Adaptec 2003 Annual Report Download - page 48

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In addition, fluctuations in our stock price and our price−to−earnings multiple may have made our stock attractive to momentum,
hedge or day−trading investors who often shift funds into and out of stocks rapidly, exacerbating price fluctuations in either direction
particularly when viewed on a quarterly basis.
Securities class action litigation has often been instituted against a company following periods of volatility and decline in the market
price of their securities. If instituted against us, regardless of the outcome, such litigation could result in substantial costs and
diversion of our management’s attention and resources and have a material adverse effect on our business, financial condition and
operating results. We could be required to pay substantial damages, including punitive damages, if we were to lose such a lawsuit.
Provisions in our charter documents and Delaware law and our adoption of a stockholder rights plan may delay or prevent
acquisition of us, which could decrease the value of our common stock.
Our certificate of incorporation and bylaws and Delaware law contain provisions that could make it harder for a third party to acquire
us without the consent of our board of directors. Delaware law also imposes some restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding common stock. In addition, our board of directors has the
right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile
acquirer.
Although we believe these provisions of our certificate of incorporation and bylaws and Delaware law and our stockholder rights plan
will provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these
provisions apply even if the offer may be considered beneficial by some stockholders.
We adopted a stockholder rights plan in 2001, pursuant to which we declared a dividend of one share purchase right for each
outstanding share of common stock. If certain events occur, including if an investor tenders for or acquires more than 15% of our
outstanding common stock, stockholders (other than the acquirer) may exercise their rights and receive $650 worth of our common
stock in exchange for $325 per right, or we may, at our option, issue one share of common stock in exchange for each right, or we may
redeem the rights for $0.001 per right. The issuance of the rights could have the effect of delaying or preventing a change in control of
us.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
The following discussion regarding our risk management activities contains “forward−looking statements” that involve risks and
uncertainties. Actual results may differ materially from those projected in the forward−looking statements.
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