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AMENDMENT NUMBER FIVE TO
TERM LOAN AGREEMENT
THIS AMENDMENT NUMBER FIVE TO TERM LOAN AGREEMENT dated as of January
27, 1997 (the "Amendment") is entered into by and between ADAPTEC, INC., a
California corporation (the "Borrower"), and COMERICA BANK-CALIFORNIA (formerly
known as Plaza Bank of Commerce), a California banking corporation (the "Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank are parties to a certain Term Loan
Agreement dated as of June 24, 1992, as amended by Amendment Number One dated as
of July 13, 1994, Amendment Number Two dated as of September 21, 1994,
Amendment Number Three dated as of December 29, 1995, and Amendment Number Four
dated as of March 18, 1996 (as so amended, the "Agreement"); and
WHEREAS, the Borrower and the Bank desire to amend the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower and the Bank agree as follows:
1. Capitalized terms used in this Amendment and not otherwise defined
shall have the respective meanings set forth in the Agreement.
2. Section 1.1 of the Agreement is hereby amended to add the following
definition, in proper alphabetical sequence, which reads in its entirety as
follows:
"Convertible Subordinated Debt" shall mean unsecured Debt
due 2004 issued by the Borrower in an aggregate principal amount not
exceeding Three Hundred Million Dollars ($300,000,000) at any one
time outstanding pursuant to documentation containing substantially
similar payment terms and substantially identical subordination
provisions as those set forth in the January 21, 1997 draft of the
Indenture.
3. Section 1.1 of the Agreement is hereby amended to add the following
definition, in proper alphabetical sequence, which reads in its entirety as
follows:
"Equity Securities" of any Person shall mean all common stock,
preferred stock, participations, shares,
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partnership interests or other equity interests in and of such Person
(regardless of how designated and whether or not voting or non-voting).
4. Section 1.1 of the Agreement is hereby amended to add the following
definition, in proper alphabetical sequence, which reads in its entirety as
follows:
"Indenture" shall mean that certain Indenture executed in
February, 1997 by and between the Borrower and State Street Bank and
Trust Company, as trustee, pursuant to which the Convertible
Subordinated Debt was issued.
5. Section 1.1 of the Agreement is hereby amended to add the following
definition, in proper alphabetical sequence, which reads in its entirety as
follows:
"Subordinated Debt" shall mean unsecured Debt of the Borrower
or any of its Subsidiaries which is subordinate to the Indebtedness and
having terms and conditions satisfactory to the Bank.
6. Section 5.5 of the Agreement is hereby amended to read in its
entirety as follows:
5.5 Maintain Tangible Net Worth. On a consolidated basis for
the Borrower and its consolidated Subsidiaries, maintain, as of the end
of each of the Borrower's fiscal quarters hereunder, commencing
September 27, 1996, a Tangible Net Worth of not less than (a) Four
Hundred Forty-Seven Million Eight Hundred Forty-Three Thousand Two
Hundred Fifty Dollars ($447,843,250), plus (b) seventy-five percent
(75%) of Net Income for each fiscal year, commencing with the fiscal
year ending March 31, 1997 (on a cumulative basis but without taking
into account any net loss incurred during any fiscal year), plus (c)
one hundred percent (100%) of the aggregate consideration received from
the issuance or sale of any Equity Securities after September 27, 1996,
net of reasonable and customary fees and expenses (including, without
limitation, filing fees, brokerage commissions, accounting fees and
attorneys fees) incurred in connection with such issuance or sale, plus
(d) one hundred percent (100%) of the aggregate decrease in Debt
resulting from conversions of the Convertible Subordinated Debt or
other liabilities into Equity Securities at any time after September
27, 1996, net of reasonable and customary fees and expenses (including,
without limitation, filing fees, brokerage commissions, accounting
fees and attorneys fees) incurred in connection with any such
conversion or call of the Convertible Subordinated Debt.
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7. Section 5.7 of the Agreement is hereby amended to read in its
entirety as follows:
5.7 Maintain Quick Ratio. On a consolidated basis for the
Borrower and its consolidated Subsidiaries, maintain, as of the end of
each of the Borrower's fiscal quarters hereunder, the ratio of (a)
unrestricted cash plus unrestricted Cash Investments plus
non-affiliated trade accounts receivable (net of applicable reserves
therefor) to (b) Current Liabilities plus the aggregate principal
amount outstanding under any line of credit or revolving credit
facility, at not less than 1.25 to 1.00.
8. Section 6.4 of the Agreement is hereby amended to read in its
entirety as follows:
6.4 Indebtedness. Incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed money, or any other indebtedness
or liability evidenced by notes, bonds, debentures or similar
obligations, or any other indebtedness whatsoever (including
sale/leaseback transactions), except (a) the Indebtedness, (b) other
indebtedness of the Borrower or any of its Subsidiaries to the Bank,
whether now existing or hereafter arising, (c) trade payables and
accrued expenses incurred and paid in the ordinary course of business,
(d) indebtedness under Capital Leases in an aggregate principal amount
not exceeding Five Million Dollars ($5,000,000), at any one outstanding
on a consolidated basis, (e) indebtedness under operating leases in the
ordinary course of business, (f) outstanding tax obligations to
governmental agencies, (g) unsecured loans or advances by the Borrower
to any Subsidiary, or by any Subsidiary to either the Borrower or any
other Subsidiary, (h) the Convertible Subordinated Debt and other
Subordinated Debt, (i) other Debt (exclusive of Subordinated Debt) in
an aggregate principal amount not exceeding One Hundred Million Dollars
($100,000,000) at any one time outstanding on a consolidated basis
which is either unsecured or secured by a Permitted Lien;
provided, however, that no Debt otherwise permitted by clauses (d),
(e), (h) and (i) above shall be permitted to be incurred if, after
giving effect to the incurrence thereof, any Default or Event of
Default has occurred and is continuing.
9. Section 6.13 of the Agreement is hereby amended to read in its
entirety as follows:
6.13 Other Agreements. Enter into any agreement containing any
provision which (a) would be violated or breached by the performance of
its obligations under this Agreement or under any instrument or
document delivered
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or to be delivered by it hereunder or in connection herewith, (b)
prohibits or restricts the creation or assumption of any lien by the
Borrower or any of its Subsidiaries upon its properties, revenues or
assets (whether now owned or hereafter acquired) as security for the
indebtedness hereunder (other than provisions set forth in agreements
relating to Permitted Liens, joint venture agreements and lease
agreements, provided that such provisions only prohibit or restrict
liens upon the assets specifically the subject of such agreements), (c)
prohibits or restricts the ability of any Subsidiary to make dividends,
advances or payments to the Borrower, or (d) prohibits or restricts the
ability of the Borrower to amend or otherwise modify this Agreement or
any other document executed in connection herewith.
10. Clause (a) of Section 6.15 of the Agreement is hereby amended to
read in its entirety as follows:
(a) in the case of such acquisitions which are funded in the
form of consideration other than treasury stock or newly-issued equity
securities of the Borrower or any of its Subsidiaries, and which are
accounted for on a consolidated basis with the Borrower and its
Subsidiaries in accordance with GAAP, the Borrower and its Subsidiaries
may not give such consideration in an amount which exceeds, in the
aggregate, One Hundred Fifty Million Dollars ($150,000,000) in fair
market value thereof (or, if higher, the book value thereof as
reflected in the Borrower's financial statements) during any fiscal
year of the Borrower.
11. Section 6 of the Agreement is hereby amended to add a new Section
6.16 which reads in its entirety as follows:
6.16 Subordinated Debt. (a) Make any payment (whether of
principal, interest or otherwise) on any Subordinated Debt on any day
other than the stated scheduled date for such payment set forth in the
documents and instruments evidencing such Subordinated Debt, except as
permitted by clause (c) hereof,(b) make any payment on any Subordinated
Debt in contravention or violation of the subordination provisions
thereof, (c) prepay, redeem, purchase or defease any Subordinated
Debt, or make any deposit for any of the foregoing purposes; provided,
however, that, with respect to the Convertible Subordinated Debt, the
Borrower may call and prepay such Convertible Subordinated Debt in
accordance with the terms of the Indenture if (i) at the time such call
is announced the market price of the Borrower's common stock has
exceeded for ten (10) consecutive Business Days the conversion price,
and (ii) both before and after giving effect thereto, no Default or
Event of Default has occurred and is continuing, or (d) enter into any
amendment or modification of any Subordinated Debt; provided, however,
that the Borrower may enter into any
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amendment or supplement to the Indenture pursuant to clauses (a), (e),
(f), (g) and (h) of Section 10.1 of the Indenture if such amendment or
supplement does not adversely affect the interests of the Bank.
12. Section 7.1 of the Agreement is hereby amended to add a new Section
7.1.10 which reads in its entirety as follows:
7.1.10 Designated Events. A "Change of Control" (as such term
is defined in the Indenture) shall occur.
13. Section 8 of the Agreement is hereby amended to add a new Section
8.13 which reads in its entirety as follows:
8.13 Designated Senior Indebtedness. The Borrower and the Bank
agree that the Indebtedness shall constitute "Designated Senior
Indebtedness" (as such term is defined in the Indenture).
14. In reliance on the Borrower's warranties set forth in Paragraph 15
below, the Bank hereby waives any Default or Event of Default which otherwise
might arise under Section 6.13 (a) of the Agreement as a result of the
Borrower's incurrence of the Convertible Subordinated Debt.
15. The Borrower hereby represents and warrants to the Bank that (a)
the representations and warranties contained in the Agreement are true and
correct as of the date of this Amendment, and (b) no Default or Event of Default
has occurred and is continuing.
16. Except as specifically amended pursuant to the foregoing paragraphs
of this Amendment, the Agreement shall remain in full force and effect and is
hereby ratified, approved and confirmed in all respects.
17. The Borrower agrees to reimburse the Bank for all reasonable costs
and expenses incurred by it in connection with this Amendment, including the
reasonable fees and expenses of the Bank's counsel with respect thereto.
18. This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Amendment. If the Borrower
delivers an executed counterpart of the signature page to this Amendment by
telecopier, the Borrower shall thereafter also promptly deliver to the Bank a
manually executed counterpart of this Amendment, but the failure to deliver such
manually executed counterpart shall not affect the validity,, enforceability and
binding effect of this Amendment. This Amendment shall become effective as of
the date when the Bank shall have received an original or telefacsimile
counterpart hereof signed by the Borrower.
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19. This Amendment and the Agreement constitute the entire agreement
and understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
20. This Amendment shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, the Borrower and the Bank have caused thiS
Amendment to be executed by their duly authorized officers as of the day and
year first written above.
ADAPTEC, INC.
By: /S/ Xxxxxxxxxxx X. X'Xxxxx
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Xxxxxxxxxxx X. X'Xxxxx
Vice President and Treasurer
COMERICA BANK-CALIFORNIA
(formerly known as Plaza Bank of Commerce)
By. /S/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
First Vice President
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