPT TECHNOLOGY, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 5, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Adept
Technology, Inc., a California corporation (the "Company"), will be held on
Friday, November 5, 1999 at 9:00 a.m. local time, at the Santa Clara Marriott,
2700 Mission College Boulevard, Santa Clara, California 95054 for the following
purposes:
1. To elect six (6) directors to serve until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified.
2. To approve an amendment to the Company's 1993 Stock Plan to increase
by 1,000,000 shares to 3,462,500 the number of shares reserved for
issuance thereunder.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 2000.
4. To transact such other business as may properly come before the
Annual Meeting, including any motion to adjourn to a later date to permit
further solicitation of proxies if necessary, or before any adjournments
thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on September 24, 1999 are entitled to notice of and to vote at the
meeting and any adjournment thereof.
FOR THE BOARD OF DIRECTORS OF
ADEPT TECHNOLOGY, INC.
Bruce E. Shimano
Secretary
San Jose, California
October 4, 1999
YOUR VOTE IS IMPORTANT.
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ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IN
ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE. ANY SHAREHOLDER ATTENDING THE MEETING
MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A PROXY.
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ADEPT TECHNOLOGY, INC.
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PROXY STATEMENT FOR 1999
ANNUAL MEETING OF SHAREHOLDERS
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Adept Technology, Inc., a California corporation (the "Company"), for use at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held Friday,
November 5, 1999 at 9:00 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 Shareholders. The Annual Meeting will
be held at the Santa Clara Marriott, 2700 Mission College Boulevard, Santa
Clara, California 95054. The Company's principal executive office is located at
150 Rose Orchard Way, San Jose, California 95134, and its telephone number at
that location is (408) 432-0888.
When proxies are properly dated, executed and returned, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareholder. If no specific instructions are given, the
shares will be voted for the election of the nominees for directors set forth
in this proxy statement; to approve an amendment to the Company's 1993 Stock
Plan to increase by 1,000,000 the number of shares reserved for issuance
thereunder; for the ratification of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 30, 2000; and at the discretion
of the proxy holders, upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Shareholders
for the fiscal year ended June 30, 1999, including financial statements, were
first mailed on or about October 4, 1999 to all shareholders entitled to vote
at the Annual Meeting.
Record Date and Shares Outstanding
Shareholders of record at the close of business on September 24, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 8,793,197 shares of the Company's Common Stock, no par value,
were issued and 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 the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
Voting; Quorum; Abstentions; Broker Non-Votes
Each shareholder is entitled to one vote for each share of Common Stock
held by the shareholder on the Record Date. Every shareholder voting for the
election of directors (Proposal One) may cumulate the shareholder's votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares that the shareholder is entitled to
vote, or distribute the shareholder's votes on the same principle among as many
candidates as the shareholder may select, provided that votes cannot be cast
for more than six candidates. However, no shareholder shall be entitled to
cumulate votes unless the candidate's name has been placed in nomination prior
to the voting and the shareholder, or any other shareholder, has given notice
at the meeting, prior to the voting, of the intention to cumulate the
shareholder's votes. On all other matters, each share of Common Stock has one
vote. A quorum comprising the holders of a majority of the outstanding shares
of Common Stock on the Record
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Date must be present or represented for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes will be counted as present for
the purpose of determining the presence of a quorum for the transaction of
business but will not be treated as votes cast for purposes of the proposals
presented herein.
Solicitation of Proxies
The cost of this solicitation 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 of approximately $6,000 for its services and
will reimburse it for reasonable out-of-pocket expenses. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to the
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, facsimile, or telegram.
Deadline for Receipt of Shareholder Proposals for 2000 Annual Meeting
Shareholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules established by
the Securities and Exchange Commission. Proposals of shareholders of the
Company that are intended to be presented by the shareholders at the Company's
2000 Annual Meeting of Shareholders must be received by the Company no later
than June 9, 2000 in order that they may be considered for inclusion in the
proxy statement and form of proxy relating to that meeting.
The attached proxy card grants the proxy holders discretionary authority
to vote on any matter raised at the Annual Meeting. If a shareholder intends to
submit a proposal at the Company's Annual Meeting that is not eligible for
inclusion in the proxy statement relating to that meeting, the shareholder must
give notice to the Company in accordance with the requirements set forth in the
Securities Exchange Act of 1934, as amended, no later than August 17, 2000. If
such a shareholder fails to comply with the foregoing notice provision, the
proxy holders will be allowed to use their discretionary voting authority when
and if the proposal is raised at the Company's Annual Meeting in 2000.
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PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Annual Meeting. The Board
of Directors of the Company has authorized the nomination at the Annual Meeting
of the persons named herein as candidates. Unless otherwise instructed, the
proxy holders will vote the proxies received by them for the Company's six
nominees named below. All of the nominees are presently directors of the
Company. In the event that 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 who shall be designated by the present Board of Directors
to fill the vacancy. The Company is not aware of any nominee who will be unable
or will decline to serve as a director. The Board of Directors will consider
the names and qualifications of candidates for the Board submitted by
shareholders in accordance with the procedures set forth in "Deadline for
Receipt of Shareholder Proposals" above and the Company's Bylaws. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner (in
accordance with cumulative voting) as will assure the election of as many of
the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. The term of
office for each person elected as a director will continue until the next
Annual Meeting of Shareholders or until a successor has been elected and
qualified.
Vote Required
If a quorum is present and voting, the six nominees receiving the highest
number of affirmative votes will be elected to the Board of Directors.
Abstentions and broker non-votes are not counted in the election of directors.
Nominees
The names of the nominees and certain information about them are set forth
below:
Director
Name of Nominee Age Position(s) with the Company Since
--------------- --- ---------------------------- -----
Brian R. Carlisle ........... 48 Chairman of the Board and Chief Executive 1983
Officer
Bruce E. Shimano ............ 50 Vice President, Research and Development, 1983
Secretary and Director
Ronald E. F. Codd(1) ........ 44 Director 1998
Michael P. Kelly(1) ......... 51 Director 1997
Cary R. Mock(2) ............. 56 Director 1990
John E. Pomeroy(2) .......... 58 Director 1994
<FN>
- ------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</FN>
There is no family relationship between any director or executive officer
of the Company.
Brian R. Carlisle has served as the Company's Chief Executive Officer and
Chairman of the Board of Directors since he co-founded the Company in June
1983. From June 1980 to June 1983, he served as General Manager of Unimation,
Inc. ("Unimation"), and from June 1977 to June 1980, he served as project
manager of the West Coast Division of Unimation. At Unimation, Mr. Carlisle was
responsible for new product strategy and development for Unimation's electric
robots, control systems, sensing systems and other robotics applications. Mr.
Carlisle received B.S. and M.S. degrees in Mechanical Engineering from Stanford
University.
Bruce E. Shimano has served as the Company's Vice President, Research and
Development, Secretary, and as a director since he co-founded the Company in
June 1983. Prior to that time, he was Director of Software Development at
Unimation. Mr. Shimano received B.S., M.S. and Ph.D. degrees in Mechanical
Engineering from Stanford University.
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Ronald E. F. Codd has served as a director of the Company since February
1998. In January 1999, Mr. Codd became the Chief Executive Officer and
President of Momentum Business Applications, Inc. From September 1991 to
December 1998, Mr. Codd served as Senior Vice President of Finance and
Administration, Chief Financial Officer and Secretary of PeopleSoft, Inc. From
March 1989 to September 1991, Mr. Codd was Corporate Controller of MIPS
Computer Systems, Inc., a microprocessor designer and computer manufacturer.
Mr. Codd is also a director of Information Advantage, Inc., an on-line
analytical processing software company. Mr. Codd is a Certified Public
Accountant, a Certified Managerial Accountant, and holds a Certified Production
and Inventory Management credential. Mr. Codd received a B.S. in Business
Administration from the University of California, Berkeley and an M.M. from the
J.L. Kellogg Graduate School of Management (Northwestern University).
Michael P. Kelly has served as a director of the Company since April 1997.
Since 1994, Mr. Kelly has served as a managing director of Broadview
Associates, LLC, a corporate finance advisory firm. From 1993 to 1994, Mr.
Kelly served as the president of Emerald Partners, a mergers and acquisitions
firm and as a managing director of Emerald Partners' predecessor, Flemings,
from 1988 to 1993. From 1985 to 1988, Mr. Kelly was a partner at Touche Ross &
Co., an independent accounting firm. Mr. Kelly received a B.A. degree from
Western Illinois University and an M.B.A. from St. Louis University.
Cary R. Mock has served as a director of the Company since December 1990.
Since January 1996, Mr. Mock has served as a financial advisor specializing in
acquisitions and related corporate development activities. From October 1983 to
December 1995, Mr. Mock served as Director of Acquisitions and Divestitures for
Westinghouse Electric Corporation, having served in other positions since
joining Westinghouse in 1964. Mr. Mock received a B.S. in Electrical
Engineering from the Massachusetts Institute of Technology and an M.B.A. from
the State University of New York at Buffalo.
John E. Pomeroy has served as a director of the Company since August 1994.
Since May 1987, Mr. Pomeroy has served as President and Chief Executive Officer
of Dover Technologies, a subsidiary of Dover Corporation and a manufacturer of
production equipment for printed circuit board assembly. Mr. Pomeroy is also a
director of Dover Corporation and HADCO Corporation, a supplier of electronic
interconnect products and services. Mr. Pomeroy received a B.S. in Electrical
Engineering from Purdue University.
The Board of Directors recommends a vote "FOR" all six nominees listed above.
Board and Committee Meetings
The Board of Directors of the Company held four meetings during fiscal
1999. Each incumbent director attended all meetings of the Board of Directors
during the period of fiscal 1999 in which he served as a director and all
meetings of the committees thereof, if any, upon which the director served
during the period in which the individual was a director of the Company. The
Board of Directors has an Audit Committee and a Compensation Committee. The
Board of Directors has no nominating committee or any committee performing such
functions.
The Audit Committee, which currently consists of Messrs. Codd and Kelly,
is responsible for overseeing actions taken by the Company's independent
auditors and reviewing the Company's internal financial procedures and
controls. The Audit Committee met once in fiscal 1999.
The Compensation Committee, which consisted of Messrs. Mock and Pomeroy,
is responsible for determining salaries, incentives and other forms of
compensation for directors, officers and other employees of the Company and
administering various incentive compensation and benefit plans. The
Compensation Committee met once during fiscal 1999.
4
PROPOSAL TWO
AMENDMENT OF 1993 STOCK PLAN
At the Annual Meeting, the shareholders are being asked to approve an
amendment of the Company's 1993 Stock Plan (the "Stock Plan") to increase the
number of shares of Common Stock reserved for issuance thereunder by 1,000,000
shares to 3,462,500. The Stock Plan was adopted by the Board of Directors in
April 1993 and subsequently approved by the shareholders in June 1993. In
October 1995 and October 1997, the Board of Directors adopted and the
shareholders approved amendments to the Stock Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 650,000 shares and
1,000,000 shares, respectively. As of September 24, 1999, options to purchase
an aggregate of 1,614,145 shares of the Company's Common Stock were
outstanding, with a weighted average exercise price of $6.0135 per share, and
200,369 shares (excluding the 1,000,000 shares subject to shareholder approval
at this Annual Meeting) were available for future grant. In addition, 647,986
shares had been purchased pursuant to exercise of stock options under the Stock
Plan.
In August 1999, the Board of Directors approved an amendment to the Stock
Plan, subject to shareholder approval, to increase the number of shares
reserved for issuance thereunder by 1,000,000 shares, thereby increasing the
total number of shares issuable under the Stock Plan from 2,462,500 to
3,462,500.
The Stock Plan, as amended, authorizes the Board of Directors to grant
stock options to eligible employees, directors and consultants of the Company.
The Stock Plan is structured to allow the Board of Directors broad discretion
in creating equity incentives in order to assist the Company in attracting,
retaining and motivating the best available personnel for the successful
conduct of the Company's business. The Company has had a long-standing practice
of linking key employee compensation to corporate performance because it
believes that this increases employee motivation to improve shareholder value.
The Company has, therefore, consistently included equity incentives as a
significant component of compensation for a broad range of the Company's
employees. This practice has enabled the Company to attract and retain the
talent that it continues to require. In addition, to the extent that the
Company increases its numbers of employees through acquisitions, the Company
may use the Stock Plan to grant stock options to its new employees in order to
align their incentives with those of the Company.
The Board of Directors believes that the remaining shares available for
grant under the Stock Plan are insufficient to accomplish the purposes of the
Stock Plan described above. The Company anticipates there will be a need to
hire additional technical or management employees during fiscal 1999, and it
will be necessary to offer equity incentives to attract and motivate these
individuals, particularly in the extremely competitive job market in Silicon
Valley. In addition, in order to retain the services of valuable employees as
the Company matures and its employee base grows larger, it will be necessary to
grant additional options to current employees as older options become fully
vested.
For these reasons, the Board of Directors recommends that the shareholders vote
"FOR" approval of the amendment to the Stock Plan.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendment to the Stock Plan. For this purpose, "Votes Cast" is
defined to be the shares of the Company's Common Stock represented and voting
of the Annual Meeting. In addition, the affirmative votes must constitute at
least a majority of the required quorum, which quorum is a majority of the
shares outstanding at the Record Date. Votes that are cast against the proposal
will be counted for purposes of determining both (i) the presence or absence of
a quorum and (ii) the total number of Votes Cast with respect to the proposal.
Abstentions and broker non-votes will be counted for purposes of determining
the presence or absence of a quorum for the transaction of business but will
not be counted for purposes of determining the total number of Votes Cast with
respect to the proposal. The essential terms of the Stock Plan are summarized
as follows:
5
Purpose
The purposes of the Stock Plan are to attract, retain and motivate the
best available personnel for positions of substantial responsibility, to
provide additional incentive to employees, directors and consultants of the
Company, and to promote the success of the Company's business.
Administration
The Stock Plan may be administered by the Board of Directors of the
Company or by a Committee of the Board. The Stock Plan is currently being
administered by the Compensation Committee of the Board of Directors. The Board
or the committee appointed to administer the Stock Plan are referred to in this
description as the "Administrator." The Administrator determines the terms of
options granted, including the exercise price, number of shares subject to the
option and the exercisability thereof. All questions of interpretation are
determined by the Administrator and its decisions are final and binding upon
all participants. Members of the Board or its committees receive no additional
compensation for their services in connection with the administration of the
Stock Plan.
Eligibility and Performance-based Compensation Limitations
The Stock Plan provides that either incentive or nonqualified stock
options may be granted to employees (including officers and directors) of the
Company or any of its designated subsidiaries. In addition, the Stock Plan
provides that nonqualified stock options may be granted to consultants of the
Company or any of its designated subsidiaries and to non-employee directors of
the Company. The Administrator selects the optionees and determines the number
of shares to be subject to each option. In making the determination, the
Administrator takes into account the duties and responsibilities of the
optionee, the value of the optionee's services, the optionee's present and
potential contribution to the success of the Company and other relevant
factors.
No employee will be granted, in any fiscal year of the Company, options to
purchase more than 200,000 shares of Common Stock, except that in connection
with an employee's initial employment, he or she may be granted options to
purchase up to an additional 200,000 shares. The foregoing limitation, which
will be adjusted proportionately in connection with any change in the Company's
capitalization, is intended to satisfy the requirements applicable to options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
In addition, there is a limit of $100,000 on the aggregate fair market value of
shares subject to all incentive stock options which are exercisable for the
first time in any calendar year by an employee.
Terms of Options
Each option granted pursuant to the Stock Plan is evidenced by a stock
option agreement between the Company and the optionee to whom the option is
granted and is subject to the following additional terms and conditions:
(1) Exercise of the Option: The Administrator determines when options
granted under the Stock Plan may be exercisable. An option is exercised by
giving written notice of exercise to the Company, specifying the number of
shares of Common Stock to be purchased and tendering payment to the Company
of the purchase price. Payment for shares issued upon exercise of an option
may consist of cash, check, promissory note, delivery of shares of the
Company's Common Stock previously owned for at least six months or that
were not acquired from the Company, subject to certain additional
conditions. Payment may also be made by a cashless exercise procedure under
which the optionee provides irrevocable instructions to a brokerage firm to
sell the purchased shares and to remit to the Company, out of the sale
proceeds, an amount equal to the exercise price plus all applicable
withholding taxes or such other consideration as determined by the
Administrator and as permitted by the California Corporations Code.
Options may be exercised at any time on or following the date the
options are first exercisable. An Option may not be exercised for a
fraction of a share.
(2) Option Price: The option price of non-qualified options granted under
the Stock Plan is determined by the Administrator, provided that
non-qualified options intended to qualify as
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"performance-based compensation" within the meaning of Section 162(m) of
the Code must be granted with an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. Incentive stock
options granted under the Stock Plan must be granted with an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant, except in the case of grants of incentive stock options granted to
employees who, at the time of grant, own stock representing more than 10%
of the voting power of all outstanding classes of the Company's capital
stock. In such cases, the applicable exercise price of incentive stock
options granted to such employees cannot be less than 110% of the fair
market value of the Company's Common Stock on the date of grant. The Stock
Plan provides that, because the Company's Common Stock is currently traded
on the Nasdaq National Market, the fair market value per share will be the
closing price on the Nasdaq National Market on the date of grant of the
option, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable.
(3) Termination Of Employment: The Stock Plan provides that if the
optionee's continuous status as an employee, director or consultant by the
Company is terminated for any reason, other than death or disability,
options may be exercised to the extent they were exercisable on the date of
termination within 30 days (or such other period not exceeding three months
in the case of incentive stock options as the Administrator may determine)
after the termination, but in no event later than the expiration date of
the term of the option as set forth in the Notice of Grant. An optionee may
be exempt from this rule if the optionee is on a leave of absence approved
by the Board or if the optionee is transferred to a subsidiary or parent of
the Company.
(4) Death: If an optionee should die while an employee, director or a
consultant of the Company, options may be exercised to the extent they were
exercisable on the date of termination at any time within six months after
the date of death but in no event later than the expiration of the term of
the option as set forth in the Notice of Grant.
(5) Disability: If an optionee's continuous status as an employee,
director or consultant is terminated due to a disability, options may be
exercised to the extent they were exercisable on the date of termination at
any time within six months from the date of the termination but in no event
later than the expiration of the term of the option as set forth in the
Notice of Grant.
(6) Termination of Options: Options granted under the Stock Plan expire
no later than ten years from the date of grant. However, incentive stock
options granted to an optionee who, immediately before the grant of the
option, owned more than 10% of the total combined voting power of all
classes of stock of the Company or a parent or subsidiary corporation, may
not have a term of more than five years. No option may be exercised by any
person after its expiration.
(7) Nontransferability of Options: Unless determined otherwise by the
Administrator, an option is not transferable by the optionee, other than by
will or the laws of descent and distribution, and is exercisable only by
the optionee during his or her lifetime or, in the event of death, by a
person who acquires the right to exercise the option by bequest or
inheritance or by reason of the death of the optionee. If the Administrator
makes an option transferable, the option shall contain such additional
terms and conditions as the Administrator deems appropriate.
Adjustment Upon Changes in Capitalization or Merger
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization which results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made in the option price and in the
number of shares subject to each option. In the event of the proposed
dissolution or liquidation of the Company, the Board is required to notify
holders of options under the Stock Plan at least 15 days prior to the proposed
action, and all outstanding options not previously exercised will terminate
automatically upon such dissolution or liquidation.
In the event of a proposed sale of the assets of the Company or the merger
of the Company with or into another corporation, all options outstanding under
the Stock Plan will be assumed or an equivalent option will be substituted by
the successor corporation. If the successor corporation refuses to fully
7
assume all options, the Board shall have the discretion to (i) permit each
optionee to exercise such options prior to the transaction for all shares of
Common Stock subject to the options, including shares for which the options
would not otherwise be exercisable or (ii) terminate the options with respect
to unvested shares. Options outstanding under the Stock Plan will be considered
assumed if, following the merger or sale of assets, the option or right granted
to the Optionee by the purchaser or acquirer confers the right to receive for
each share of Common Stock subject to the options the consideration received in
the merger or sale of assets in exchange for outstanding shares of the Common
Stock on the date of the transaction; provided, however, that if the
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its parent, the Administrator may, with
the consent of the successor corporation, 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 the Company's Common Stock in the merger
or sale of assets.
Amendment and Termination
The Board of Directors may amend, alter, suspend, or terminate the Stock
Plan at any time or may terminate it without approval of the shareholders.
Shareholder approval is required for any amendment to the Stock Plan to the
extent necessary or desirable to comply with Rule 16b-3 promulgated under
Section 16 of the Exchange Act or Section 422 of the Code, or any successor
rule or statute or other applicable law, including the requirements of any
exchange or automatic quotation system on which the Company's Common Stock may
be listed. No action by the Board of Directors or shareholders may alter or
impair any option previously granted under the Stock Plan without the consent
of the optionee. Unless terminated earlier, the Stock Plan will terminate in
June 2003.
Tax Information
Options granted under the Stock Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonqualified options.
Incentive Stock Options
The Code provides favorable federal income for tax treatment to holders of
options qualifying as incentive stock options. Even if designated as an
incentive stock option in the applicable option agreement, any option in excess
of the $100,000 limit on exercisability in any calendar year will be deemed to
be a non-qualified stock options and treated as described under the caption
"Non-Qualified Stock Options." If an option granted under the Stock Plan is
treated as an incentive stock option, the optionee will recognize no income
upon grant of the option, and will recognize no income upon exercise of the
Option unless the alternative minimum tax rules apply. The Company will not be
allowed a deduction for federal tax purposes in connection with the exercise of
an incentive stock option.
Upon the sale or exchange of shares issued more than two years after grant
of the option and one year after exercise of the option (the "Incentive Stock
Option Holding Periods"), any gain or loss will be treated as long-term capital
gain or loss. If the Incentive Stock Option Holding Periods are not satisfied
(i.e., the optionee makes a disqualifying disposition), the optionee will
recognize ordinary income at the time of sale or exchange 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. 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. Generally, the Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
Non-Qualified Stock Options
All other options which do not qualify as incentive stock options are
referred to as non-qualified options. Non-qualified options granted under the
Stock Plan will not qualify for any special tax benefits to the optionee. An
optionee will not recognize any taxable income at the time he or she is granted
a nonqualified option.
8
Upon the exercise of an option, the optionee will recognize ordinary
income generally measured as the excess of the then fair market value of the
shares purchased over the purchase price. Any taxable income recognized in
connection with an option exercise by an optionee who is also an employee of
the Company will be subject to tax withholding by the Company. Upon a resale of
the shares issued upon exercise of a non-qualified option, any difference
between the sales price and the fair market value of the shares on the date of
exercise of the non-qualified option (or the fair market value of the shares on
the date they become vested, if a Section 83(b) election has not been timely
filed) will be treated as capital gain or loss.
Generally, the Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a non-qualified option.
Alternative Minimum Tax
The exercise of an incentive stock option may subject the optionee to the
alternative minimum tax ("AMT") under Section 55 of the Code. Under certain
circumstances, an optionee may affect the timing and measurement of AMT by
filing an election with the Internal Revenue Service under Section 83(b) within
30 days after the date of exercise of an incentive stock option.
Tax Summary
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Stock Plan, does not purport to be complete, and does not
discuss the tax consequences of the optionee's death or the income tax laws of
any municipality, state or foreign country in which an optionee may reside.
Participation in the Stock Plan
The grant of options under the Stock Plan to consultants, directors and
executive officers, including the officers named in the Summary Compensation
Table below, is subject to the discretion of the Administrator. As of the date
of this proxy statement, there has been no determination by the Administrator
with respect to future awards under the Stock Plan. Accordingly, future awards
are not determinable. The table of option grants under "Option Grants in Fiscal
Year 1999" on page 15 provides information with respect to the grant of options
to the chief executive officer and the other executive officers named in the
Summary Compensation Table below during fiscal 1999. During fiscal 1999, all
current executive officers as a group and all other employees as a group
received options to purchase 190,000 shares and 342,590 shares, respectively,
pursuant to the Stock Plan. In addition, certain executive officers and other
employees received options in connection with the Company's option repricing
program in exchange for equivalent options that had a higher exercise price that
were cancelled. See "Report of Compensation Committee of the Board of
Directors--Stock Option Repricing."
9
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending June 30, 2000, and recommends that shareholders vote for
ratification of the appointment. Notwithstanding the selection, the Board of
Directors, in its discretion, may direct the appointment of new independent
auditors at any time during the year, if the Board of Directors feels that such
a change would be in the best interests of the Company and its shareholders. In
the event of a negative vote on ratification, the Board of Directors will
reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements annually
since 1984. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement, if they desire to do so,
and are expected to be available to respond to questions.
The Board recommends a vote "FOR" the ratification of the appointment of
Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending June 30, 2000.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of the Record Date as
to:
* each person who is known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock,
* each director,
* each of the executive officers named in the Summary Compensation Table
below, and
* all directors and executive officers as a group.
Common
Stock Approximate
Five Percent Shareholders, Beneficially Percentage
Directors and Certain Executive Officers Owned Owned(1)
---------------------------------------- ----- --------
Kopp Investment Advisors Inc.(2) ................. 1,547,500 17.6%
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Dimensional Fund Advisors, Inc.(3) ............... 602,900 6.9
1299 Ocean Ave., 11th Floor
Santa Monica, California 90401
Brian R. Carlisle(4) ............................. 377,318 4.3
Bruce E. Shimano(5) .............................. 338,769 3.8
John E. Pomeroy(6) ............................... 23,623 *
Cary R. Mock(7) .................................. 18,623 *
Michael P. Kelly(8) .............................. 11,561 *
Ronald E. F. Codd(9) ............................. 12,124 *
Charles S. Duncheon(10) .......................... 195,727 2.2
Richard J. Casler, Jr.(11) ....................... 34,208 *
Marcia R. Alstott(12) ............................ 13,014 *
All directors and executive officers as a group
(10 persons)(13) ................................ 1,024,967 11.3
- ------------
* Less than 1%
(1) Applicable percentage ownership is based on 8,793,197 shares of Common
Stock outstanding as of the Record Date together with applicable options
for the shareholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and includes voting
and investment power with respect to shares. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days
after the Record Date, are deemed outstanding for computing the percentage
ownership of the person holding the options, but are not deemed
outstanding for computing the percentage of any other person.
(2) Reflects ownership as reported on Amendment No. 4 to Schedule 13G dated
January 27, 1999 filed with the Commission by Kopp Investment Advisors,
Inc. ("KIA"). As set forth in KIA's filing, represents shares beneficially
owned by (i) KIA, a registered investment advisor, (ii) Kopp Holding
Company ("Holding"), (iii) Kopp Funds, Inc. ("Funds"), a registered
investment advisor, and (iv) LeRoy C. Kopp individually and through his
ownership of a controlling interest in KIA and his control over Holdings
and Funds. KIA beneficially owns 1,547,500 shares of the Company's common
stock, has sole voting power over 761,000 shares of the Company's Common
Stock, sole dispositive power over 615,000 shares of the Company's Common
Stock and shared dispositive power over 932,500 shares of the Company's
Common Stock. Holding beneficially owns 1,547,500 shares of the Company's
Common Stock. Funds beneficially owns 615,000 shares of the Company's
Common Stock. Mr. Kopp has beneficial ownership of 1,567,500 shares of the
Company's Common Stock and sole voting and dispositive power over 20,000
shares of the Company's Common Stock.
(Footnotes continued on next page)
11
(Footnotes continued from previous page)
(3) Reflects ownership as reported on the Schedule 13G dated February 12, 1999
filed with the Commission by Dimensional Fund Advisors, Inc.
("Dimensional"), a registered investment advisor. Dimensional beneficially
owns and has sole voting and dispositive power over 602,900 shares of the
Company's Common Stock
(4) Includes 79,685 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Carlisle is Chairman of
the Board and Chief Executive Officer of the Company.
(5) Includes 54,684 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date and 22,500 shares held by
Mr. Shimano as custodian for his children under the California Uniform
Transfers to Minors Act. Mr. Shimano is Vice President, Research and
Development, Secretary and a director of the Company.
(6) Includes 18,623 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Pomeroy is a director
of the Company.
(7) Includes 18,623 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Mock is a director of
the Company.
(8) Includes 11,561 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Kelly is a director of
the Company.
(9) Includes 7,124 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Codd is a director of
the Company.
(10) Includes 67,560 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date and 4,500 shares held by Mr.
Duncheon's spouse. Mr. Duncheon is Senior Vice President, Marketing and
Sales of the Company.
(11) Includes 23,958 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Mr. Casler is the Company's
Vice President, Engineering.
(12) Includes 10,936 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date. Ms. Alstott is the
Company's Vice President, Operations.
(13) Includes 292,754 shares of Common Stock which may be acquired upon
exercise of stock options which are presently exercisable or will become
exercisable within 60 days of the Record Date.
12
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and
the other four most highly compensated executive officers of the Company for
services rendered in all capacities to the Company for the fiscal year ended
June 30, 1999.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Awards
------------
Number of
Annual Compensation(1) Securities
Fiscal ----------------------- Underlying All Other
Name and Principal Position Year Salary Bonus(2) Options Compensation $
--------------------------- ---- ------ -------- ------- --------------
Brian R. Carlisle .................. 1999 $275,267 $ -- 25,000 12,580(5)
Chairman of the Board and Chief 1998 262,117 31,000 25,000 12,377(6)
Executive Officer 1997 217,442 -- 100,000 15,289(7)
Charles S. Duncheon ................ 1999 191,049 33,992 120,000 (4) 11,787(5)
Senior Vice President, Marketing 1998 186,439 59,437 20,000 12,468(6)
and Sales 1997 171,996 46,283 50,000 11,482(7)
Bruce E. Shimano ................... 1999 183,033 -- 20,000 10,899(5)
Vice President, Research and 1998 178,555 13,000 20,000 11,488(6)
Development, Secretary and Director 1997 166,346 -- 75,000 11,366(7)
Richard J. Casler .................. 1999 161,894 -- 35,000 (4) 10,541(5)
Vice President, Engineering 1998 159,744 18,053 10,000 10,245(6)
1997 140,825 -- 10,000 9,915(7)
Marcia R. Alstott(3) ............... 1999 148,023 -- 50,000 (4) 80,631(5)
Vice President, Operations 1998 40,385 25,000 40,000 35,991(6)
1997 -- -- -- --
<FN>
- ------------
(1) Other than salary, bonus and all other compensation described herein, the
Company did not pay the persons named in the Summary Compensation Table
any compensation, including incidental personal benefits that in the
aggregate constituted an excess of 10% of the executive officer's salary.
(2) Bonus compensation for fiscal 1998 consisted in part of bonuses earned in
fiscal 1998 but paid in fiscal 1999 of $31,000 for Mr. Carlisle, $13,000
for Mr. Shimano and $18,053 for Mr. Casler. Bonus compensation for Mr.
Duncheon consists of (i) $33,992 in commission income earned and paid in
fiscal 1999, (ii) $59,437 in commission income earned in fiscal 1998 and
paid in fiscal 1999, and (iii) $46,282 in commission income earned and
paid in fiscal 1997.
(3) As Ms. Alstott joined the Company in March 1998, her compensation for
Fiscal Year 1998 did not qualify for insertion in the Summary Compensation
Table in the 1998 Proxy Statement.
(4) Option grant figure includes options to purchase an aggregate of 20,000,
10,000 and 30,000 shares of Common Stock granted to Mr. Duncheon, Mr.
Casler and Ms. Alstott in connection with the Company's option repricing
program in exchange for equivalent options that had a higher exercise
price that were cancelled.
(5) Other compensation for fiscal 1999 consists of (i) group term life excess
premiums of $534 for Mr. Carlisle, $366 for Mr. Duncheon, $351 for Mr.
Shimano, $313 for Mr. Casler and $292 for Ms. Alstott; (ii) automobile
allowance for $9,784 for Mr. Carlisle, $9,768 for Mr. Duncheon, $8,736 for
Mr. Shimano, $9,268 for Mr. Casler and $9,055 for Ms. Alstott; (iii)
supplemental life insurance premiums of $1,762 for Mr. Carlisle, $1,153
for Mr. Duncheon, $1,302 for Mr. Shimano, $960 for Mr. Casler and $538 for
Ms. Alstott; (iv) matching contributions of $500 by the Company under is
401(k) Plan for each of Messrs. Carlisle, Duncheon, Shimano and for Ms.
Alstott; and (v) loan forgiveness of $70,477 for Ms. Alstott per the terms
of her April 1998 promissory note.
(Footnotes continued on next page)
13
(Footnotes continued from previous page)
(6) Other compensation for fiscal 1998 consisted of (i) group term life excess
premiums of $1,008 for Mr. Carlisle, $1,116 for Mr. Duncheon, $686 for Mr.
Shimano, $601 for Mr. Casler and $118 for Ms. Alstott; (ii) automobile
allowances for $8,736 for Mr. Carlisle, $9,638 for Mr. Duncheon, $8,736
for Mr. Shimano, $8,736 for Mr. Casler and $2,352 for Ms. Alstott; (iii)
supplemental life insurance premiums of $1,633 for Mr. Carlisle, $714 for
Mr. Duncheon, $1,066 for Mr. Shimano, $909 for Mr. Casler and $192 for Ms.
Alstott; (iv) matching contributions of $1,000 by the Company under its
401(k) Plan for each of Messrs. Carlisle, Duncheon and Shimano and $269
for Ms. Alstott; and (v) relocation assistance of $33,060 for Ms. Alstott.
(7) Other compensation for fiscal 1997 consisted of (i) group term life excess
premiums of $844 for Mr. Carlisle, $668 for Mr. Duncheon, $646 for Mr.
Shimano, $548 for Mr. Casler and $573 for Ms. Lange; (ii) automobile
allowances of $12,104 for Mr. Carlisle, $8,790 for Mr. Duncheon, $8,736
for Mr. Shimano, and $8,736 for Mr. Casler; (iii) supplemental life
insurance premiums of $1,340 for Mr. Carlisle, $1,024 for Mr. Duncheon,
$984 for Mr. Shimano and $632 for Mr. Casler; and (iv) matching
contributions under its 401(k) Plan of $1,000 for each of Messrs.
Carlisle, Duncheon, and Shimano.
</FN>
14
OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth certain information regarding the grant of
stock options to the persons named in the Summary Compensation Table during the
fiscal year ended June 30, 1999.
Individual Grants
-------------------------------------------------------------
Potential Realizable
Percentage of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term(1)
Option Employees in Price Per Expiration ------------------------
Name Granted(2) Fiscal Year Share(3)(4) Date 5% 10%
- ------------------------------ ------------ --------------- ------------- ------------ ---------- -----------
Brian R. Carlisle ............ 25,000 2.75 $ 6.625 08/07/08 $104,161 $ 263,964
Charles S. Duncheon ......... 20,000 2.20 6.625 08/07/08 83,329 211,171
20,000 (5) 2.20 7.000 08/21/08 88,045 223,124
80,000 8.81 4.625 10/09/98 232,691 589,684
Bruce E. Shimano ............ 20,000 2.20 6.625 08/07/08 83,329 211,171
Richard J. Casler, Jr. ....... 10,000 1.10 6.625 08/07/08 41,664 105,585
10,000 (5) 1.10 7.000 08/21/98 44,023 111,562
15,000 1.65 4.625 10/09/08 43,630 110,569
Marcy R. Alstott ............ 10,000 1.10 6.625 08/07/08 41,664 105,585
30,000 (5) 3.30 7.000 08/21/98 132,068 334,686
10,000 1.10 7.031 02/11/09 44,218 112,056
<FN>
- ------------
* Less than 1%.
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimates of future stock price growth.
(2) Each of the options becomes exercisable as to 1/48th of the option shares
each month with full vesting occurring on the fourth anniversary of the date
of grant.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant.
(4) Exercise price may be paid in cash, promissory note, by delivery of
already-owned shares subject to certain conditions, or pursuant to a
cashless exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to remit
to the Company, out of the sale proceeds, an amount equal to the exercise
price plus all applicable withholding taxes. (5) Figure includes options
to purchase an aggregate of 20,000, 10,000 and 30,000 shares of Common
Stock granted to Mr. Duncheon, Mr. Casler and Ms. Alstott in connection
with the Company's option repricing program in exchange for equivalent
options that had a higher exercise price that were cancelled.
</FN>
15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the exercise
of stock options in the last fiscal year by the persons named in the Summary
Compensation Table and the value of options held by these individuals as of
June 30, 1999.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired June 30, 1999 (#) June 30, 1999 ($)(1)
on Value ------------------------------- -------------------------------
Name Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ------------- ---------------
Brian R. Carlisle ............ 25,000 $ -- 62,499 62,501 $ 142,342 $ 129,658
Charles S. Duncheon ......... 35,750 144,788 53,881 117,369 190,565 504,972
Bruce E. Shimano ............ 25,000 (2,350) 41,457 48,543 86,093 98,907
Richard J. Casler, Jr. ...... -- -- 20,284 32,216 66,060 124,690
Marcy R. Alstott ............ -- -- 4,791 45,209 13,931 127,009
<FN>
- ------------
(1) Market value of the Company's Common Stock at June 30, 1999 minus the
exercise price.
(2) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
</FN>
Employment Contracts and Change-In-Control Arrangements
The Company currently has no employment contracts with any of the
executive officers listed in the Summary Compensation Table, and no
compensatory plan or arrangement with the executive officers that are activated
upon resignation, termination or retirement of any executive officer upon a
change in control of the Company.
Compensation of Directors
No director currently receives any cash compensation for attendance at
Board or committee meetings, except that directors will be reimbursed for travel
and lodging expenses incurred in attending Board and committee meetings. The
Company's 1995 Director Option Plan provides that options shall be granted to
non-employee directors of the Company pursuant to an automatic nondiscretionary
grant mechanism. Upon joining the Board of Directors, each new non-employee
director is granted an option automatically (the "Initial Grant"). Each
non-employee director is granted an option to purchase 3,000 shares of Common
Stock annually (the "Annual Grant") for so long as the individual remains a
member of the Board. Messrs. Codd, Kelly, Mock and Pomeroy each received an
Annual Grant of an option to purchase 3,000 shares of the Company's Common Stock
on February 11, 1999 at an exercise price of $7.031 per share. All the options
were granted at the fair market value of the Common Stock on the date of grant.
The Initial Grants to non-employee directors vest at a rate of 25% on the first
anniversary date of grant and at a rate of 1/48th of the shares per month
thereafter, and the Annual Grants become exercisable at a rate of 1/48th of the
shares subject to the options on the monthly anniversary of the date of grant.
Directors are also eligible to participate in the 1993 Stock Plan.
Compensation Committee Interlocks and Insider Participation
In fiscal 1999, the Compensation Committee consisted of Messrs. Mock and
Pomeroy. There are no interlocking relationships, as described by the
Securities and Exchange Commission, between the Compensation Committee members.
16
Report of Compensation Committee of the Board of Directors
This Report of the Compensation Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended (the "Securities
Act") or under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), except to the extent that the Company specifically incorporates this
information by reference into such filing.
The following is the Report of the Compensation Committee describing the
compensation policies and rationales applicable to the Company's executive
officers with respect to the compensation paid to our executive officers for
the fiscal year ended June 30, 1999.
General. The responsibilities of the Compensation Committee are to
administer the Company's various incentive plans, including the 1995 Director
Option Plan and the Company's 1993 Stock Option Plan (collectively, the "Equity
Plans") and to set compensation policies applicable to the Company's executive
officers. The Committee's fundamental policy is to offer the Company's
executive officers competitive compensation opportunities based upon overall
Company performance, the individual contribution of officers to the financial
success of the Company and market rates of compensation at similarly situated
technology companies. It is the Committee's objective to have a substantial
portion of each officer's compensation contingent upon the Company's
performance, as well as upon the officer's own level of performance.
Accordingly, each executive officer's compensation package is comprised of
three elements: (i) base salary, which is established primarily on the basis of
individual performance and market considerations, (ii) annual variable
performance awards payable in cash and tied to the Company's achievement of
financial performance goals and the executive's contribution, and (iii)
long-term stock-based incentive awards that are intended to strengthen the
mutuality of interests between the executive officers and the shareholders.
Base Salary. Individual salaries are determined based on individual
experience, performance and breadth of responsibility within the Company. The
Compensation Committee reviews these factors for each executive officer each
year. In addition, the Compensation Committee considers executive officers'
salaries for relative competitiveness with similarly situated companies.
Commissions and Bonuses. Incentive cash compensation for Charles S.
Duncheon, the Company's Senior Vice President of Marketing and Sales, consists
of commission income. Mr. Duncheon received $33,992 in fiscal 1999 for
commissions earned in fiscal 1999. The Compensation Committee sets new goals
for each executive and the Company as a whole each fiscal year on the basis of
past performance and objectives for the next fiscal year.
Equity Plans. The Equity Plans are long-term incentive plans for all
employees. These plans are intended to align shareholder and employee interests
by creating a direct link between long-term rewards and the value of the
Company's shares. The Compensation Committee believes that long-term stock
ownership by executive officers and all employees is an important factor in
retaining valued employees and in achieving growth in share value. The options
utilize vesting periods that encourage employees to continue in the employ of
the Company. Because the value of an option bears a direct relationship to the
Company's stock price, the Compensation Committee believes that options
motivate executive officers and employees to manage the Company in a manner
which will benefit all shareholders.
The Equity Plans authorize the Compensation Committee to award stock
options to employees at any time. The exercise price per share of each stock
option is generally equal to the prevailing market value of a share of the
Company's Common Stock on the date the option is granted. The size of stock
option grants is determined by a number of factors, including comparable grants
to executive officers and employees of similarly situated companies, as well as
the executive officer's relative position and responsibilities with the
Company, the individual performance of the executive officer over the previous
fiscal year and the anticipated contribution of the executive officer to the
attainment of the Company's long-term strategic performance goals. The
Committee views stock option grants as an important component of its long-term,
performance-based compensation philosophy.
CEO Compensation. The compensation of Mr. Carlisle consists of base
salary, bonuses and stock options. The Board of Directors periodically reviews
Mr. Carlisle's base salary and bonus and revises his
17
compensation based on the Board's overall evaluation of his performance toward
the achievement of the Company's financial, strategic and other goals, with
consideration given to his length of service and to competitive chief executive
officer compensation information. In fiscal 1999, Mr. Carlisle earned a base
salary of $275,267 as set by the Compensation Committee. Mr. Carlisle was
granted stock options to purchase 25,000 shares of Common Stock at an exercise
price of $6.625 per share in fiscal 1999. The Compensation Committee granted
Mr. Carlisle the option to purchase these shares following consideration of Mr.
Carlisle's unvested option position relative to industry norms for chief
executive officers of similarly situated companies.
Section 162(m)
The Board has considered the potential future effects of Section 162(m) of
the Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1 million in any taxable
year for any of the executive officers named in the proxy statement, unless the
compensation is performance-based. The Company has adopted a policy that, where
reasonably practicable, the Company will seek to qualify the variable
compensation paid to its executive officers for an exemption from the
deductibility limitations of Section 162(m).
Stock Options Repricing
The principal purpose of the Company's 1993 Stock Option Plan is to provide
an equity incentive to employees to remain in the employment of the Company and
to work diligently in its best interests. Because a significant number of
employees held options that had exercise prices that were substantially above
the market price of the Company's Common Stock, the Board of Directors
determined that the principal purpose of the Company's 1993 Stock Option Plan
would not be achieved for these employees, and further determined that it was
critical to the best interests of the Company and to its stockholders that the
Company retain the services of these employees. Accordingly, in August 1998, the
Company's Board of Directors authorized the repricing of outstanding options to
purchase Common Stock under the Company's stock option plans. Employees,
including Named Executive Officers, were eligible to participate if they
remained employed at the effective date of the repricing. Of the 165 employees
that were eligible to participate in the repricing program, 133 employees did
so. The repricing/option exchange was effective August 21, 1998 (the "Repricing
Effective Date"). The repricing program offered eligible employees the
opportunity to exchange eligible outstanding options with exercise prices in
excess $7.00 per share for a new option with an exercise price equal to $7.00
per share. Other than the exercise price, each new option issued upon exchange
has terms substantially equivalent to the surrendered option, including with
respect to the number of shares. However, the vesting of the options was
retarded by 12 months effective August 21, 1998 and the new expiration date was
set at August 21, 2008.
18
The following table provides information with respect to the August 1998
repricing for the Named Executive Officers and for other executive officers of
the Company who elected to reprice options. These are the only executive
officers who had any of their options repriced.
Ten-Year Option/SAR Repricings
Length of
Number of Original
Securities Market Option
Underlying Price of Exercise Term
Options/ Stock at Price at Remaining
SARs Time of Time of New at
Repriced or Repricing or Repricing or Exercise Date of
Amended Amendment Amendment Price Repricing or
Name Date (#)(1) ($) ($) ($) Amendment
---- ---- ----------- ------------ ------------ --------- ------------
Current Executive Officers
Brian R. Carlisle ............ 8/21/98 -- $ 6.063 $ -- $ 7.00 $ --
Charles S. Duncheon ........... 8/21/98 11,259 6.063 11.75 7.00 9.01
8/21/98 8,741 6.063 11.75 7.00 9.01
Bruce E. Shimano .............. 8/21/98 -- 6.063 -- 7.00 --
Richard J. Casler, Jr. ........ 8/21/98 10,000 6.063 11.75 7.00 9.01
Marcy R. Alstott .............. 8/21/98 26,571 6.603 10.31 7.00 9.73
8/21/98 3,429 6.063 10.31 7.00 9.73
Former Executive Officers
Betsy A. Lange ............... 8/21/98 7,000 6.063 11.75 7.00 9.01
<FN>
- ------------
(1) All options repriced by the Named Executive Officers and other executive
officers listed in the above table were granted under the 1993 Plan.
</FN>
Respectfully submitted,
The Compensation Committee:
Cary R. Mock
John E. Pomeroy
19
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
ADEPT TECHNOLOGY, INC., THE NASDAQ STOCK MARKET-US INDEX
AND A PEER GROUP
The stock price performance graph set forth below under the caption
"Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any filing under the Securities Act or under
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference into such filings.
Performance Graph
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
12/15/95 06/30/96 06/30/97 06/30/98 06/30/99
-------- -------- -------- -------- --------
Adept Technology, Inc. 100 147 92 80 103
Nasdaq Stock Market (U.S.) Index 100 116 141 185 265
Peer Group 100 81 124 83 142
This graph assumes that $100 was invested on December 15, 1995 in the
Company's Common Stock and in the Nasdaq Stock Market US Index and in a Peer
Group Index, comprised of fourteen companies in the robotics and vision systems
industries, and that all dividends were reinvested.
No dividends have been declared or paid on the Company's Common Stock. The
Company intends to retain future earnings, if any, to fund its business and
does not anticipate paying any cash dividends in the foreseeable future.
Shareholder returns over the period indicated should not be considered
indicative of future shareholder returns.
20
Certain Transactions
In connection with the employment of Kathleen M. Fisher, Vice President,
Finance and Chief Financial Officer, in August 1999, the Company loaned Ms.
Fisher $255,132 pursuant to a promissory note secured by Ms. Fisher's
residence. The interest rate on the note was initially set at 5.25% and will be
reset every August 2 to the then-applicable Federal short-term rate. The
purpose of the loan was to provide Ms. Fisher housing assistance. The loan is
evidenced by a promissory note that provides for forgiveness of principal at a
rate of $25,513 per year over ten years so long as Ms. Fisher continues as an
employee of the Company. Ms. Fisher's loan included an obligation for the
Company to reimburse Ms. Fisher for taxes payable by her and for interest
payable each year on February 2. In the event that Ms. Fisher ceases employment
voluntarily within the first four years of her employment, the loan will become
due and payable 180 days after the effective date of her termination. If Ms.
Fisher leaves the Company after four years, the loan will be forgiven. If Ms.
Fisher's employment by the Company is terminated involuntarily for any reason
by the Company or she dies or becomes disabled, the remaining balance of
principal and interest due on the loan will be forgiven.
On May 7, 1999, the Company loaned Bruce Shimano, Vice President, Research
and Development, Secretary and Director, the sum of $165,000 pursuant to an
unsecured promissory note. Mr. Shimano paid off the note in its entirety on
August 16, 1999. The note was due and payable on May 7, 2004. The interest rate
on the note was set at the applicable Federal short-term rate on May 7, 1999,
with the rate to adjust to the then-applicable Federal short-term rate on each
successive May 7. Interest payments were payable on an annual basis beginning
on May 7, 2000.
On May 7, 1999, the Company loaned Brian Carlisle, Chairman of the Board
and Chief Executive Officer, the sum of $165,000 pursuant to an unsecured
promissory note. Mr. Carlisle paid off the note in its entirety on August 16,
1999. The note was due and payable on May 7, 2004. The interest rate on the
note was set at the applicable Federal short-term rate on May 7, 1999, with the
rate to adjust to the then-applicable Federal short-term rate on each
successive May 7. Interest payments were payable on an annual basis beginning
on May 7, 2000.
Universal Instruments, a subsidiary of Dover Technologies, bought $107,550
worth of linear modules and controls from the Company in Fiscal 1999. Mr.
Pomeroy, a director of the Company, is the President and Chief Executive
Officer of Dover Technologies.
All future transactions, including loans, between the Company and its
officers, directors, principal shareholders and their affiliates will be
approved by the Compensation Committee of the Board of Directors, which
consists of independent and disinterested outside directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the National Association of Securities Dealers, Inc. Executive
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. Based solely on its review of the copies of the forms received by
it, or written representations from certain reporting persons, the Company
believes that during fiscal 1999 all executive officers and directors of the
Company complied with all applicable filing requirements. However, Cary R. Mock
and John E. Pomeroy filed delinquent Form 5 filings covering fiscal years 1996,
1997 and 1998.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent
as the Board of Directors may recommend. See "Deadline for Receipt of
Shareholder Proposals for 2000 Annual Meeting."
21
ADJOURNMENT OF THE ANNUAL MEETING
In the event that there are not sufficient votes to approve any proposal
incorporated herein at the time of the Annual Meeting, the proposal could not
be approved unless the Annual Meeting were adjourned in order to permit further
solicitation of proxies from holders of the Company's Common Stock. Proxies
that are being solicited by the Company's Board grant discretionary authority
to vote for any adjournment, if necessary. If it is necessary to adjourn the
Annual Meeting, and the adjournment is for a period of less than 45 days, no
notice of the time and place of the adjourned meeting is required to be given
to the shareholders other than an announcement of the time and place at the
Annual Meeting. A majority of the shares represented and voting at the Annual
Meeting is required to approve the adjournment, regardless of whether there is
a quorum present at the Annual Meeting.
THE BOARD OF DIRECTORS
Dated: October 4, 1999
22
APPENDIX A
ADEPT TECHNOLOGY, INC
1993 STOCK PLAN
(as amended through August 1999)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors 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
appointed pursuant to 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.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Adept Technology, Inc., a California
corporation.
(h) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services.
(i) "Continuous Status as an Employee, Director or Consultant"
means that the employment relationship, directorship or consulting relationship
is not interrupted or terminated by the Company, any Parent or Subsidiary.
Continuous Status as an Employee, Director or Consultant shall not be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, any such leave may not
exceed ninety (90) days, unless reemployment upon the expiration of such leave
is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
(j) "Director" means a member of the Board.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee 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
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported, as quoted on such exchange or system for
the last market trading day prior to the time of determination) as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is 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 bid
and low asked prices for the 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; or
(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 intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the
Plan.
(s) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
-2-
(t) "Optioned Stock" means the Common Stock subject to an
Option.
(u) "Optionee" means an Employee, Director or Consultant who
receives an Option.
(v) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 1993 Stock Plan.
(x) "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.
(y) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.
(z) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 3,462,500. The Shares may be authorized, but unissued, or
reacquired Common Stock. However, should the Company reacquire Shares which were
issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of
Employees, Directors and Consultants.
(ii) 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.
(iii) 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.
-3-
(iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(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, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(l) of the Plan;
(ii) to select the Employees, Directors and
Consultants to whom Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
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. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), and any restriction or limitation regarding any Option or the Shares
of Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(x) to modify or amend each Option (subject to
Section 13(b) of the Plan);
(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
-4-
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to determine the terms and restrictions
applicable to Options; and
(xiv) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to Employees,
Directors and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee, Director or Consultant who has been granted an Option
may, if otherwise eligible, be granted additional Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of Optionee's employment relationship, directorship or
consulting relationship with the Company, nor shall it interfere in any way with
his or her right or the Company's right to terminate his or her employment
relationship, directorship or consulting relationship at any time, with or
without cause.
(e) The following limitations shall apply to grants of Options
to Employees:
(i) No Employee shall be granted, in any fiscal year
of the Company, Options to purchase more than 200,000 Shares, provided, however,
that in connection with his or her initial employment, an Employee may be
granted Options to purchase up to 400,000 Shares. To the extent such a new
Employee is granted Options to purchase more than 200,000 shares, he or she
shall not be entitled to additional grants during such fiscal year.
-5-
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iii) If an Option is cancelled in the same fiscal
year of the Company in which it was granted (other than in connection with a
transaction described in Section 11), the cancelled Option will be counted
against the limits set forth in subsection (i) above. 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.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 17 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Notice of Grant. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Notice of Grant.
8. Option Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the Administrator. In the case
of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
-6-
(b) At the time an Option is granted, the Administrator shall
fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised. In so
doing, the Administrator may specify that an Option may not be exercised until
the completion of a service period.
(c) 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 such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the 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 by Applicable Laws. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, 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 Board, consist
of any consideration and method of payment allowable under Section 8(c) 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 shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon 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 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may 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.
-7-
(b) Termination of Continuous Status as an Employee, Director
or Consultant. In the event of termination of an Optionee's Continuous Status as
an Employee, Director or Consultant with the Company, such Optionee may, but
only within such period of time as is determined by the Administrator, of at
least thirty (30) days, with such determination in the case of an Incentive
Stock Option not exceeding three (3) months after the date of such termination
(but in no event later than the expiration date of the term of such Option as
set forth in the Notice of Grant), exercise his or her Option to the extent that
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee, Director or Consultant as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within six (6) months from the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Notice of Grant), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee, Director or Consultant as a result
of the death of an Optionee, the Option may be exercised, at any time within six
(6) months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Notice of Grant),
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent the Optionee was
entitled to exercise the Option at the date of death. To the extent that
Optionee was not entitled to exercise the Option at the date of death, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(e) 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.
10. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option 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.
11. Adjustments Upon Changes in Capitalization; Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of Shares of Common Stock covered
by each outstanding Option, and
-8-
the number of Shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares of Common Stock 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 number of issued Shares of Common Stock
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 of Common Stock subject
to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, the 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 Board shall have the discretion
either (i) to permit each Optionee to exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable or (ii) to terminate the Option with respect to unvested Shares. If
an Option is exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option shall be fully 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 the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or asset sale, the option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or asset sale, the consideration (whether stock, cash, or
other securities or property) received in the merger or asset sale by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or asset sale was not
solely common stock of the successor corporation or its parent, the
Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to 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
merger or asset sale.
12. 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, or such other
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date as is determined by the Board. Notice of the determination shall be given
to each Employee, Director or Consultant to whom an Option is so granted within
a reasonable time after the date of such grant.
13. 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 Applicable Laws,
the Company shall obtain shareholder 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, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of 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.
As a condition to the 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.
15. 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.
The 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 failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
16. Agreements. Options shall be evidenced by written agreements in
such form as the Board shall approve from time to time.
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17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
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APPENDIX B
PROXY ADEPT TECHNOLOGY, INC. PROXY
1999 ANNUAL MEETING OF SHAREHOLDERS
November 5, 1999
This Proxy is solicited on behalf of the Board of Directors
The undersigned shareholder of ADEPT TECHNOLOGY, INC., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated October 4, 1999, and hereby
appoints Brian R. Carlisle and Kathleen M. Fisher, 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 Shareholders of ADEPT TECHNOLOGY, INC. to be held on November 5, 1999 at 9:00
a.m. local time, at the Santa Clara Marriott, 2700 Mission College Boulevard,
Santa Clara, California 95054 and at any adjournment or adjournments thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote if then and there personally present, on the matters set forth below:
(Continued, and to be signed on the other side)
[X] Please mark
your votes
as this
WITHHOLD FOR AGAINST ABSTAIN
FOR FOR ALL [ ] [ ] [ ]
1. ELECTION OF DIRECTORS: [ ] [ ] 2. To approve an amendment to the Company's 1993 Stock
NOMINEES: Plan to increase by 1,000,000 shares to 3,462,500 the
Brian R. Carlisle, number of shares reserved for issuance thereunder.
Bruce E. Shimano, Ronald E. F. Codd, Michael P. Kelly,
Cary R. Mock, John E. Pomeroy FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTION: If you wish to withhold authority to vote for
any individual nominee, write that nominee's name in the 3. Proposal to ratify the appointment of Ernst & Young LLP
space provided below. as the independent auditors of the Company for the fiscal
year ending June 30, 2000.
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and, in their discretion, upon such other matter or matters
which may properly come before the meeting or any adjournment
or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, TO APPROVE THE AMENDMENT TO THE 1993 STOCK PLAN TO
INCREASE BY 1,000,000 THE RESERVATION OF SHARES THEREUNDER,
FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Signature(s) -------------------------------------------------------------- Dated --------------------------------- , 1999
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as his or her name appears hereon, and
returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)