SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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)
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and 0-11.
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previously. Identify the previous filing by registration statement number,
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ADVANCED DIGITAL INFORMATION CORPORATION
P.O. BOX 97057
11431 WILLOWS ROAD N.E.
REDMOND, WASHINGTON 98073-9757
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 24, 1999
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 24, 1999 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 three directors, two to hold office for a three-year term and
one to hold office for a two-year term;
2, 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 600,000 shares; and
3. 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 8, 1999, 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
[SIG]
Leslie S. Rock
Secretary--Treasurer
Redmond, Washington
January 28, 1999
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
P.O. BOX 97057
11431 WILLOWS ROAD N.E.
REDMOND, WASHINGTON 98073-9757
PROXY STATEMENT
This Proxy Statement, which was first mailed to shareholders of Advanced
Digital Information Corporation ("ADIC" or the "Company") on or about January
28, 1999, 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 24, 1999, 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 9,776,662 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 8, 1999. 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 8, 1999, 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 amendment to the 1996 Stock Option Plan will be
approved if the votes cast in favor of the proposal by the shares entitled to
vote thereon exceed the votes cast against the proposal. Abstentions from voting
and broker nonvotes on this proposal will have no impact on the outcome since no
vote has been cast for or against the 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.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. 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 2002. One nominee, Tom A. Alberg, was elected in
February 1998 to fill a vacancy on the Company's Board of Directors. He is
nominated for election at the Annual Meeting for a term of two years, expiring
on the date of the Annual Meeting of Shareholders in
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2001, so that the director classes are as equal in size as possible, as required
by Washington law. 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
- -------------------------------------------------- --------------
Tom A. Alberg, age 58............................. 1998
Mr. Alberg has been a principal of Madrona Investment Group LLC, a private
venture investment firm, since January 1996. Mr. Alberg was the President, Chief
Operating Officer and a Director of LIN Broadcasting Corporation, a cellular
telephone company, from April 1991 to October 1995, and the Executive Vice
President of AT&T Wireless Services, formerly McCaw Cellular Communications,
Inc., from July 1990 to October 1995. Prior to July 1990, Mr. Alberg was
Chairman of the Executive Committee and a partner in the law firm of Perkins
Coie, Seattle, Washington. Mr. Alberg also serves as a director of Active Voice
Corporation, Amazon.com, Inc., Emeritus Corporation, MOSAIX, Inc. and Visio
Corporation.
John W. Stanton, age 43........................... 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
Columbia Sportswear, SmarTone Inc. 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 46........................ 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 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 PricewaterhouseCoopers 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., Spacelabs Medical, Inc. and Key Technology, Inc. He holds a B.A. from
Whitman College and an M.B.A. from Harvard Business School, where he was a Baker
Scholar.
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CONTINUING DIRECTORS
NAME AND AGE TERM EXPIRES DIRECTOR SINCE
- -------------------------------------------------- ------------ --------------
Christopher T. Bayley, age 60..................... 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 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 87........................ 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.
Walter F. Walker, age 44.......................... 2001 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 serves as a Director of Redhook Ale
Brewery, Incorporated and Gargoyles, Inc., and 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.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the last fiscal year there were five meetings of the Board of
Directors. All directors 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. 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 was one meeting 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, however the
Board of Directors nominated and elected Mr. Tom A. Alberg to fill a vacancy on
the Board of Directors in February 1998. 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
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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 five meetings of the Compensation and
Stock Option Committee.
COMPENSATION OF DIRECTORS; STOCK OPTION PROGRAM
Nonemployee directors are paid a retainer of $2,000 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. Committee members are
paid $500 for each meeting attended which is not part of a regularly scheduled
Board of Directors meeting.
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 ("Initial
Grant"). 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 2,000 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. The 1996 Option Plan is administered by the
Compensation and Stock Option Committee of the Board of Directors.
Mr. Alberg was elected to the Board of Directors immediately after the 1998
annual meeting of shareholders and received an Initial Grant under the 1996
Option Plan. In addition, to induce Mr. Alberg to become a Director of the
Company and to make his initial option holdings comparable with those of the
Company's existing directors, Mr. Alberg was granted a nonqualified stock option
for 7,500 shares of the Company's Common Stock, which grant was not made under
the 1996 Option Plan. Of these shares, 5,500 vest on the same terms as the
Initial Grant, the remaining 2,000 shares vest on the date of the 1999 Annual
Meeting.
PROPOSAL TO AMEND 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 350 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 1,025,000 shares. On December 9, 1998, the Company's Board of
Directors unanimously adopted an amendment to the 1996 Option Plan that, subject
to Shareholder approval, would authorize an additional 600,000 shares to be
available for the granting of options under the 1996 Option Plan. As of December
31, 1998, approximately 54,000 shares remain available for future grant under
the 1996 Option Plan, and options to purchase approximately 971,000 shares of
Common Stock are outstanding. On December 31, 1998, the average of the high and
low sale prices of the Common Stock was $16.06 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 number of Team Members eligible to
participate in the 1996 Option Plan has increased substantially as a result of
the acquisition of EMASS, Inc. in August 1998. The Board believes that existing
option grants have contributed substantially to the
4
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 A and is incorporated herein by reference. The
following description of the 1996 Option Plan is summary and does not purport to
be a complete description. See Appendix A 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. Unless otherwise
established by the Option Plan Administrator, the term of each option shall be
five 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
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.
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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 and it is
based on present law and regulations as in effect as of the date hereof.
NSOS. No income will be recognized by a participant upon the grant of an
NSO.
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 at the time of
exercise of the shares acquired over the option price. Upon a later sale of
those shares, the optionee will have capital gain or loss equal to the
difference between the amount realized on such sale and the tax basis of the
shares sold. Futhermore, this capital gain or loss will be long-term capital
gain or loss (currently taxed at a top rate of 20%) if the shares are held for
more than one year before they are 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
NSO 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.
ISOS. No income will be recognized by a participant upon the grant of an
ISO.
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 (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 long-term capital
gain or loss. If the shares are disposed of in an arms'-length sale 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, if less, the excess of the amount realized on the
sale of the shares over the option price), and the optionee will have short-term
or long-term capital gain or loss, 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.
6
COMPANY DEDUCTION. 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 STOCK 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................................ 46 Chairman of the Board and Chief Executive Officer
Charles H. Stonecipher............................ 37 President and Chief Operating Officer
William C. Britts................................. 40 Executive Vice President, Sales and Marketing
Leslie S. Rock.................................... 41 Secretary-Treasurer and Chief Accounting Officer
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."
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.
WILLIAM C. BRITTS. Mr. Britts has served as Executive Vice President, Sales
and Marketing of ADIC since 1998, as Vice President, Sales and Marketing from
1995 to 1997 and 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.
LESLIE S. ROCK. Ms. Rock has served as Treasurer and Chief Accounting
Officer of ADIC since January 1997 and as Secretary since 1998. 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.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
Chief Executive Officer (the "CEO") and each of the three other most highly
compensated executive officers of the Company (together with the CEO, the "named
executive officers") during the fiscal years ended October 31, 1998, 1997 and
1996 based on services rendered to ADIC and Interpoint.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------
-------------------- SECURITIES ALL OTHER
NAME AND BONUS($) UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) (1) OPTIONS(#) ($)(2)
- -------------------------------------------------- ---- -------- -------- ---------- ------------
Peter H. van Oppen................................ 1998 $227,500 -- 20,000 $5,412
Chairman and 1997 204,308 $110,000 20,000 4,750
CEO(3) 1996 221,000 96,067 120,000 150
Charles H. Stonecipher............................ 1998 173,750 -- 20,000 3,998
President and 1997 153,486 87,500 15,000 4,071
Chief Operating Officer(4) 1996 122,442 49,165 95,000 150
William C. Britts................................. 1998 149,538 56,000 50,000 2,000
Executive Vice President, 1997 101,519 44,000 5,000 1,900
Sales and Marketing(5) 1996 93,094 20,936 25,000 150
Michel R. Grosbost................................ 1998 116,709(6) -- 10,000
President and General Manager, 1997 121,684(6) 36,842(6) 5,000
ADIC Europe(7) 1996 138,720(6) 26,300(6) 41,500
- ------------------------
(1) Consists of a special bonus award for fiscal 1998, ADIC Bonus Plan awards
for fiscal 1997 and Interpoint profit bonus and Management Incentive Plan
awards for fiscal 1996.
(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 in fiscal 1996.
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.
(5) 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.
(6) Assumes an exchange rate of French francs to U.S. dollars of 5.9:1; 5.7:1
and 5.0:1 in fiscal years 1998, 1997 and 1996, respectively.
(7) Excludes $75,380 related to compensation for the buyout of Interpoint stock
options in fiscal 1996 in connection with the acquisition of Interpoint by
Crane Co.
8
STOCK OPTION GRANTS
The following table sets forth certain information regarding options granted
during the fiscal year ended October 31, 1998 to the named executive officers
under the Company's 1996 Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS(1) REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING TEAM EXERCISE FOR OPTION TERM(2)
OPTIONS MEMBERS IN PRICE EXPIRATION ------------------
NAME GRANTED(#) FISCAL YEAR(3) ($/SHARE) DATE 5%($) 10%($)
- -------------------------------------------------- ---------- -------------- --------- ---------- -------- --------
Peter H. van Oppen................................ 20,000 5.68% $ 16.5625 2/25/03 $ 91,518 $202,231
Charles H. Stonecipher............................ 20,000 5.68% 16.5625 2/25/03 91,518 202,231
William C. Britts................................. 50,000 14.21% 16.5625 2/25/03 228,796 505,579
Michel R. Grosbost................................ 10,000 2.84% 16.5625 2/25/03 45,759 101,116
- ------------------------
(1) These options vest in four equal annual installments beginning one year
after the date of grant. The per share exercise price represents the fair
market value of the Common Stock on the date of grant. The options expire
five years from the date of grant.
(2) Future value of current year grants assuming appreciation of 5% and 10% per
year over the five-year or ten-year option period. The actual value realized
may be greater than or less than the potential realizable values set forth
in the table.
(3) Options issued to certain non-executive officer Team Members in exchange for
cancellation of existing options were not considered option grants for
purposes of this calculation.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding options
exercised in fiscal 1998 and options held as of October 31, 1998 by each of the
named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
ACQUIRED OCTOBER 31, 1998(#) OCTOBER 31, 1998($)(2)
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
Peter H. van Oppen................. -- -- 85,000 95,000 $288,554 $ 78,302
Charles H. Stonecipher............. -- -- 77,250 82,750 336,501 118,066
William C. Britts.................. -- -- 20,750 71,250 69,938 50,057
Michel R. Grosbost................. 4,000 $58,498 25,000 41,500 45,307 84,807
- ------------------------
(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, 1998,
times the number of shares for those shares which are in-the-money.
9
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE ON ANNUAL COMPENSATION
The policy of the Compensation and Stock Option Committee (the "Committee")
of the Board of Directors with respect to executive officer compensation is that
such compensation should (a) assist ADIC in attracting, motivating 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 $220,000 to $250,000 effective August 1, 1998. This increase
brings the CEO's base salary to the 25th percentile for the compensation survey
used.
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, with certain adjustments reflecting individual
performance. Payment amounts are targeted to Team Members beginning at a level
of 8% of current base salary. For the CEO and other key Team Members, the ABP
sets a threshold level of Company performance that must be attained before any
bonuses are awarded. The payment target amount for the CEO is 50% of base salary
as of the end of the fiscal year. ABP payments are presented in the Summary
Compensation Table under the heading "Bonus"; there were no amounts paid to the
CEO for fiscal year 1998.
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 February 25, 1998, the CEO was granted
options to purchase 20,000 shares of Common Stock at an exercise price of
$16.5625 per share subject to a four-year vesting schedule.
COMPENSATION AND STOCK OPTION COMMITTEE
John W. Stanton, Chairman
Christopher T. Bayley
Walter F. Walker
10
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE RETURN(1)
AMONG ADVANCED DIGITAL INFORMATION CORPORATION,
NASDAQ COMPUTER MANUFACTURER INDEX AND S&P 500 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ADIC STANDARD NASDAQ
STOCK & Poor's Computer
500 Index Manufacturer
Index
10/17/96 $100 $100 $100
10/31/96 $85 $100 $97
10/31/97 $127 $129 $128
10/31/98 $97 $155 $205
- ------------------------
(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.
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 1998 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
purchase transaction by Walter F. Walker, a director, and late filings by each
of the Company's directors and officers relating to option grants.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of January 8, 1999, 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
11
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 ............................................ 1,120,000 11.4%
One Federal Street
Boston, MA 02109
S Squared Technology Corp. ................................................ 579,500 5.9%
515 Madison Avenue, Suite 4200
New York, NY 10022
John W. Stanton............................................................ 384,664(1) 3.9%
Peter H. van Oppen......................................................... 236,955(2) 2.4%
Charles H. Stonecipher..................................................... 88,250(3) *
Christopher T. Bayley...................................................... 49,000(4) *
Walter F. Walker........................................................... 42,250(5) *
William C. Britts.......................................................... 39,535(6) *
Michel R. Grosbost......................................................... 35,430(7) *
Tom A. Alberg.............................................................. 33,750(8) *
Russell F. McNeill......................................................... 11,450(1) *
All directors and executive officers as a group (10 persons)............... 929,044(9) 9.5%
- ------------------------
* Represents holdings of less than 1%.
(1) Includes 5,000 shares subject to issuance upon exercise of 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 242
shares owned by Mr. van Oppen's spouse and 90,000 shares subject to issuance
upon exercise of options that are exercisable within 60 days.
(3) Includes 86,250 shares subject to issuance upon exercise of options that are
exercisable within 60 days.
(4) Includes 1,000 shares owned by Mr. Bayley's spouse. Includes 5,000 shares
subject to issuance upon exercise of options that are exercisable within 60
days.
(5) Includes 12,250 shares subject to issuance upon exercise of options that are
exercisable within 60 days.
(6) Includes 38,250 shares subject to issuance upon exercise of options that are
exercisable within 60 days.
(7) Includes 34,500 shares subject to issuance upon exercise of options that are
exercisable within 60 days.
(8) Includes 800 shares owned by Raven Trust, a charitable trust of which Mr.
Alberg and his spouse are the sole trustees. Includes, 4,750 shares subject
to issuance upon exercise of options that are exercisable within 60 days.
(9) Includes 282,250 shares subject to issuance upon exercise of options that
are exerciseable within 60 days, 242 shares owned by Mr. van Oppen's spouse,
1,000 shares owned by Mr. Bayley's spouse and 800 shares owned by Raven
Trust, a charitable trust of which Mr. Alberg and his spouse are the sole
trustees. 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.
12
CERTAIN TRANSACTIONS
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 1998 were $24,000.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP was ADIC's independent auditor in fiscal 1998. A
representative of PricewaterhouseCoopers 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 2000 ANNUAL MEETING
In accordance with the Company's Bylaws, a shareholder proposing to transact
business at the Company's annual meeting of shareholders must provide notice of
such proposal, in the manner required by the Company's Bylaws, not fewer than 60
nor more than 90 days prior to the date of the annual meeting (or, if the
Company provides less than 60 days' notice of such meeting, no later than 10
days after the date of the Company's notice). Shareholder proposals to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to its annual meeting of shareholders to be held in February 2000 must
be received by the Company no later than September 24, 1999.
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 1998 fiscal
year which also includes the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1998 (including financial statements), accompanies this
Proxy Statement.
13
APPENDIX A
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;
A-1
(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
A-2
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 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.
A-3
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.
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 1,625,000 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.
A-4
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.
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.
A-5
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:
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
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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 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
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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 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.
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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 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.
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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.
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
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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 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.
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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.
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.
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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
11431 WILLOWS ROAD N.E.
P.O. BOX 97057
REDMOND, WA 98073-9757
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS FEBRUARY 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Peter H. van Oppen and Leslie S. Rock, 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 24, 1999 at 10 a.m. PST 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.
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Please mark
your votes as /X/
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND
"FOR" ITEM 2:
1. ELECTION OF DIRECTORS FOR WITHHOLD
NOMINEES: 01. Tom A. Alberg all nominees AUTHORITY
02. John W. Stanton (except as indicated to the to vote for
03. Peter H. van Oppen contrary below) all nominees
/ / / /
2. APPROVAL OF AMENDMENT TO 1996 FOR AGAINST ABSTAIN
STOCK OPTION PLAN / / / / / /
(INSTRUCTION: TO WITHHOLD AUTHORITY
TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.)
- ---------------------------------------
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" ITEM 2 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 _____________, 1999
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.
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