Adaptec 2008 Annual Report Download - page 22

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ITEM 3. Legal Proceedings.
Stockholder Derivative Lawsuits
Three derivative actions have been filed against the Company, as a nominal defendant, and various current
and former officers and/or directors: (1) Meissner v. Bailey, et al., Santa Clara Superior Court Case
No. 1-06-CV-071329 (filed September 18, 2006); (2) Beiser v. Bailey, et al., United States District Court for the
Northern District of California Case No. 5:06-CV-05330-RS (filed August 29, 2006); and (3) Barone v. Bailey, et
al., United States District Court for the Northern District of California (the “Federal Court”) Case
No. 4:06-CV-06473-SBA (filed October 16, 2006). On November 21, 2006, the Beiser and Barone actions were
consolidated into one case. On January 18, 2007, the Santa Clara County Superior Court in California ordered
that the Meissner action be stayed pending the outcome of the consolidated, federal Beiser/Barone action.
The Beiser/Barone plaintiffs generally allege that various current and former Company directors and/or
officers breached their duty of loyalty and/or duty of care to the Company and its stockholders in connection with
improperly dating certain employee stock option grants and that these purported breaches of fiduciary duties
caused harm to the Company. The plaintiffs seek to recover damages on behalf of the Company. They also allege
violations of federal securities laws. The Company is a nominal defendant, but any recovery in the litigation
would be paid to the Company, rather than to its stockholders. The defendants have entered into joint defense
arrangements.
The defendants moved to dismiss the Beiser/Barone action on various legal grounds including that the
plaintiffs failed to state a claim and failed to plead with particularity facts establishing that a litigation demand on
the board of directors of the Company would have been futile at the time they commenced the derivative
lawsuit. The Federal Court dismissed the consolidated complaint on August 22, 2007 and gave plaintiffs leave to
amend. The Federal Court dismissed the plaintiffs’ first amended consolidated complaint on May 8, 2008 and
permitted plaintiffs leave to amend “one last time.” Defendants moved to dismiss the second amended complaint
which motions were to be heard on August 20, 2008.
On July 15, 2008, Ian Beiser, a named plaintiff in the Beiser/Barone action, filed a complaint in the
Delaware Court of Chancery, and it was served on July 18, 2008, compelling the Company to permit plaintiff to
inspect and make copies of the Company’s books and records. On August 5, 2008, the plaintiffs moved to stay
the Federal Court action pending the books and records action. The Federal Court granted the motion to stay on
August 13, 2008, which removed from the calendar the hearing on defendants’ motions to dismiss, previously
scheduled for August 20, 2008.
On December 11, 2008, the Delaware Court of Chancery heard arguments on the books and records demand
and the parties are awaiting the Court’s order.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
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