Adaptec 2002 Annual Report Download - page 72

NOTE 10. Stockholders' Equity
Authorized capital stock of PMC. At December 31, 2002 and 2001, the Company had an authorized capital of
905,000,000 shares, 900,000,000 of which are designated "Common Stock", $0.001 par value, and 5,000,000 of
which are designated "Preferred Stock", $0.001 par value.
Stock Splits. In January 2000, the Company's Board of Directors approved a two−for−one split of the
Company's common stock in the form of a stock dividend that was applicable to shareholders of record on
January 31, 2000, and effective on February 14, 2000. All references to share and per share data for all
periods presented have been adjusted to give effect to this stock dividend.
Warrants. During 1996, the Company issued a warrant to purchase 100,000 shares of common stock at $2.31 per
share to an investment banking firm in settlement for services previously expensed. This warrant was fully
exercised in August 2000.
In 1999, as a result of the Company's acquisition of Abrizio, the Company assumed warrants to purchase
174,580 shares of common stock at $1.66 per share. In 2000, as a result of the Company's acquisitions of
AANetcom, Extreme, QED and SwitchOn, the Company assumed warrants to purchase 50,759, 63,162, 68,434 and 780
shares of common stock at $9.36, $3.06, $5.26 and $89.76 per share, respectively. In 2001, 50,759 of these
warrants were cancelled. At December 31, 2002, 2001, and 2000, there were 30,100 warrants outstanding at a
weighted average exercise price of $1.66 per share, 42,138 warrants outstanding at a weighted average
exercise price of $1.66 per share, and 92,897 warrants outstanding at a weighted average exercise price of
$5.87 per share, respectively. All warrants outstanding at December 31, 2002 expire in March 2003.
Convertible Preferred Stock of QED. QED, which was acquired by PMC in August 2000 in a transaction accounted
for under the pooling method (see Note 2), had preferred stock comprised of $0.001 par value per share
Series A, B, C, D convertible preferred shares. Simultaneously with the closing of QED's initial public
offering on February 1, 2000, all issued and outstanding shares of QED's convertible preferred stock, with a
carrying value of $39.9 million, were automatically converted into 13,619,000 shares of QED common stock.
All shares of common stock of QED were exchanged for shares of PMC common stock at an exchange ratio of
0.385 (see Note 2) per QED common share.
Exchangeable Shares. As a result of the acquisitions of Extreme and Datum in 2000, each holder of the
Extreme and Datum common stock received shares exchangeable into PMC common stock. The shares are
exchangeable, at the option of the holder, for PMC common stock on a share−for−share basis. The exchangeable
shares remain securities of the Company and entitle the holders to dividend and other rights economically
equivalent to that of PMC common stock and, through a voting trust, to vote at shareholder meetings of the
Company. At December 31, 2002, 2001, and 2000, these shares were exchangeable into 636,000, 712,000 and
1,386,000 PMC shares, respectively.
Stockholders' Rights Plan. On April 26, 2001, PMC adopted a stockholders' rights plan. Under the rights
plan, the Company issued a dividend of one right for each share of common stock of the Company held by
stockholders of record as of May 25, 2001. Each right will initially entitle stockholders to purchase a
fractional share of the Company's preferred stock for $325. However, the rights are not immediately
exercisable and will become exercisable only upon the occurrence of certain events. Upon occurrence of these
events, unless redeemed for $0.001 per right, the rights will become exercisable by holders, other than
rights held by a potential unsolicited third party acquirer, for shares of the Company or for shares of the
third party acquirer having a value of twice the right's then−current exercise price.
70