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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of
/X/ Definitive Proxy Statement the Commission Only
/ / Definitive Additional Materials (as permitted by
/ / Soliciting Material Pursuant to Rule 14a-6(e)(2))
Rule 14a-11(c) or Rule 14a-12
ADVANCED DIGITAL INFORMATION CORPORATION
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(Name of Registrant as Specified in Its Charter)
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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)(1) and 0-11.
CALCULATION OF FILING FEE
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PER UNIT PRICE OR OTHER
UNDERLYING VALUE OF
TITLE OF EACH CLASS AGGREGATE NUMBER OF TRANSACTION COMPUTED PROPOSED MAXIMUM
OF SECURITIES TO WHICH SECURITIES TO WHICH PURSUANT TO EXCHANGE AGGREGATE VALUE OF
TRANSACTION APPLIES: TRANSACTION APPLIES: ACT RULE 0-11: TRANSACTION: TOTAL FEE PAID:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Party:
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Form, Schedule or
Registration Statement no.: Date Filed:
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ADVANCED DIGITAL INFORMATION CORPORATION
10201 WILLOWS ROAD
REDMOND, WASHINGTON 98073-9705
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 25, 1998
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Annual Meeting") of Advanced
Digital Information Corporation, a Washington corporation ("ADIC" or the
"Company"), will be held on Wednesday, February 25, 1998 at 10:00 a.m., local
time, at the Hyatt Regency Bellevue at Bellevue Place, 900 Bellevue Way N.E.,
Bellevue, Washington, for the following purposes:
1. To elect two directors, each to hold office for a three-year term;
2. To consider and vote upon a proposal to approve the Advanced Digital
Information Corporation Amended 1997 Stock Purchase Plan;
3. To consider and vote upon a proposal to amend the Advanced Digital
Information Corporation 1996 Stock Option Plan to increase the number
of shares available for issuance thereunder by 400,000 shares and to
effect certain other amendments; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Only holders of record of shares of ADIC Common Stock at the close of
business on January 9, 1998, the record date for the Annual Meeting, are
entitled to notice of and to vote at the Annual Meeting and adjournments or
postponements thereof. Shareholders are cordially invited to attend the Annual
Meeting in person.
By Order of the Board of Directors
Charles H. Stonecipher
Secretary
Redmond, Washington
January 23, 1998
PLEASE COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE RETURN
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
ADVANCED DIGITAL INFORMATION CORPORATION
10201 WILLOWS ROAD
REDMOND, WASHINGTON 98073-9705
PROXY STATEMENT
This Proxy Statement, which was first mailed to shareholders of Advanced
Digital Information Corporation ("ADIC" or the "Company") on or about January
23, 1998, is furnished to shareholders of the Company (the "Shareholders") in
connection with the solicitation of proxies by the Board of Directors of the
Company for the Annual Meeting of Shareholders to be held February 25, 1998, and
any adjournments or postponements thereof (the "Annual Meeting"). A proxy may
be revoked in writing at any time before it is exercised by filing with the
Secretary of the Company a written revocation or a duly executed proxy bearing a
later date. A proxy may also be revoked by attending the Annual Meeting and
voting in person. If the enclosed form of proxy is properly executed and
returned, it will be voted in accordance with the instructions given, unless
revoked. There were 9,703,324 shares of the Company's common stock (the "Common
Stock"), the only security of the Company entitled to vote at the Annual
Meeting, outstanding at January 9, 1998. Holders of a majority of those shares,
present in person or represented by proxy, will constitute a quorum.
Shareholders are entitled to one vote for each share of Common Stock held of
record at the close of business on January 9, 1998, the record date for the
Annual Meeting.
The cost of soliciting proxies will be borne by the Company. Proxies will
be solicited by certain of the Company's directors, officers and regular
employees ("Team Members"), without additional compensation, personally or by
telephone or telefax. In addition, the Company may reimburse brokerage firms
and other persons representing beneficial owners of shares of Common Stock for
their expenses in forwarding solicitation materials to such beneficial owners.
Each shareholder will be entitled to one vote for each share of Common
Stock held. Directors will be elected by a plurality of the shares of Common
Stock present by proxy or in person at the Annual Meeting. Holders of Common
Stock are not entitled to cumulate votes in the election of directors.
Abstention from voting on the election of directors will have no impact on the
outcome of this proposal since no vote has been cast in favor of any nominee.
There can be no broker nonvotes on this matter since brokers who hold shares for
the accounts of their clients have discretionary authority to vote such shares
with respect to the election of a director. The Amended 1997 Stock Purchase
Plan and the amendment to the 1996 Stock Option Plan will be approved if the
votes cast in favor of the particular proposal by the shares entitled to vote
and be counted collectively thereon exceed the votes cast against the particular
proposal by the shares entitled to vote and be counted collectively thereon.
Abstentions from voting and broker nonvotes on these proposals will have no
impact on the outcome of these proposals since no vote has been cast for or
against a proposal.
The Company is not aware, as of the date hereof, of any matters to be voted
upon at the Annual Meeting other than as stated in the accompanying Notice of
Annual Meeting of Shareholders. The accompanying Proxy gives discretionary
authority to the persons named therein to vote the shares in their best judgment
if any other matters are properly brought before the Annual Meeting.
1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Each director was
elected in 1996, prior to the spin-off of the Company from Interpoint
Corporation ("Interpoint"), to hold office for one, two or three years to
provide for staggered election of directors to three-year terms. One class is
elected each year by the Shareholders. At the Annual Meeting, two directors
will be elected to serve for terms of three years, expiring on the date of the
Annual Meeting of Shareholders in 2001. Each director elected will continue in
office until a successor has been elected or until resignation or removal in the
manner provided by the Restated Bylaws of the Company. The names of nominees to
the Board of Directors, each of whom is presently a director of the Company, and
the names of directors whose terms will continue after the Annual Meeting are
listed below.
Unless otherwise instructed, the persons named in the accompanying Proxy
intend to vote shares represented by properly executed proxies for the two
nominees named below. If any nominee becomes unavailable for any reason or if a
vacancy occurs before the election (which events are not anticipated), the
proxies may be voted for a person to be selected by the Board of Directors.
NOMINEES
NAME AND AGE DIRECTOR SINCE
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Walter P. Kistler, age 78................ 1996
Mr. Kistler served as a Director of ADIC for 11 years prior to its
acquisition by Interpoint in 1994 and as a Director of Interpoint from 1972
until its acquisition by Crane Co. in October 1996. Mr. Kistler has served as
Chairman of the Board of Directors of Kistler Aerospace Corporation since 1993.
Mr. Kistler served as Chairman Emeritus of the Interpoint Board of Directors
from 1987 to 1996, and as its Chairman from 1974 to 1987. Mr. Kistler has also
served as Chairman of Kistler-Morse Corporation (electronic equipment
manufacturer) from 1972 to 1995. He studied at the University of Geneva and
holds an M.S. in Physics from the Federal Institute of Technology in Zurich,
Switzerland.
Walter F. Walker, age 43................. 1996
Mr. Walker served as a Director of Interpoint from 1995 until its
acquisition by Crane Co. in October 1996. Mr. Walker has served as President of
the Seattle Supersonics National Basketball Association basketball team (a
subsidiary of Ackerley Communications, Inc.) since 1994. Prior to this, he
served as President of Walker Capital (a money management firm) from March 1994
to September 1994 and as Vice President of Goldman Sachs & Co. (an investment
banking firm) from 1987 to 1994. Mr. Walker also serves as a Director of
Redhook Ale Brewery, Incorporated and Gargoyles, Inc. (eyeware manufacturer), as
a member of the University of Virginia Board of Visitors and as a Director of
the Washington State Special Olympics Board. He holds a B.A. in Psychology from
the University of Virginia and an M.B.A. from Stanford University.
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CONTINUING DIRECTORS
NAME AND AGE TERM EXPIRES DIRECTOR SINCE
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John W. Stanton, age 42............ 1999 1996
Mr. Stanton served as a Director of ADIC for five years prior to its
acquisition by Interpoint in 1994 and as a Director of Interpoint from 1988
until its acquisition by Crane Co. in October 1996. Mr. Stanton has served as
Chairman of the Board and Chief Executive Officer of Western Wireless
Corporation and its predecessor companies since 1992. Prior to this, he served
as a Director of McCaw Cellular Communications, Inc. from 1987 to 1994, serving
as Vice Chairman from 1988 to 1991. Mr. Stanton also serves as a Director of
SmarTone Inc., a Hong Kong wireless communications company, and as a Trustee of
Whitman College. He holds a B.A. in Political Science from Whitman College and
an M.B.A. from Harvard Business School.
Peter H. van Oppen, age 45 . . . . 1999 1986
Mr. van Oppen has served as Chairman of the Board and Chief Executive
Officer of ADIC since its acquisition by Interpoint in 1994, and as President
from 1994 to 1997. He has served as a Director of ADIC since 1986. He served as
Chairman of the Board of Interpoint from 1995 until its acquisition by Crane Co.
in October 1996. He also served as President and Chief Executive Officer of
Interpoint from 1989 until its acquisition by Crane Co. in October 1996, as
President and Chief Operating Officer of Interpoint from 1987 to 1989, and as
Executive Vice President for Finance and Operations of Interpoint from 1985 to
1987. Prior to 1985, Mr. van Oppen worked as a Consulting Manager at Price
Waterhouse LLP and at Bain & Company in Boston and London. He has additional
experience in medical electronics and venture capital. Mr. van Oppen also serves
as a Director of Seattle FilmWorks, Inc. He holds a B.A. from Whitman College
and an M.B.A. from Harvard Business School, where he was a Baker Scholar.
Christopher T. Bayley, age 59. . . 2000 1996
Mr. Bayley served as a Director of Interpoint from 1987 until its
acquisition by Crane Co. in October 1996. He has served as a principal of The
Madison Group, a public affairs consulting firm, since 1997 and prior to that
was Chairman of New Pacific Partners (a Seattle and Hong Kong-based investment
bank) since 1992. He served as President and Chief Executive Officer of Glacier
Park Company (real estate development), and as Senior Vice President, Corporate
Affairs of Burlington Resources Inc. (oil and gas exploration and production
company) from 1985 to 1992 and 1989 to 1992, respectively. He is also a
Director of The Commerce Bank and a member of the Board of Trustees of Scenic
America, the International Music Festival of Seattle and the E.B. Dunn Historic
Garden Trust. He holds an A.B. in History from Harvard University and a J.D.
from Harvard Law School.
Russell F. McNeill, age 86 . . . . 2000 1996
Mr. McNeill served as a Director of Interpoint from 1977 until its
acquisition by Crane Co. in October 1996. Mr. McNeill served as Secretary
Emeritus of Interpoint from 1992 until its acquisition by Crane Co. in October
1996 and as its Secretary from 1977 to 1992. He is the former President of Old
National Bank of Washington, and serves as Trustee Emeritus of Whitman College.
He holds a B.A. in Mathematics and Physics from Whitman College.
3
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the last fiscal year there were five meetings of the Board of
Directors. All directors except Mr. Kistler attended at least 75% of all board
and committee meetings of which they were a member.
The Board of Directors has an Audit Committee, a Nominating Committee and a
Compensation and Stock Option Committee. The Audit Committee, composed of
Messrs. Kistler, McNeill and Walker, reviews with the Company's independent
auditors the scope, results and costs of the audit engagement. During the last
fiscal year, there were three meetings of the Audit Committee.
The Nominating Committee, composed of Messrs. Bayley, van Oppen and Walker,
nominates and recommends candidates for the Board of Directors. During the last
fiscal year, there were no meetings of the Nominating Committee. Shareholders
may nominate candidates for director when such candidate is nominated in
compliance with the rules set forth in the Company's Restated Bylaws.
The Compensation and Stock Option Committee, composed of Messrs. Bayley,
Stanton and Walker, determines the salary and bonus to be paid to the Company's
Chief Executive Officer and reviews the salaries and bonuses for those reporting
to the Chief Executive Officer. The Committee also administers the Company's
stock option plans and meets either independently or in conjunction with the
Company's full Board of Directors to grant options to eligible individuals in
accordance with the terms of each plan. During the last fiscal year, there were
three meetings of the Compensation and Stock Option Committee.
COMPENSATION OF DIRECTORS; STOCK OPTION PROGRAM
Nonemployee directors are paid a retainer of $1,000 per quarter and $500
for each Board of Directors meeting attended. The employee director is not
paid any fees for serving as a member of the Board of Directors. Audit
Committee members are paid $500 for each meeting attended.
Under the Advanced Digital Information Corporation 1996 Stock Option Plan
(the "1996 Option Plan"), each director who is not an employee of the Company
(an "Eligible Director") receives a nonqualified stock option for 5,500 shares
of Common Stock upon his or her initial election or appointment. Such options
vest in four equal annual installments of 1,375 shares each beginning one year
after the date of grant. The 1996 Option Plan also provides for an annual grant
of options to purchase 1,000 shares of Common Stock to each Eligible Director on
the date of each annual meeting of Shareholders. Such options vest on the date
of the next annual meeting of Shareholders and expire after five years. If the
amendments to the 1996 Option Plan described below are approved, the annual
grant of options to each Eligible Director will increase to 2,000 shares of
Common Stock. The 1996 Option Plan is administered by the Compensation and Stock
Option Committee of the Board of Directors.
PROPOSAL TO ADOPT AMENDED 1997 STOCK PURCHASE PLAN
On August 20, 1997, the Company's Board of Directors unanimously adopted,
subject to Shareholder approval, the Advanced Digital Information Corporation
1997 Stock Purchase Plan (as amended on December 10, 1997, the Amended 1997
Stock Purchase Plan, referred to herein as the "Purchase Plan"). The Purchase
Plan will provide a means for eligible Team Members of the Company and its
subsidiaries to purchase shares of Common Stock on favorable terms through
payroll deductions. The Board believes that adoption of the Purchase Plan will
promote the interests of the Company and its Shareholders by assisting the
Company in attracting and retaining Team Members and by aligning Team
4
Members' interests though their purchases of Common Stock with the interests of
the Company's Shareholders.
A copy of the Purchase Plan is attached to this Proxy Statement as Appendix
A and is incorporated herein by reference. The following description of the
Purchase Plan is a summary and does not purport to be a complete description.
See Appendix A for more detailed information.
DESCRIPTION OF THE PURCHASE PLAN
SHARES SUBJECT TO THE PURCHASE PLAN. An aggregate of up to 500,000 shares
of Common Stock is authorized for issuance under the Purchase Plan, subject to
adjustment from time to time for stock dividends and certain other changes in
capitalization as provided in the Purchase Plan.
ADMINISTRATION. The Purchase Plan will be administered by the Board of
Directors or the Compensation and Stock Option Committee (the "Committee"),
except to the extent administrative authority is delegated to an executive
officer of the Company in accordance with the terms of the Purchase Plan (the
"Plan Administrator"). The Plan Administrator is authorized to administer and
interpret the Purchase Plan and to make such rules and regulations as it deems
necessary, subject to the requirements of the Purchase Plan and Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code").
ELIGIBILITY. The Purchase Plan is an employee benefit program that enables
eligible Team Members to purchase shares of Common Stock at a discount through
payroll deductions without incurring broker commissions. To participate, a Team
Member must have been employed for at least three months, and his or her'
customary employment must be for more than 20 hours per week and more than five
months in any calendar year. A Team Member is not eligible to continue
participation in the Purchase Plan if his or her employment is voluntarily or
involuntarily terminated, or if the Team Member owns or will own, as a result of
such participation, shares possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or any related
corporation. As of January 9, 1998, approximately 215 of the Company's Team
Members would be eligible to participate in the Purchase Plan, including each of
the named executive officers (as hereinafter defined). Nonemployee directors of
the Company are not eligible to participate in the Purchase Plan.
STOCK PURCHASES. The Purchase Plan is divided into six-month offering
periods, beginning on March 1 and September 1 of each year. During these
offering periods, participating Team Members accumulate funds in an account used
to buy Common Stock through payroll deductions at a rate of not less than $10
nor more than 10% of the Team Member's' wages during each payroll period within
the offering period. The Board of Directors or the Committee may establish
offering periods of different lengths subject to the limitations set forth in
the Purchase Plan, and may establish shorter consecutive purchase periods within
an offering period. The Purchase Plan will initially be implemented with two
coextensive six-month offering and purchase periods each year.
On the last business day of each purchase period (the "Purchase Date"), the
Team Member's accumulated funds are used to purchase as many shares of Common
Stock as his or her accumulated payroll deductions will allow, at the purchase
price. The purchase price is 85% of the lesser of the market price of the
Common Stock on (i) the first business day of the offering period and (ii) the
Purchase Date. The Board of Directors or the Committee may establish higher
purchase prices for subsequent offering periods. No participant may purchase
more than $25,000 in fair market value of Common Stock for any calendar year
under the Purchase Plan. On January 13, 1998, the average of the high and low
sale prices of the Common Stock was $14.69 per share, as reported by the Nasdaq
National Market.
5
TERM, TERMINATION AND AMENDMENT OF THE PURCHASE PLAN. The Plan will
terminate on August 20, 2007. The Board of Directors or the Committee has the
power to amend, suspend or terminate the Purchase Plan, provided that the Board
or the Committee may not amend the Purchase Plan without Shareholder approval if
such approval is required by Section 423 of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The Company intends that the Purchase Plan qualify as an "employee stock
purchase plan" under Section 423 of the Code. Section 423 allows an employer to
grant "options" to its employees to purchase company stock at a stipulated price
without having the employee realize taxable income at the time the option is
granted or when exercised. Under Section 423, the Company is deemed to have
granted an option on the first day of an offering period, and the Team Member is
deemed to have exercised the option on the Purchase Date. The basis of the
stock received on exercise of an option under the Purchase Plan is the exercise
price paid for the stock. The Code imposes a holding period for favorable tax
treatment upon disposition of Common Stock acquired under the Purchase Plan
equal to the later of two years after the first day of an offering period and
one year after the Purchase Date. When the Common Stock is sold after this
holding period, the Team Member will realize ordinary income up to the amount of
any discount (up to a maximum of 15%) from the market price of the Common Stock
as of the first day of an offering period. Any further gain is taxed at capital
gain rates. If the Common Stock is sold before the holding period expires, the
Team Member will realize ordinary income to the extent of the difference between
the price actually paid for the stock and the market price of the stock on the
Purchase Date, regardless of the price at which the stock is sold. If the sale
price is less than the market price of the Common Stock on the Purchase Date,
the Team Member will realize a capital loss equal to such difference.
The Company may not take a deduction for the difference between the market
price of the Common Stock and the purchase price paid for the Common Stock by
the Team Member unless the Team Member disposes of the stock before the
statutory holding periods expire.
RECOMMENDATION BY THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE ADOPTION OF THE ADVANCED DIGITAL INFORMATION CORPORATION AMENDED 1997 STOCK
PURCHASE PLAN.
PROPOSAL TO AMEND 1996 STOCK OPTION PLAN
The Advanced Digital Information Corporation 1996 Stock Option Plan (the
"1996 Option Plan") provides a means whereby selected Team Members (including
directors who are also Team Members), officers, consultants, advisors and agents
of the Company may be granted incentive stock options ("ISOs") or nonqualified
stock options ("NSOs") to purchase shares of Common Stock. In addition,
Eligible Directors receive automatic awards of NSOs under the 1996 Option Plan.
Approximately 125 persons are eligible to participate in the 1996 Option Plan.
Currently, subject to adjustment required in the event of any recapitalization
of the Company, the aggregate amount of Common Stock that may be issued upon
exercise of all options granted under the 1996 Option Plan may not exceed
625,000 shares. On December 10, 1997, the Company's Board of Directors
unanimously adopted an amendment to the 1996 Option Plan that, subject to
Shareholder approval, would authorize an additional 400,000 shares to be
available for the granting of options under the 1996 Option Plan, and would
increase the annual grant of options to Eligible Directors to 2,000 shares of
Common Stock. As of the date of this Proxy Statement, approximately 4,000
shares remain available for future grant under the 1996 Option Plan, and options
to purchase approximately 621,000 shares of Common Stock are outstanding. On
January 13, 1998, the
6
average of the high and low sale prices of the Common Stock was $14.69 per
share, as reported by the Nasdaq National Market.
The Board believes that the additional option shares would, among other
things, promote the interests of the Company and its Shareholders by assisting
the Company in attracting, retaining and stimulating the performance of
directors, officers and key Team Members. The Board believes that existing
option grants have contributed substantially to the successful achievement of
the above objectives and that the granting of stock options for these purposes
is comparable with other high-technology companies.
A copy of the 1996 Option Plan, as proposed to be amended, is attached to
this Proxy Statement as Appendix B and is incorporated herein by reference. The
following description of the 1996 Option Plan is a summary and does not purport
to be a complete description. See Appendix B for more detailed information.
DESCRIPTION OF THE 1996 OPTION PLAN
The Committee is currently the administrator of the 1996 Option Plan (the
"Option Plan Administrator"). Subject to the terms of the 1996 Option Plan, the
Option Plan Administrator determines the terms and conditions of options granted
under the 1996 Option Plan, including the exercise price. The 1996 Option Plan
provides that the Option Plan Administrator must establish an exercise price for
ISOs that is not less than the fair market value per share at the date of grant.
Each ISO must expire within ten years of the date of grant. However, if ISOs
are granted to persons owning more than 10% of the voting stock of the Company,
the 1996 Option Plan and the tax laws for ISOs provide that the exercise price
may not be less than 110% of the fair market value per share at the date of
grant and that the term of the ISOs may not exceed five years. NSOs expire ten
years from the date of grant. Unless otherwise provided by the Option Plan
Administrator, options granted under the 1996 Option Plan vest at a rate of 25%
per year over a four-year period.
Eligible Directors of the Company receive option awards under the 1996
Option Plan only in the form of automatic grants. These automatic grants are
described above under "ELECTION OF DIRECTORS--Compensation of Directors; Stock
Option Program."
No option may be transferred by the optionee other than by will or the laws
of descent or distribution, except for certain transfers that may be permitted
by the Option Plan Administrator. An optionee whose relationship with the
Company or any related corporation ceases for any reason (other than termination
for cause, death or total disability, as such terms are defined in the 1996
Option Plan) may exercise options in the three-month period following such
cessation (unless such options terminate or expire sooner by their terms), or in
such longer period determined by the Option Plan Administrator. In the event
the optionee is terminated for cause, the options terminate upon the Company's
discovery of such cause. In the event the optionee dies or becomes totally
disabled, options vested as of the date of death or total disability may be
exercised prior to the earlier of the option's specified expiration date and one
year from the date of the optionee's death or disability.
In the event of certain corporate transactions, including certain mergers
or a sale of substantially all the assets or a liquidation of the Company, each
option that is at the time outstanding will automatically accelerate so that it
will, immediately prior to such corporate transaction, become 100% vested,
except that options other than those granted to Eligible Directors will not so
accelerate if and to the extent (a) such option is, in connection with the
corporate transaction, either to be assumed by the successor corporation or
7
parent thereof or to be replaced with a comparable award for the purchase of
shares of the capital stock of the successor corporation or its parent
corporation or (b) such option is to be replaced with a cash incentive program
of the successor corporation that preserves the spread existing at the time of
the corporate transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option. Any options that are
assumed or replaced in the corporate transaction and do not otherwise accelerate
at that time are accelerated in the event the holder's employment or other
services should subsequently terminate within two years following such corporate
transaction, unless such employment or services are terminated by the successor
corporation for cause or by the holder voluntarily without good reason.
Shares subject to options granted under the 1996 Option Plan that have
lapsed or terminated may again be subject to options granted under the 1996
Option Plan. Furthermore, the Option Plan Administrator may offer to exchange
new options for existing options, with the shares subject to the existing
options being again available for grant under the 1996 Option Plan. No ISOs may
be granted under the 1996 Option Plan after July 22, 2006.
FEDERAL INCOME TAX CONSEQUENCES
The material U.S. federal income tax consequences to the Company and to any
person granted an option under the 1996 Option Plan who is subject to taxation
in the United States under the existing applicable provisions of the Code and
the underlying Treasury Regulations are substantially as follows. The following
summary does not address state, local or foreign tax consequences. Under
present law and regulations, no income will be recognized by a participant upon
the grant of stock options.
Upon the exercise of an NSO, the optionee will recognize taxable ordinary
income in an amount equal to the excess of the fair market value of the shares
acquired over the option price. Upon a later sale of those shares, the optionee
will have short-term, mid-term or long-term capital gain or loss, as the case
may be, in an amount equal to the differences between the amount realized on
such sale and the tax basis of the shares sold. If payment of the option price
is made entirely in cash, the tax basis of the shares will be equal to their
fair market value on the exercise date (but not less than the option price), and
the shares' holding period will begin on the day after the exercise date.
If the optionee uses already-owned shares to pay the exercise price of an
option in whole or in part, the transaction will not be considered to be a
taxable disposition of the already-owned shares. The optionee's tax basis and
holding period of the already-owned shares will be carried over to the
equivalent number of shares received upon exercise. The tax basis of the
additional shares received upon exercise will be the fair market value of the
shares on the exercise date (but not less than the amount of cash, if any, used
in payment), and the holding period for such additional shares will begin on the
day after the exercise date.
The rules for the tax treatment of an NSO also apply to an ISO that is
exercised more than three months after the optionee's termination of employment
(or more than 12 months thereafter in the case of permanent and total
disability, as defined in the Code).
Upon the exercise of an ISO during employment or within three months after
the optionee's termination of employment (12 months in the case of permanent and
total disability), for regular tax purposes the optionee will recognize no
income at the time of exercise (although the optionee will have income for
alternative minimum income tax purposes at that time equal to the excess of the
fair market value of the shares over the exercise price). If the acquired
shares are sold or exchanged after the later of
8
(a) one year from the date of exercise of the option and (b) two years from the
date of grant of the option, the difference between the amount realized by the
optionee on that sale or exchange and the option exercise price will be taxed to
the optionee as capital gain or loss. If the shares are disposed of before such
holding period requirements are satisfied, then the optionee will recognize
taxable ordinary income in the year of disposition in an amount equal to the
excess of the fair market value on the exercise date of the shares received over
the option price paid (or generally, if less, the excess of the amount realized
on the sale of the shares over the option price), and the optionee will have
capital gain or loss, long-term, mid-term or short-term, as the case may be, in
an amount equal to the difference between (i) the amount realized by the
optionee upon that disposition of the shares and (ii) the option price paid by
the optionee increased by the amount of ordinary income, if any, so recognized
by the optionee.
In all the foregoing cases the Company will be entitled to a deduction at
the same time and in the same amount as the participant recognizes ordinary
income, subject to certain limitations. Among these limitations is
Section 162(m) of the Code, under which certain compensation payments in excess
of $1 million are not deductible by the Company. The limitation on
deductibility applies with respect to that portion of a compensation payment for
a taxable year in excess of $1 million to either the Company's Chief Executive
Officer or any one of the other four most highly compensated executive officers.
Certain performance-based compensation is not subject to the limitation on
deductibility. Options can qualify for this performance-based exception if they
meet the requirements set forth in Section 162(m) of the Code and the underlying
Treasury Regulations. The 1996 Option Plan has been drafted to allow compliance
with those performance-based criteria.
RECOMMENDATION BY THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT OF THE ADVANCED DIGITAL INFORMATION CORPORATION 1996 OPTION PLAN.
EXECUTIVE OFFICERS
The following are executive officers of ADIC who will serve in the
capacities noted until their successors are appointed:
NAME AGE POSITION
---- --- --------
Peter H. van Oppen 45 Chairman of the Board and Chief
Executive Officer
Charles H. Stonecipher 36 President and Chief Operating Officer
Michel R. Grosbost 51 President and General Manager, ADIC Europe
William C. Britts 39 Vice President, Sales and Marketing
Barry W. Brugman 53 Vice President, Operations
Leslie S. Rock 40 Treasurer and Chief Accounting Officer
Richard S. Sato 35 Vice President, Quality Assurance
Nathan H. Searle 51 Vice President, Engineering
Each executive officer of the Company is appointed annually by the Board
of Directors.
For a biographical summary of Mr. van Oppen see, "ELECTION OF DIRECTORS."
9
CHARLES H. STONECIPHER. Mr. Stonecipher has served as President and Chief
Operating Officer of ADIC since 1997 and as Senior Vice President and Chief
Operating Officer of ADIC from 1995 to 1997. Prior to this, he served as Vice
President, Finance and Administration and Chief Financial Officer of Interpoint
from 1994 to 1995. Prior to joining Interpoint, Mr. Stonecipher worked as a
Manager at Bain & Company in San Francisco from 1989 to 1994. Previously, he
worked as an engineer at The Boeing Company. He holds B.S. and M.S. degrees in
Mechanical Engineering from Stanford University, where he graduated Phi Beta
Kappa, and an M.B.A. from Harvard Business School.
MICHEL R. GROSBOST. Mr. Grosbost has served as President and General
Manager, ADIC Europe since 1994. From 1988 to 1994, Mr. Grosbost served in
various general management positions with Gigatape and GigaTrend Europe SARL,
predecessor to ADIC Europe. From 1985 to 1988, Mr. Grosbost served as Vice
President, International with Intertechnique. He holds an advanced degree in
electrical engineering from the University of Grenoble, France.
WILLIAM C. BRITTS. Mr. Britts has served as Vice President, Sales and
Marketing of ADIC since 1995 and as Director of Marketing of ADIC in 1994. For
seven years prior to joining ADIC, Mr. Britts served in a number of marketing
and sales positions with Raychem Corporation and its subsidiary, Elo
TouchSystems. He holds B.S. and M.S. degrees in Mechanical Engineering from
Virginia Polytechnic Institute and an M.B.A. from Harvard Business School.
BARRY W. BRUGMAN. Mr. Brugman has served as Vice President, Operations of
ADIC since 1997, and as Vice President, Operations and Finance of ADIC from 1994
to 1997. He previously served as Vice President and General Manager of the
Custom Hybrids Division of Interpoint from 1993 to 1994, Vice President of
Operations of Interpoint from 1992 to 1993, and Vice President of Marketing of
the Custom Hybrids Division of Interpoint from 1989 to 1992. He holds a B.S. in
Electrical Engineering from U.C.L.A. and an M.B.A. from the University of
Washington, where he was valedictorian.
LESLIE S. ROCK. Ms. Rock has served as Treasurer and Chief Accounting
Officer of ADIC since January 1997. Ms. Rock served as Treasurer and Secretary
of Interpoint from 1994 until its acquisition by Crane Co. in October 1996 and
was a consultant to Crane Co. from October 1996 until January 1997. She served
as Interpoint's Vice President, Finance from 1989 to 1994, as its Chief
Financial Officer from 1987 to 1994, and as its Controller from 1986 to 1994.
Prior to 1986, she was an Audit Manager at KPMG Peat Marwick. She holds a B.A.
in Accounting from California State University, Fullerton, and is a Certified
Public Accountant.
RICHARD S. SATO. Mr. Sato has served as Vice President, Quality Assurance
of ADIC since June 1997. He previously served as Vice President, Power Products
Division of Interpoint from 1995 through 1997. He served as Interpoint's
Director of Operations, Power Products Division, from 1993 through 1995 and as
its Manufacturing Manager from 1989 to 1993. He holds a B.S. degree in Ceramic
Engineering from the University of Washington.
NATHAN H. SEARLE. Mr. Searle has served as Vice President, Engineering of
ADIC since 1988. From 1986 to 1988, Mr. Searle served as Vice President of IQ
Technologies Inc. Mr. Searle co-founded Output Technology Corporation and
served as its Vice President, Engineering from 1984 to 1985. He holds a B.S. in
Electrical Engineering from California Polytechnic University.
10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
Chief Executive Officer (the "CEO") and each of the five other most highly
compensated executive officers of the Company (together with the CEO, the "named
executive officers") during the fiscal year ended October 31, 1997 (and, where
required, for the fiscal years ended October 31, 1996 and 1995) based on
services rendered to Interpoint and ADIC.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------------- --------------
SECURITIES ALL OTHER
NAME AND BONUS($) OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) (1) COMPENSATION ($) OPTIONS(#) ($) (2)
- ------------------------------- ----- ------------- ------------ ----------------- ------------- ------------
Peter H. van Oppen 1997 $204,308 $110,000 20,000 $4,750
Chairman and 1996 221,000 96,067 120,000 150
CEO(3) 1995 212,493 20,636 -- 150
Charles H. Stonecipher 1997 153,486 87,500 15,000 4,071
President and 1996 122,442 49,165 95,000 150
Chief Operating Officer(4) 1995 116,059 7,650 20,000 150
Michel R. Grosbost 1997 121,684(5) 36,842(5) 5,000
President and General 1996 138,720(5) 26,300(5) 41,500
Manager, 1995 138,720(5) 5,487(5) $36,809(5)(6) 32,000
ADIC Europe(7)
William C. Britts 1997 101,519 44,000 5,000 1,900
Vice President, 1996 93,094 20,936 25,000 150
Sales and Marketing(8)
Barry W. Brugman 1997 101,750 31,500 2,000 2,327
Vice President, 1996 94,074 23,338 25,000 --
Operations (9) 1995 92,040 8,000 -- --
Nathan H. Searle 1997 100,212 31,000 2,000 3,146
Vice President, 1996 96,403 22,985 25,000 150
Engineering(10) 1995 93,875 7,308 6,000 150
- ---------------
(1) Consists of ADIC Bonus Plan awards for fiscal 1997 and Interpoint profit
bonus and Management Incentive Plan awards for fiscal 1996 and 1995.
(2) Consists of matching contributions to the 401(k) plan.
(3) Salary excludes cash-out of unused sick days and vacation days in
accordance with Interpoint's flexible time-off plan, which was applicable
to all Interpoint team members. Such cash-out amounted to $22,645 and
$4,023 in fiscal 1996 and 1995, respectively. Also excludes $454,067
related to compensation for the buyout of Interpoint stock options in
fiscal 1996 in connection with the acquisition of Interpoint by Crane Co.
(4) Salary excludes cash-out of unused sick and vacation days in accordance
with ADIC's policy of not recognizing vacation accruals for officers. Such
cash-out amounted to $12,451 in fiscal 1996. Also excludes $177,543
related to compensation for the buyout of Interpoint stock options in
fiscal 1996 in connection with the acquisition of Interpoint by Crane Co.
11
(5) Assumes an exchange rate of French francs to U.S. dollars of 5.7:1 in
fiscal 1997 and 5:1 in fiscal 1996 and 1995.
(6) Includes payments by ADIC Europe to two companies, which in turn
compensated Mr. Grosbost for services rendered.
(7) Excludes $75,380 related to compensation for the buyout of Interpoint stock
options in fiscal 1996 in connection with the acquisition of Interpoint by
Crane Co.
(8) Salary excludes cash-out of unused sick and vacation days in accordance
with ADIC's policy of not recognizing vacation accruals for officers. Such
cash-out amounted to $10,417 in fiscal 1996. Also excludes $56,285 related
to compensation for the buyout of Interpoint stock options in fiscal 1996
in connection with the acquisition of Interpoint by Crane Co.
(9) Salary excludes cash-out of unused sick and vacation days in accordance
with ADIC's policy of not recognizing vacation accruals for officers. Such
cash-out amounted to $7,723 in fiscal 1996. Also excludes $89,968 related
to compensation for the buyout of Interpoint stock options in fiscal 1996
in connection with the acquisition of Interpoint by Crane Co.
(10) Salary excludes cash-out of unused sick and vacation days in accordance
with ADIC's policy of not recognizing vacation accruals for officers.
Such cash-out amounted to $4,870 in fiscal 1996. Also excludes $117,853
related to compensation for the buyout of Interpoint stock options in
fiscal 1996 in connection with the acquisition of Interpoint by Crane Co.
STOCK OPTION GRANTS
The following table sets forth certain information regarding options
granted during the fiscal year ended October 31, 1997 to the named executive
officers under the 1996 Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (1)
-----------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Options Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Team Exercise for Option Term(2)
Options Members in Price Expiration -----------------------
Name Granted(#) Fiscal Year ($/Share) Date 5%($) 10%($)
- ------------------------- ---------- ----------- --------- ----------- --------- ---------
PETER H. VAN OPPEN 20,000 7.85% $18.5625 8/20/02 $102,570 $226,652
CHARLES H. STONECIPHER 15,000 5.89% 18.5625 8/20/02 76,927 169,989
MICHEL R. GROSBOST 5,000 1.96% 18.5625 2/20/03 25,642 56,663
WILLIAM C. BRITTS 5,000 1.96% 16.5625 7/25/03 22,880 50,558
BARRY W. BRUGMAN 2,000 .78% 16.5625 7/25/03 9,152 20,223
NATHAN H. SEARLE 2,000 .78% 16.5625 7/25/03 9,152 20,223
- ---------------
(1) THESE OPTIONS VEST IN FOUR EQUAL ANNUAL INSTALLMENTS BEGINNING ONE YEAR
AFTER THE DATE OF GRANT. THE PER SHARE EXERCISE PRICE REPRESENTS THE FAIR
MARKET VALUE OF THE COMMON STOCK ON THE DATE OF GRANT. THE OPTIONS EXPIRE
FIVE YEARS FROM THE DATE OF GRANT, EXCEPT FOR MR. GROSBOST, WHOSE OPTIONS
EXPIRE FIVE AND ONE-HALF YEARS FROM THE DATE OF GRANT.
(2) FUTURE VALUE OF CURRENT YEAR GRANTS ASSUMING APPRECIATION OF 5% AND 10% PER
YEAR OVER THE FIVE-YEAR OR TEN-YEAR OPTION PERIOD. THE ACTUAL VALUE
REALIZED MAY BE GREATER THAN OR LESS THAN THE POTENTIAL REALIZABLE VALUES
SET FORTH IN THE TABLE.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding options
exercised in fiscal 1997 and options held as of October 31, 1997 by each of the
named executive officers.
12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
OCTOBER 31, 1997(#) OCTOBER 31, 1997($)(2)
SHARES ----------------------- -------------------------
ACQUIRED VALUE
ON EXERCISE REALIZED
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ------------- ---------- ----------- ------------- ----------- -------------
Peter H. van Oppen 107,482 $1,920,969 50,000 110,000 $450,953 $474,633
Charles H. Stonecipher 20,000 289,540 38,250 101,750 336,297 619,808
Michel R. Grosbost 11,000 137,253 10,375 50,125 48,869 342,643
William C. Britts 8,000 134,727 8,250 33,750 52,740 218,311
Barry W. Brugman 12,300 226,712 20,850 20,750 252,452 75,078
Nathan H. Searle -- -- 35,650 24,850 494,792 134,401
- --------------
(1) Value realized is determined by subtracting the exercise price from the
fair market value on the date the options were exercised and multiplying
the resulting number by the number of underlying shares of Common Stock.
(2) Value is calculated based on the difference between the option exercise
price and the fair market value of the Common Stock as of October 31, 1997,
times the number of shares.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE ON ANNUAL COMPENSATION
The policy of the Committee with respect to executive officer compensation
is that such compensation should (a) assist ADIC in attracting and retaining key
executives critical to the Company's success, (b) align the interests of the
executives with the interests of the Shareholders, (c) reflect ADIC's
performance and (d) reward executives for their individual performance.
Executive compensation includes base salary, bonuses based on Company
performance and stock option grants. These programs are designed to provide
incentives for both short- and long-term performance.
BASE SALARY. The base salary of the CEO is set at an amount the Committee
believes is competitive or somewhat below salaries paid to executives of
companies of comparable size in similar industries and located within the local
area. In evaluating salaries, the Committee relies upon surveys that provide
data by industry and size of company, as well as knowledge of local pay
practices as reported in financial periodicals or otherwise accessible to the
Committee. Additionally, a review of the CEO's performance and a general review
of the Company's financial and stock price performance are considered. The base
salary for executive officers is reviewed annually. The CEO's base salary was
increased from $200,000 to $220,000 on August 1, 1997.
BONUSES. The ADIC Bonus Plan (the "ABP") is a noncontributory plan that
covers all ADIC Team Members except certain personnel based outside the United
States and commissioned sales staff. Bonuses are paid in a single, annual
payment. The Board of Directors sets aside a portion of pretax profits for
payment under the ABP based upon achievement of certain corporate performance
goals established at the beginning of the year. These goals are primarily tied
to operating profit and provide for significant growth in sales and
profitability during the year. Upon achievement of these goals, ABP payment
targets are set as a percentage of base compensation depending upon the Team
Member's level of responsibility,
13
with certain adjustments reflecting individual performance. Payment amounts are
targeted to range between 8% and 50% of current base salary as of the end of the
fiscal year. ABP payments are presented in the Summary of Compensation Table
under the heading "Bonus."
STOCK OPTION GRANTS. The Company provides its executive officers with
long-term incentives through the 1996 Option Plan. The objective of the 1996
Option Plan is to provide incentives to maximize Shareholder value. The
Committee relies upon surveys and general familiarity with the proportion of
shares available for stock options in similar technology-based companies to
determine appropriate grant levels. On August 20, 1997, the CEO was granted
options to purchase 20,000 shares of Common Stock at an exercise price of
$18.5625 per share subject to a four-year vesting schedule.
COMPENSATION AND STOCK OPTION COMMITTEE
John W. Stanton, Chairman
Christopher T. Bayley
Walter F. Walker
PERFORMANCE GRAPH
The following graph compares the cumulative total return to Shareholders on
the Common Stock with the cumulative total return of the Nasdaq Computer
Manufacturer Index and the Standard & Poor's 500 Index beginning on October 17,
1996, the first day of trading as a public company following the spin-off from
Interpoint.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE RETURN(1)
AMONG ADVANCED DIGITAL INFORMATION CORPORATION,
NASDAQ COMPUTER MANUFACTURER INDEX AND S&P 500 INDEX
Nasdaq
Standard Computer
ADIC & Poor's Manufactu
Stock 500 Index rer Index
10/17/96 $100 $100 $100
10/31/96 $85 $100 $97
10/31/97 $127 $129 $128
- --------------
(1) Assumes $100 invested in ADIC Common Stock at the close of the first day of
trading on October 17, 1996. Similarly, assumes $100 invested in the
Nasdaq Computer Manufacturer Index and the S&P 500 Index on October 17,
1996. Stock prices shown above for the Common Stock are historical and not
necessarily indicative of future price performance.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires ADIC officers and directors, and persons who own more
than 10% of a registered class of ADIC's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than 10% Shareholders are required
by SEC regulation to furnish ADIC with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 4 or 5 were
required for those persons, ADIC believes that during fiscal 1997 all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, other than a late filing relating to one
sale transaction by Walter P. Kistler, a director, a late filing relating to one
sale transaction by Christopher T. Bayley, a director, and one sale transaction
by Michel R. Grosbost, an executive officer, for which a late filing will be
made in fiscal 1998.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of January 9, 1998, with
respect to the beneficial ownership of shares of Common Stock by (a) each
person who is known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock, (b) each director of ADIC, (c) each of
ADIC's executive officers for whom compensation is reported in this Proxy
Statement, and (d) all directors and executive officers of ADIC as a group.
Except as noted, ADIC believes that the beneficial owners listed below, based
on information furnished by such owners, have sole voting and investment
power with respect to such shares.
SHARES BENEFICIALLY OWNED
--------------------------
NAME NUMBER PERCENT
---- ------- -------
Fidelity Management & Research . . . . . . 1,019,000 10.5%
One Federal Street
Boston, MA 02109
John W. Stanton. . . . . . . . . . . . . . 332,464(1) 3.4%
Peter H. van Oppen . . . . . . . . . . . . 154,974(2) 1.6%
Walter P. Kistler. . . . . . . . . . . . . 146,150(1)(3) 1.5%
Nathan H. Searle . . . . . . . . . . . . . 63,150(4) *
Christopher T. Bayley. . . . . . . . . . . 47,000(5) *
Charles H. Stonecipher . . . . . . . . . . 44,250(6) *
Michel R. Grosbost . . . . . . . . . . . . 14,375(7) *
Barry W. Brugman . . . . . . . . . . . . . 27,450(8) *
Walter F. Walker . . . . . . . . . . . . . 20,000(9) *
William C. Britts. . . . . . . . . . . . . 13,250(10) *
Russell F. McNeill . . . . . . . . . . . . 9,800(11) *
All directors and executive officers
as a group (13 persons). . . . . . . . . . 879,488(12) 9.1%
15
- ---------------
* Represents holdings of less than 1%.
(1) Includes 14,000 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(2) Does not include 5,300 shares that are held in trust for Mr. van Oppen's
minor children or 3,000 shares that are held in a trust (of which Mr. van
Oppen serves as trustee) for the benefit of certain minor relatives of
Mr. van Oppen, as to which he disclaims beneficial ownership. Includes
50,000 shares subject to issuance upon exercise of ADIC options that are
exercisable within 60 days.
(3) Includes 81,500 shares owned by Foundation for the Future, of which Mr.
Kistler is a trustee.
(4) Includes 37,150 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(5) Includes 1,000 shares owned by Mr. Bayley's spouse. Includes 3,000 shares
subject to issuance upon exercise of ADIC options that are exercisable
within 60 days.
(6) Includes 42,250 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(7) Includes 14,375 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(8) Includes 20,850 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(9) Includes 7,500 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(10) Includes 13,250 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(11) Includes 9,800 shares subject to issuance upon exercise of ADIC options
that are exercisable within 60 days.
(12) Includes 226,800 shares subject to issuance upon exercise of ADIC options
that are exerciseable within 60 days, 81,500 shares owned by Foundation for
the Future, of which Mr. Kistler is a trustee, and 1,000 shares owned by
Mr. Bayley's spouse. Does not include 5,300 shares that are held in trust
for Mr. van Oppen's minor children or 3,000 shares that are held in a trust
(of which Mr. van Oppen serves as trustee) for the benefit of certain minor
relatives of Mr. van Oppen, as to which he disclaims beneficial ownership.
CERTAIN TRANSACTIONS
The Company leases its facility located in Redmond, Washington, from K-M
Properties, a general partnership of which Walter P. Kistler, a director, is a
partner. Rent payments for fiscal 1997 were $440,933.
The Company reimburses Michel R. Grosbost, President and General Manager,
ADIC Europe, for use of office space and equipment located in his residence in
connection with the Company's sales operations in Europe. Rent payments for use
of this office space and equipment in fiscal 1997 were $24,000.
INDEPENDENT AUDITORS
Price Waterhouse LLP was ADIC's independent auditor in fiscal 1997. A
representative of Price Waterhouse LLP will be present at the Annual Meeting to
respond to appropriate questions and will have the opportunity to make a
statement, if desired.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals for Shareholder action that eligible Shareholders wish to have
included in the Company's Annual Meeting of Shareholders to be held in February
1999 must be received by the Company at its principal executive offices on or
before September 25, 1998.
16
OTHER MATTERS
The Company's Board of Directors knows of no other matters that may come
before the Annual Meeting. If any other matters should properly come before the
Annual Meeting or any adjournment or postponement, the persons named in the
Proxy intend to vote the Proxy in accordance with their best judgment.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Shareholders for the 1997 fiscal
year which also includes the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1997 (including financial statements), accompanies this
Proxy Statement.
17
APPENDIX A
ADVANCED DIGITAL INFORMATION CORPORATION
AMENDED 1997 STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purposes of the Advanced Digital Information Corporation Amended 1997
Stock Purchase Plan (the "Plan") are to (a) assist team members of Advanced
Digital Information Corporation, a Washington corporation (the "Company"), and
its subsidiary corporations in acquiring a stock ownership interest in the
Company pursuant to a plan that is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), and (b) help team members provide for their future
security and encourage them to remain in the employ of the Company and its
subsidiary corporations. Stock purchased under the Plan may be paid for by
regular payroll deductions. Only employees of the Company and its designated
subsidiary corporations are eligible to participate in the Plan, and
participation is voluntary.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Company's Compensation and Stock Option Committee or
another committee appointed by the Board and given authority by the Board to
administer the Plan.
"Company" means Advanced Digital Information Corporation, a Washington
corporation.
"Designated Subsidiary" has the meaning set forth under the definition of
"Eligible Team Member" in this Section 2.
"Eligible Compensation" means all regular cash compensation, including
overtime, cash bonuses and commissions. Regular cash compensation does not
include severance pay, hiring and relocation bonuses, pay in lieu of vacation or
sick leave, or any other special payments, or any gain from stock option
exercises.
"Eligible Team Member" means any employee (a "Team Member") of the Company,
or any Subsidiary Corporation designated by the Board or the Committee (a
"Designated Subsidiary"), who is in the employ of the Company (or any Designated
Subsidiary) on one or more Offering Dates and who meets the following criteria:
(a) the Team Member does not, immediately after the Option is granted, own
stock (as defined by the Code) possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of its parent or
subsidiary corporations;
(b) the Team Member has been employed for at least one month;
(c) the Team Member's customary employment is for more than 20 hours per
week; and
(d) the Team Member's customary employment is for more than five months in
any calendar year.
A-1
If the Company permits any employee of a Designated Subsidiary to
participate in the Plan, then all employees of that Designated Subsidiary who
meet the requirements of this paragraph shall also be considered Eligible Team
Members.
"Enrollment Period" has the meaning set forth in Section 6.1.
"SPP Broker" has the meaning set forth in Section 10.
"Offering" has the meaning set forth in Section 5.1.
"Offering Date" means the first day of an Offering.
"Offering Period" has the meaning set forth in Section 5.1.
"Option" means an option granted under the Plan to an Eligible Employee to
purchase shares of Stock.
"Parent Corporation" means any corporation, other than the Company, in an
unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations, other than the Company, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"Participant" means any Eligible Team Member who has elected to participate
in an Offering in accordance with the procedures set forth in Section 6.1 and
who has not withdrawn from the Plan or whose participation in the Plan is not
terminated.
"Plan" means the Advanced Digital Information Corporation Amended 1997
Stock Purchase Plan.
"Plan Administrator" has the meaning set forth in Section 3.1.
"Purchase Date" means the last day of each Purchase Period.
"Purchase Period" has the meaning set forth in Section 5.2.
"Purchase Price" has the meaning set forth in Section 8.
"Stock" means the Common Stock, no par value, of the Company.
"Subscription" has the meaning set forth in Section 6.1.
"Subsidiary Corporation" means any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or the Committee or, if and to
the extent the Board or the Committee designates an executive officer of the
Company to administer the Plan, by such executive officer.
A-2
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Subject to the provisions of the Plan, the Plan Administrator shall have
the authority, in its sole discretion, to determine all matters relating to
Options granted under the Plan, including all terms, conditions, restrictions
and limitations of Options; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and privileges within
the meaning of Code Section 423. The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, unless revised by the Board or the
Committee, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's other officers or employees as the Plan Administrator so determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in Section 19, a
maximum of 500,000 shares of Stock may be sold under the Plan. Shares sold
under the Plan shall be drawn from authorized and unissued shares or shall be
shares acquired by the Company. Any shares of Stock subject to an Option that
cease to be subject to the Option (other than by reason of exercise of the
Option), including, without limitation, in connection with the cancellation or
termination of the Option, shall again be available for sale in connection with
future grants of Options under the Plan.
SECTION 5. OFFERING DATES
5.1 OFFERING PERIODS
The Plan shall be implemented by a series of offerings (each, an
"Offering"). Except as otherwise set forth below, Offerings shall commence on
March 1 and September 1 of each year and end on the next August 31 and
February 28 (or February 29 when applicable), respectively, occurring
thereafter. Notwithstanding the foregoing, the Board or the Committee may
establish (a) a different term for one or more future Offerings and
(b) different commencing and ending dates for such Offerings; provided, however,
that an offering period (the "Offering Period") may not exceed five years; and
provided, further, that if the Purchase Price may be less than 85% of the fair
market value of the Stock on the Purchase Date, the Offering Period may not
exceed 27 months. In the event the first or the last day of an Offering Period
is not a regular business day, then the first day of the Offering Period shall
be deemed to be the next regular business day and the last day of the Offering
Period shall be deemed to be the last preceding regular business day. A Team
Member who becomes eligible to participate in the Plan after an Offering Period
has commenced shall not be eligible to participate in such Offering but may
participate in any subsequent Offering, provided that such Team Member is still
an Eligible Team Member as of the commencement of any such subsequent Offering.
Eligible Team Members may not participate in more than one Offering at a time.
5.2 PURCHASE PERIODS
Each Offering Period shall consist of one or more consecutive purchase
periods (each, a "Purchase Period"). Except as otherwise set forth below,
Purchase Periods shall commence on March 1 and September 1 of each year and end
on the next February 28 (or February 29 when applicable) and August 31,
respectively, occurring thereafter. Notwithstanding the foregoing, the Board or
the Committee may establish for any future Offering (a) different terms for one
or more Purchase Periods within the Offering Period and (b) different commencing
dates and Purchase Dates for any such Purchase Periods. The last day of each
Purchase Period shall be the Purchase Date for such Purchase Period. In the
event the first or last day of a Purchase Period is not a regular business day,
then the first day of the Purchase Period shall be deemed to be the next regular
business day and the last day of the Purchase Period shall be deemed to be the
last preceding regular business day.
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SECTION 6. PARTICIPATION IN THE PLAN
6.1 INITIAL PARTICIPATION
An Eligible Team Member shall become a Participant on the first Offering
Date after satisfying the eligibility requirements and delivering to the Plan
Administrator during the enrollment period established by the Plan Administrator
(the "Enrollment Period") a subscription (the "Subscription"):
(a) indicating the Eligible Team Member's election to participate in the
Plan;
(b) authorizing payroll deductions and stating the amount to be deducted
regularly from the Participant's pay; and
(c) authorizing the purchase of Stock for the Participant in each Purchase
Period.
An Eligible Team Member who does not deliver a Subscription to the Plan
Administrator during the Enrollment Period shall not participate in the Plan for
that Offering Period or any subsequent Offering Period unless such Eligible Team
Member subsequently enrolls in the Plan by delivering a Subscription to the Plan
Administrator during the Enrollment Period for such subsequent Offering Period.
The Plan Administrator may, from time to time, change the Enrollment Period for
any future Offering as deemed advisable by the Plan Administrator in its, his or
her sole discretion for the proper administration of the Plan.
6.2 CONTINUED PARTICIPATION
Unless the Plan Administrator determines otherwise for any future Offering,
a Participant shall automatically participate in the next Offering Period until
such time as the Participant withdraws from the Plan pursuant to Section 11.1 or
terminates employment as provided in Section 12.
SECTION 7. LIMITATIONS ON RIGHT TO PURCHASE SHARES
7.1 $25,000 LIMITATION
No Participant shall be entitled to purchase Stock under the Plan (or any
other employee stock purchase plan that is intended to meet the requirements of
Code Section 423 sponsored by the Company, any Parent Corporation or any
Subsidiary Corporation) at a rate that exceeds $25,000 in fair market value,
determined as of the Offering Date for each Offering Period (or such other limit
as may be imposed by the Code), for each calendar year in which a Participant
participates in the Plan (or any other employee stock purchase plan described in
this Section 7.1).
7.2 PRO RATA ALLOCATION
In the event the number of shares of Stock that might be purchased by all
Participants in the Plan exceeds the number of shares of Stock available in the
Plan, the Plan Administrator shall make a pro rata allocation of the remaining
shares of Stock in as uniform a manner as shall be practicable and as the Plan
Administrator shall determine to be equitable. Fractional shares may be issued
under the Plan unless the Board or the Committee determines otherwise.
SECTION 8. PURCHASE PRICE
The purchase price (the "Purchase Price") at which Stock may be acquired in
an Offering pursuant to the exercise of all or any portion of an Option granted
under the Plan shall be 85% of the lesser of (a) the fair market value of the
Stock on the Offering Date of such Offering and (b) the fair market value of the
Stock on the Purchase Date. Notwithstanding the foregoing, the Board or the
Committee may establish a different Purchase Price for any future Offering,
which shall not be less than 85% of the lesser of (a) the fair market value of
the Stock on the Offering Date of such Offering and (b) the fair market value of
the Stock on the
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Purchase Date. The fair market value of the Stock on the Offering Date or on
the Purchase Date shall be the average of the high and low per share trading
prices for the Stock as reported for such day by the Nasdaq National Market. If
no sales of the Stock were made on the Nasdaq National Market on the transaction
date, fair market value shall mean the average of the high and low per share
trading prices for the Stock as reported for the next preceding day on which
sales of the Stock were made on the Nasdaq National Market.
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 GENERAL RULES
Stock that is acquired pursuant to the exercise of all or any portion of an
Option may be paid for only by means of payroll deductions from the
Participant's Eligible Compensation. Except as set forth in this Section 9, the
amount of compensation to be withheld from a Participant's Eligible Compensation
during each pay period shall be determined by the Participant's Subscription.
9.2 CHANGE NOTICES
Unless otherwise determined by the Plan Administrator for any future
Offering, a Participant may not elect during an Offering Period to increase or
decrease the amount withheld from his or her compensation in future pay periods.
9.3 PERCENT WITHHELD
The amount of payroll withholding with respect to the Plan for any
Participant during any pay period shall be at least $10, but shall not exceed
10% of the Participant's Eligible Compensation for such pay period. Amounts
shall be withheld only in whole percentages or increments of $10.
9.4 PAYROLL DEDUCTIONS
Payroll deductions shall commence on the first payday following the
Offering Date and shall continue through the last payday of the Offering Period
unless sooner altered or terminated as provided in the Plan.
9.5 MEMORANDUM ACCOUNTS
Individual accounts shall be maintained for each Participant for memorandum
purposes only. All payroll deductions from a Participant's compensation shall
be credited to such account but shall be deposited with the general funds of the
Company. All payroll deductions received or held by the Company may be used by
the Company for any corporate purpose.
9.6 NO INTEREST
No interest shall be paid on payroll deductions received or held by the
Company.
9.7 ACQUISITION OF STOCK
On each Purchase Date of an Offering Period, each Participant shall
automatically acquire, pursuant to the exercise of the Participant's Option, the
number of shares of Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase Period by the
Purchase Price; provided, however, that the number of shares of Stock purchased
by the Participant shall not exceed the number of whole shares of Stock so
determined, if the Board or the Committee has determined for any future Offering
that fractional shares may not be issued under the Plan.
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9.8 CARRYOVER OF ACCOUNT
Any cash balance remaining in the Participant's account at the termination
of each Offering shall be refunded to the Participant as soon as practical after
the Purchase Date without the payment of any interest; provided, however, that
if the Participant reenrolls in the next Offering, any cash balance remaining in
the Participant's account shall be applied to the purchase of Stock in the new
Offering.
9.9 WITHHOLDING OBLIGATIONS
At the time the Option is exercised, in whole or in part, or at the time
some or all of the Stock is disposed of, the Participant shall make adequate
provision for federal and state withholding obligations of the Company, if any,
that arise upon exercise of the Option or upon disposition of the Stock. The
Company may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary to meet such withholding obligations.
9.10 TERMINATION OF PARTICIPATION
No Stock shall be purchased on behalf of a Participant on a Purchase Date
if his or her participation in the Plan has terminated prior to such Purchase
Date.
9.11 PROCEDURAL MATTERS
The Plan Administrator may, from time to time, establish (a) limitations on
the frequency and/or number of any permitted changes in the amount withheld
during an Offering, (b) an exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, (c) payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, and
(d) such other limitations or procedures as deemed advisable by the Plan
Administrator, in its sole discretion, that are consistent with the Plan and in
accordance with the requirements of Code Section 423.
9.12 LEAVES OF ABSENCE
During leaves of absence approved by the Company and meeting the
requirements of the applicable Treasury Regulations promulgated under the Code,
a Participant may continue participation in the Plan by delivering cash payments
to the Plan Administrator on the Participant's normal paydays equal to the
amount of his or her payroll deduction under the Plan had the Participant not
taken a leave of absence.
SECTION 10. STOCK PURCHASED UNDER THE PLAN
10.1 SPP BROKER
If the Plan Administrator designates or approves a stock brokerage or other
financial services firm (the "SPP Broker") to hold shares purchased under the
Plan for the accounts of Participants, the following procedures shall apply.
Promptly following each Purchase Date, the number of shares of Stock purchased
by each Participant shall be deposited into an account established in the
Participant's name with the SPP Broker. A Participant shall be free to
undertake a disposition of the shares of Stock in his or her account at any
time, but, in the absence of such a disposition, the shares of Stock must remain
in the Participant's account at the SPP Broker until the holding period set
forth in Code Section 423 has been satisfied. With respect to shares of Stock
for which the Code Section 423 holding periods have been satisfied, the
Participant may move those shares of Stock to another brokerage account of the
Participant's choosing or request that a stock certificate be issued and
delivered to him or her. A Participant who is not subject to payment of U.S.
income taxes may move his or her shares of Stock to another brokerage account of
his or her choosing or request that a stock certificate be delivered to him or
her at any time, without regard to the Code Section 423 holding period.
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10.2 NOTICE OF DISPOSITION
By entering the Plan, each Participant agrees to promptly give the Company
notice of any Stock disposed of within the later of one year from the Purchase
Date and two years from the Offering Date for such Stock, showing the number of
such shares disposed of and the Purchase Date and Offering Date for such Stock.
This notice shall not be required if and so long as the Company has a designated
SPP Broker.
SECTION 11. VOLUNTARY WITHDRAWAL
11.1 WITHDRAWAL FROM THE PLAN
A Participant may withdraw from the Plan by delivering to the Plan
Administrator a notice of withdrawal in the form required by the Plan
Administrator for such purpose. Any withdrawal from an Offering shall
constitute a withdrawal from the Plan unless the Board or the Committee
determines for any future Offerings that withdrawal from an Offering shall not
result in a withdrawal from the Plan and any succeeding Offering. Such notice
must be delivered at least ten days prior to the end of the Purchase Period for
which such withdrawal is to be effective or by any other date specified by the
Plan Administrator for any future Offering. If a Participant withdraws after
the Purchase Date for a Purchase Period of an Offering, the withdrawal shall not
affect Stock acquired by the Participant in that Purchase Period and any earlier
Purchase Periods. In the event a Participant voluntarily elects to withdraw
from the Plan, the withdrawing Participant may not resume participation in the
Plan during the same Offering Period but may participate in any subsequent
Offering under the Plan by again satisfying the definition of a Participant.
11.2 RETURN OF PAYROLL DEDUCTIONS
Upon withdrawal from the Plan pursuant to Section 11.1, the withdrawing
Participant's accumulated payroll deductions that have not been applied to the
purchase of Stock shall be returned as soon as practical after the withdrawal,
without the payment of any interest, to the Participant, and the Participant's
interest in the Offering shall terminate. Such accumulated payroll deductions
may not be applied to any other Offering and the Plan under the Plan.
SECTION 12. TERMINATION OF EMPLOYMENT
Termination of a Participant's employment with the Company for any reason,
including retirement, disability or death, or the failure of a Participant to
remain an Eligible Team Member, shall immediately terminate the Participant's
participation in the Plan. The payroll deductions credited to the Participant's
account since the last Purchase Date shall, as soon as practical, be returned to
the Participant or, in the case of a Participant's death, to the Participant's
legal representative, and all the Participant's rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a Participant
pursuant to this Section 12.
SECTION 13. RESTRICTIONS UPON ASSIGNMENT
An Option granted under the Plan shall not be transferable otherwise than
by will or by the applicable laws of descent and distribution and shall be
exercisable during the Participant's lifetime only by the Participant. The Plan
Administrator will not recognize, and shall be under no duty to recognize, any
assignment or purported assignment by a Participant, other than by will or by
the applicable laws of descent and distribution, of the Participant's interest
in the Plan, of his or her Option, or of any rights under his or her Option.
SECTION 14. NO RIGHTS OF SHAREHOLDER UNTIL SHARES ISSUED
With respect to shares of Stock subject to an Option, a Participant shall
not be deemed to be a shareholder of the Company, and he or she shall not have
any of the rights or privileges of a shareholder. A
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Participant shall have the rights and privileges of a shareholder of the Company
when, but not until, the shares have been issued following exercise of the
Participant's Option.
SECTION 15. AMENDMENT OF THE PLAN
The Board or the Committee may amend the Plan in such respects as it shall
deem advisable; provided, however, that, to the extent required for compliance
with Code Section 423 or any applicable law or regulation, shareholder approval
will be required for any amendment that will (a) increase the total number of
shares as to which Options may be granted under the Plan, (b) modify the class
of employees eligible to receive Options, or (c) otherwise require shareholder
approval under any applicable law or regulation.
SECTION 16. TERMINATION OF THE PLAN
The Board may suspend or terminate the Plan at any time. Unless the Plan
shall theretofore have been terminated by the Board, the Plan shall terminate
on, and no Options shall be granted after, August 20, 2007, except that such
termination shall have no effect on Options granted prior thereto. No Options
shall be granted during any period of suspension of the Plan.
SECTION 17. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including any
Eligible Team Member or Participant) the right to remain in the employ of the
Company or a Subsidiary Corporation or to affect the right of the Company and
the Subsidiary Corporations to terminate the employment of any person (including
any Eligible Team Member or Participant) at any time with or without cause.
SECTION 18. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary Corporation.
Nothing in the Plan shall be construed to limit the right of the Company or any
Subsidiary Corporation to (a) establish any other forms of incentives or
compensation for employees of the Company or any Subsidiary Corporation or
(b) grant or assume options otherwise than under the Plan in connection with any
proper corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
SECTION 19. ADJUSTMENTS
19.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Stock, then (subject to any required action by the
Company's shareholders), the Board or the Committee, in its sole discretion,
shall make such equitable adjustments as it shall deem appropriate in the
circumstances in (i) the maximum number and kind of securities subject to the
Plan as set forth in Section 4 and (ii) the number and kind of securities that
are subject to any outstanding Option and the per share price of such
securities. The determination by the Board or the Committee as to the terms of
any of the foregoing adjustments shall be conclusive and binding.
19.2 MERGER, ACQUISITION OR LIQUIDATION OF THE COMPANY
In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets, or the liquidation or dissolution of
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the Company, the Purchase Date with respect to outstanding Options shall be the
business day immediately preceding the effective date of such merger,
consolidation, acquisition, liquidation or dissolution unless the Board or the
Committee shall, in its sole discretion, provide for the assumption or
substitution of such Options in a manner complying with Code Section 424(a).
19.3 LIMITATIONS
The grant of Options will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 20. REGISTRATION
The Company shall be under no obligation to any Participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any shares of Stock. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
SECTION 21. EFFECTIVE DATE
The Plan's effective date is the date on which it is approved by the
Company's shareholders.
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APPENDIX B
ADVANCED DIGITAL INFORMATION CORPORATION
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Advanced Digital Information Corporation 1996 Stock
Option Plan (the "Plan") is to enhance the long-term shareholder value of
Advanced Digital Information Corporation, a Washington corporation (the
"Company"), by offering opportunities to employees, directors, officers,
consultants, agents, advisors and independent contractors of the Company and its
Subsidiaries (as defined in Section 2) to participate in the Company's growth
and success, and to encourage them to remain in the service of the Company and
its Subsidiaries and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 AWARD
"Award" means an award or grant made to a Participant pursuant to the
Plan, including awards or grants of Incentive Stock Options and Nonqualified
Stock Options or any combination thereof.
2.2 BOARD
"Board" means the Board of Directors of the Company.
2.3 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 COMMON STOCK
"Common Stock" means the common stock, no par value, of the Company.
2.6 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the Company in
which the Company is not the continuing or surviving corporation, or pursuant to
which shares of the Common Stock are converted into cash, securities or other
property, if following such merger or consolidation the holders of the Company's
outstanding voting securities immediately prior to such merger or consolidation
own less than 66-2/3% of the outstanding voting securities of the surviving
corporation;
(b) Consummation of any sale, lease, exchange or other transfer in
one transaction or a series of related transactions of all or substantially all
of the Company's assets other than a transfer of the Company's assets to a
majority-owned subsidiary corporation (as the term "subsidiary corporation" is
defined in Section 8.3) of the Company;
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(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company; or
(d) Acquisition by a person, within the meaning of Section 3(a)(9) or
of Section 13(d)(3) (as in effect on the date of adoption of the Plan) of the
Exchange Act of a majority or more of the Company's outstanding voting
securities (whether directly or indirectly, beneficially or of record).
Ownership of voting securities shall take into account and shall include
ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect on the
date of adoption of the Plan) pursuant to the Exchange Act.
2.7 DISABILITY
"Disability" means "disability" as that term is defined for purposes of
Section 22(e)(3) of the Code.
2.8 ELIGIBLE DIRECTOR
"Eligible Director" means a member of the Board who is not also an
employee of the Company or any "parent corporation" or "subsidiary corporation"
(as those terms are defined in Section 8.3) of the Company.
2.9 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.10 FAIR MARKET VALUE
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and the low selling price for the Common Stock
as reported by the Nasdaq National Market for a single trading day or (b) if the
Common Stock is listed on the New York Stock Exchange or the American Stock
Exchange, the closing selling price for the Common Stock as such price is
officially quoted in the composite tape of transactions on such exchange for a
single trading day. If there is no such reported price for the Common Stock for
the date in question, then such price on the last preceding date for which such
price exists shall be determinative of Fair Market Value.
2.11 GOOD REASON
"Good Reason" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or
condition within 30 days after receipt of written notice by the Holder:
(a) a change in the Holder's status, title, position or
responsibilities (including reporting responsibilities) that, in the Holder's
reasonable judgment, represents a substantial reduction in the status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to the Holder of any duties or responsibilities that, in the Holder's
reasonable judgment, are materially inconsistent with such status, title,
position or responsibilities; or any removal of the Holder from or failure to
reappoint or reelect the Holder to any of such positions, except in connection
with the termination of the Holder's employment for Cause, for Disability or as
a result of his or her death, or by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Successor Corporation's requiring the Holder (without the
Holder's consent) to be based at any place outside a 35-mile radius of his or
her place of employment prior to a Corporate Transaction, except for reasonably
required travel on the Successor Corporation's business that is not materially
greater than such travel requirements prior to the Corporate Transaction;
(d) the Successor Corporation's failure to (i) continue in effect any
material compensation or benefit plan (or the substantial equivalent thereof) in
which the Holder was participating at the time of a Corporate Transaction,
including, but not limited to, the Plan, or (ii) provide the Holder with
compensation and benefits substantially equivalent (in terms of benefit levels
and/or reward opportunities) to
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those provided for under each material employee benefit plan, program and
practice as in effect immediately prior to the Corporate Transaction;
(e) any material breach by the Successor Corporation of its
obligations to the Holder under the Plan or any substantially equivalent plan of
the Successor Corporation; or
(f) any purported termination of the Holder's employment or service
for Cause by the Successor Corporation that does not comply with the terms of
the Plan or any substantially equivalent plan of the Successor Corporation.
2.12 GRANT DATE
"Grant Date" means the date the Plan Administrator adopted the granting
resolution or a later date designated in a resolution of the Plan Administrator
as the date an Award is to be granted, or the date an Option is automatically
granted pursuant to Section 9.
2.13 HOLDER
"Holder" means the Participant to whom an Award is granted or, for a
Holder who has died, the personal representative of the Holder's estate, the
person(s) to whom the Holder's rights under the Award have passed by will or by
the applicable laws of descent and distribution or the beneficiary designated
pursuant to Section 10.
2.14 INCENTIVE STOCK OPTION
"Incentive Stock Option" means an Option to purchase Common Stock granted
under Section 7 with the intention that it qualify as an "incentive stock
option" as that term is defined in Section 422 of the Code.
2.15 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
2.16 OPTION
"Option" means the right to purchase Common Stock granted under
Section 7.
2.17 PARTICIPANT
"Participant" means an individual who is a Holder of an Award or, as the
context may require, any employee, director, officer, consultant, agent, advisor
or independent contractor of the Company or a Subsidiary who has been designated
by the Plan Administrator as eligible to participate in the Plan.
2.18 PLAN ADMINISTRATOR
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.19 SECURITIES ACT
"Securities Act" means the Securities Act of 1933, as amended.
2.20 SUBSIDIARY
"Subsidiary," except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company or in which the Company has a significant ownership
interest, as determined by the Plan Administrator, and any entity that may
become a direct or indirect parent of the Company.
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2.21 SUCCESSOR CORPORATION
"Successor Corporation" has the meaning set forth under Section 12.2.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or committees
(which term includes subcommittees) appointed by, and consisting of two or more
members of, the Board. If and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in
selecting the Plan Administrator and the membership of any committee acting as
Plan Administrator of the Plan with respect to any persons subject or likely to
become subject to Section 16 under the Exchange Act the provisions regarding
(a) "outside directors" as contemplated by Section 162(m) of the Code and
(b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act. The Board may delegate the responsibility for administering the Plan with
respect to designated classes of eligible Participants to different committees,
subject to such limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to removal by the
Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan, the
Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 12.1, a
maximum of 1,025,000 shares of Common Stock shall be available for issuance
under the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares.
4.2 LIMITATIONS
Subject to adjustment from time to time as provided in Section 12.1, not
more than 100,000 shares of Common Stock may be made subject to Awards under the
Plan to any individual Participant in the aggregate in any one fiscal year of
the Company, such limitation to be applied in a manner consistent with the
requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under
Section 162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for in shares), shall again be available
for issuance in connection with future grants of Awards under the Plan;
provided, however, that any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.
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SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and key
employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects; provided, however, that Eligible Directors shall be
eligible to receive Awards only under Section 9. Awards may also be made to
consultants, agents, advisors and independent contractors who provide services
to the Company and its Subsidiaries.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be made under the Plan. Such Awards
may consist of Incentive Stock Options and/or Nonqualified Stock Options.
Awards may be granted singly or in combination.
6.2 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
Awards shall be deemed to be Participants and Holders.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan Administrator
or, if not so established, shall be five years from the Grant Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not so established in the instrument
evidencing the Option, the Option will become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator at
any time:
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Period of Holder's Continuous Employment or
Service With the Company or Its Subsidiaries Percent of Total Option
From the Option Grant Date That Is Exercisable
-------------------------- -------------------
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
To the extent that the right to purchase shares has accrued thereunder, an
Option may be exercised from time to time by written notice to the Company, in
accordance with procedures established by the Plan Administrator, setting forth
the number of shares with respect to which the Option is being exercised and
accompanied by payment in full as described in Section 7.5. The Plan
Administrator may determine at any time that an Option may not be exercised as
to less than 100 shares at any one time (or the lesser number of remaining
shares covered by the Option).
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or check, or, unless the Plan Administrator at any time
determines otherwise, a combination of cash and/or check and one or both of the
following alternative forms: (a) tendering (either actually or, if and so long
as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, by attestation) Common Stock already owned by the Holder for at least six
months (or any shorter period necessary to avoid a charge to the Company's
earnings for financial reporting purposes) having a Fair Market Value on the day
prior to the exercise date equal to the aggregate Option exercise price; or
(b) if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, delivery of a properly executed exercise notice,
together with irrevocable instructions, to (i) a brokerage firm designated by
the Company to deliver promptly to the Company the aggregate amount of sale or
loan proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise and (ii) the Company
to deliver the certificates for such purchased shares directly to such brokerage
firm, all in accordance with the regulations of the Federal Reserve Board. In
addition, the exercise price for shares purchased under an Option may be paid
either singly or in combination with one or more of the alternative forms of
payment authorized by this Section 7.5, by (y) a promissory note delivered
pursuant to Section 10 or (z) such other consideration as the Plan Administrator
may permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.
In case of termination of the Holder's employment or services other than
by reason of death or Cause, the Option shall be exercisable, to the extent of
the number of shares purchasable by the Holder at the date of such termination,
only within three months after the date the Holder ceases to be an employee,
director, officer, consultant, agent, advisor or independent contractor of the
Company or a Subsidiary if termination of the Holder's employment or services is
for any reason other than Disability and only within one year after the date of
such termination by reason of Disability, but in no event later than the
remaining term of the Option. Any Option exercisable at the time of the
Holder's death may be exercised, at any time or from time to time within one
year after the date of death, but in no event later than the remaining term of
the Option, to the extent of the number of shares purchasable by the Holder at
the date of the Holder's death, by the personal
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representative of the Holder's estate, the person(s) to whom the Holder's rights
under the Award have passed by will or the applicable laws of descent and
distribution or the beneficiary designated pursuant to Section 11. Any portion
of an Option that is not exercisable on the date of termination of the Holder's
employment or services shall terminate on such date, unless the Plan
Administrator determines otherwise. In case of termination of the Holder's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Holder of such termination, unless the Plan
Administrator determines otherwise. If a Holder's employment or services with
the Company are suspended pending an investigation of whether the Holder shall
be terminated for Cause, all the Holder's rights under any Option likewise shall
be suspended during the period of investigation.
A transfer of employment or services between or among the Company and its
Subsidiaries shall not be considered a termination of employment or services.
The effect of a Company-approved leave of absence on the terms and conditions of
an option shall be determined by the Plan Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock Options
shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the Grant
Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the
event the Participant holds two or more such Options that become exercisable for
the first time in the same calendar year, such limitation shall be applied on
the basis of the order in which such Options are granted.
8.2 10% SHAREHOLDERS
If a Participant owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
To qualify for Incentive Stock Option tax treatment, an Option designated
as an Incentive Stock Option must be exercised within three months after
termination of employment for reasons other than death, except that, in the case
of termination of employment due to total disability, such Option must be
exercised within one year after such termination. Employment shall not be
deemed to continue beyond the first 90 days of a leave of absence unless the
Participant's reemployment rights are guaranteed by statute or contract. For
purposes of this Section 8.5, "total disability" shall mean a mental or physical
impairment of the Participant which is expected to result in death or which has
lasted or is expected to last for a continuous period of 12 months or more and
which causes the Participant to be unable, in the opinion of the Company and two
independent physicians, to perform his or her duties for the Company and to be
engaged in any substantial
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gainful activity. Total disability shall be deemed to have occurred on the
first day after the Company and the two independent physicians have furnished
their opinion of total disability to the Plan Administrator.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date of the Incentive Stock Option and one year from the date of exercise.
A Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Plan Administrator may require a
Participant to give the Company prompt notice of any disposition of shares
acquired by the exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 10 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
SECTION 9. AWARDS OF OPTIONS TO NONEMPLOYEE DIRECTORS
Notwithstanding any other provision of the Plan to the contrary, grants to
Eligible Directors shall be made only pursuant to the terms and conditions set
forth below.
9.1 ANNUAL GRANTS
Commencing with the Company's 1997 Annual Meeting of Shareholders, each
Eligible Director shall automatically receive a grant of an Option to purchase
2,000 shares of Common Stock immediately following each year's Annual Meeting of
Shareholders ("Annual Grants"). Annual Grants shall vest and become exercisable
upon the optionee's continued service as a director until the next Annual
Meeting of Shareholders after the Grant Date.
9.2 INITIAL GRANTS
Each Eligible Director shall automatically receive a grant of an Option to
purchase 5,500 shares of Common Stock immediately following his or her initial
election or appointment to the Board ("Initial Grants"). Initial Grants shall
vest and become exercisable as follows: Options for 1,375 shares shall become
exercisable on and after one year after the Grant Date, and Options for an
additional 1,375 shares shall become exercisable on and after each of the three
succeeding anniversaries of the Grant Date.
9.3 NONQUALIFIED STOCK OPTIONS; TERM OF OPTIONS
Options granted to an Eligible Director under the Plan shall constitute
Nonqualified Stock Options. The term of each Option granted under this
Section 9 shall be five years from the Grant Date.
9.4 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option granted under this
Section 9 shall be the Fair Market Value of the Common Stock on the Grant Date.
9.5 POST-TERMINATION EXERCISES
In case of termination of the Holder's services other than by reason of
death or Cause, the Option shall be exercisable, to the extent of the number of
shares purchasable by the Holder at the date of such termination, only within
three months after the date the Holder ceases to be a director of the Company if
such termination is for reasons other than Disability and only within one year
if such termination is by reason of Disability, but in no event later than the
remaining term of the Option. Any Option exercisable at the time of
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the Holder's death may be exercised, to the extent of the number of shares
purchasable by the Holder at the date of the Holder's death, by the personal
representative of the Holder's estate entitled thereto at any time or from time
to time within one year after the date of death, but in no event later than the
remaining term of the Option. In case of termination of the Holder's services
for Cause, the Option shall automatically terminate upon first notification to
the Holder of such termination. If a Holder's services with the Company are
suspended pending an investigation of whether the Holder shall be terminated for
Cause, all the Holder's rights under any Option likewise shall be suspended
during the period of investigation.
9.6 CORPORATE TRANSACTION
In the event of a Corporate Transaction, each Award that is at the time
outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the
opinion of the Company's accountants, it would render unavailable "pooling of
interests" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. All such Awards not exercised prior to that time
shall terminate and cease to remain outstanding immediately following the
consummation of the Corporate Transaction.
9.7 AVAILABILITY OF SHARES
The Options provided for in this Section 9 are subject to the availability
of shares under the Plan. If at the date of any grant under this Section 9
there are insufficient shares of Common Stock available to satisfy the grants in
whole, then the shares available shall be divided by the number of Eligible
Directors then entitled to a grant and each such Eligible Director shall be
granted an Option for that number of shares.
9.8 OTHER TERMS APPLICABLE
Except as otherwise provided in this Section 9, Options granted to
Eligible Directors shall be subject to the terms and conditions of the Plan
applicable to other Participants.
SECTION 10. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES
To assist a Holder (including a Holder who is an officer or director of
the Company) in acquiring shares of Common Stock pursuant to an Award granted
under the Plan, the Plan Administrator, in its sole discretion, may authorize,
either at the Grant Date or at any time before the acquisition of Common Stock
pursuant to the Award, (a) the extension of a loan to the Holder by the Company,
(b) the payment by the Holder of the purchase price, if any, of the Common Stock
in installments, or (c) the guarantee by the Company of a loan obtained by the
Holder from a third party. The terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of repayment, will be subject
to the Plan Administrator's discretion. Loans, installment payments and loan
guarantees may be granted with or without security. The maximum credit
available is the purchase price, if any, of the Common Stock acquired, plus the
maximum federal and state income and employment tax liability that may be
incurred in connection with the acquisition.
SECTION 11. ASSIGNABILITY
No Award granted under the Plan may be pledged, assigned or transferred by
the Holder other than by will or by the laws of descent and distribution, and
during the Holder's lifetime, such Awards may be exercised only by the Holder.
Notwithstanding the foregoing, and to the extent permitted by Section 422 of the
Code, the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Holder of such Awards
to designate a beneficiary who may exercise the Award or receive compensation
under the Award after the Holder's death; provided, however, that any Award so
assigned or transferred shall be subject to all the same terms and conditions
contained in the instrument evidencing the Award.
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SECTION 12. ADJUSTMENTS
12.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
class of securities subject to the Plan as set forth in Section 4.1, (ii) the
number and class of securities that may be made subject to Awards to any
individual Participant as set forth in Sections 4.2, 9.1, 9.2 and 9.3 and
(iii) the number and class of securities subject to any outstanding Award and
the per share price of such securities, without any change in the aggregate
price to be paid therefor. The determination by the Plan Administrator as to
the terms of any of the foregoing adjustments shall be conclusive and binding.
12.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the Award,
in the event of a Corporate Transaction, each Award that is at the time
outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the
opinion of the Company's accountants, it would render unavailable "pooling of
interests" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. Except for Options granted pursuant to
Section 9, such Award shall not so accelerate, if and to the extent (a) such
Award is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof (the "Successor Corporation") or to
be replaced with a comparable award for the purchase of shares of the capital
stock of the Successor Corporation or, (b) such Award is to be replaced with a
cash incentive program of the Successor Corporation that preserves the spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such Award.
The determination of Award comparability under clause (a) above shall be made by
the Plan Administrator, and its determination shall be conclusive and binding.
All such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
such Awards (other than Options granted pursuant to Section 9) are assumed by
the Successor Corporation. Any such Awards that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that time shall be
accelerated in the event the Holder's employment or services should subsequently
terminate within two years following such Corporate Transaction, unless such
employment or services are terminated by the Successor Corporation for Cause or
by the Holder voluntarily without Good Reason. Notwithstanding the foregoing,
no Incentive Stock Option shall become exercisable pursuant to this Section 12.2
without the Holder's consent, if the result would be to cause such Option not to
be treated as an Incentive Stock Option (whether by reason of the annual dollar
limitation described in Section 8.1 or otherwise).
12.3 FURTHER ADJUSTMENT OF AWARDS
Subject to the preceding Section 12.2, the Plan Administrator shall have
the discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Participants, with respect to
Awards (other than Options granted pursuant to Section 9). Such authorized
action may include (but shall not be limited to) establishing, amending or
waiving the type, terms, conditions or duration of, or restrictions on, Awards
so as to provide for earlier, later, extended or additional time for exercise,
alternate forms and amounts of payments and other modifications, and the Plan
Administrator may take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants. The Plan
Administrator may take such actions before or after
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granting Awards to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation, reorganization,
liquidation or change in control that is the reason for such action.
12.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 13. WITHHOLDING
The Company may require the Holder to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant or exercise of any Award. In such instances, subject to the Plan and
applicable law and unless the Plan Administrator determines otherwise, the
Holder may satisfy withholding obligations, in whole or in part, by paying cash,
by electing to have the Company withhold shares of Common Stock or by
transferring shares of Common Stock to the Company, in such amounts as are
equivalent to the Fair Market Value of the withholding obligation. The Company
shall have the right to withhold from any shares of Common Stock issuable
pursuant to an Award or from any cash amounts otherwise due or to become due
from the Company to the Participant an amount equal to such taxes. The Company
may also deduct from any Award any other amounts due from the Participant to the
Company or a Subsidiary.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
14.1 AMENDMENT OF PLAN
The Plan may be amended by the shareholders of the Company. The Board may
also amend the Plan in such respects as it shall deem advisable; however, to the
extent required for compliance with Section 422 of the Code or any applicable
law or regulation, shareholder approval will be required for any amendment that
will (a) increase the aggregate number of shares as to which Awards may be
granted, (b) modify the class of employees eligible to receive Awards, or
(c) otherwise require shareholder approval under any applicable law or
regulation.
14.2 TERMINATION OF PLAN
The Company's shareholders or the Board may suspend or terminate the Plan
at any time. The Plan will have no fixed expiration date; provided, however,
that no Incentive Stock Options may be granted more than 10 years after the
earlier of the Plan's adoption by the Board or approval by the shareholders.
14.3 CONSENT OF HOLDER
The amendment or termination of the Plan shall not, without the consent of
the Holder of any Award under the Plan, impair or diminish any rights or
obligations under any Award theretofore granted under the Plan.
Any change or adjustment to an outstanding Incentive Stock Option shall
not, without the consent of the Holder, be made in a manner so as to constitute
a "modification" that would cause such Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option.
SECTION 15. GENERAL
15.1 AWARD AGREEMENTS
Awards granted under the Plan shall be evidenced by a written agreement
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with the
Plan.
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15.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
None of the Plan, participation in the Plan as a Participant or any action
of the Plan Administrator taken under the Plan shall be construed as giving any
Participant or employee of the Company any right to be retained in the employ of
the Company or limit the Company's right to terminate the employment or services
of the Participant.
15.3 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
15.4 NO RIGHTS AS A SHAREHOLDER
No Award shall entitle the Holder to any dividend, voting or other right
of a shareholder unless and until the date of issuance under the Plan of the
shares that are the subject of such Award, free of all applicable restrictions.
15.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
15.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
15.7 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
SECTION 16. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the Board,
so long as it is approved by the Company's shareholders at any time within 12
months of such adoption.
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PROXY
ADVANCED DIGITAL INFORMATION CORPORATION
10201 WILLOWS ROAD
P.O. BOX 97057
REDMOND, WA 98073-9757
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS FEBRUARY 25, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Peter H. van Oppen and Charles H. Stonecipher, and
either of them, with full powers of substitution, attorneys and proxies to vote
all shares of stock of the undersigned entitled to vote at the Annual Meeting
of Shareholders of Advanced Digital Information Corporation ("ADIC") to be held
at the Hyatt Regency Bellevue at Bellevue Place, 900 Bellevue Way N.E.,
Bellevue, Washington on Wednesday, February 25, 1998 at 10 a.m. and any
adjournment or postponements thereof with all powers the undersigned would
possess if personally present:
IMPORTANT - PLEASE DATE AND SIGN ON THE OTHER SIDE.
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
Please mark your votes as indicated in this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND "FOR"
ITEMS 2 AND 3:
1. ELECTION OF DIRECTORS
NOMINEES: Walter P. Kistler
Walter F. Walker
FOR ALL NOMINEES
(EXCEPT AS INDICATED TO THE
CONTRARY BELOW)
/ /
WITHHOLD AUTHORITY
to vote for
all nominees
/ /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW.)
_____________________________________________________
2. APPROVAL OF AMENDED 1997 STOCK PURCHASE PLAN
FOR AGAINST ABSTAIN
/ / / / / /
3. APPROVAL OF AMENDMENT TO 1996 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN. UNLESS
REVOKED OR OTHERWISE INSTRUCTED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED "FOR ALL NOMINEES" IN ITEM 1, "FOR" ITEMS 2 AND 3 AND WILL BE VOTED IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES UPON ALL OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE BOARD OF DIRECTORS AT PRESENT KNOWS OF NO OTHER MATTERS TO BE BROUGHT
BEFORE THE MEETING.
Signature of Shareholder(s)___________________________ Dated___________, 1998
PLEASE SIGN AS YOUR NAME APPEARS. Trustees, Guardians, Personal and other
Representatives, please indicate full titles.
PLEASE DATE AND MAIL IN ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE