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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED). For the fiscal year ended March 31, 1995 or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED). For the transition period from
to .
Commission File Number 000-15071
ADAPTEC, INC.
(exact name of Registrant as specified in its charter)
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CALIFORNIA 94-2748530
(State of incorporation) (I.R.S. Employer Identification No.)
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691 S. Milpitas Blvd.
Milpitas, California 95035
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 945-8600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Common Share Purchase Rights
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes /X/ No / /
Based on the closing sale price of the Common Stock on the NASDAQ National
Market System on June 9, 1995, the aggregate market value of the voting stock
held by non-affiliates of the Registrant was $1,309,035,702. Shares of Common
Stock held by each officer and director and by each person known by the Company
to own 5% or more of the outstanding Common Stock have been excluded in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
The number of shares outstanding of Registrant's Common Stock, $.001 par
value, was 51,481,515 at June 9, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate information by reference from the Annual
Report to Shareholders for the fiscal year ended March 31, 1995. Part III
incorporates information by reference from the definitive proxy statement for
the Annual Meeting of Shareholders to be held on August 24, 1995.
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INTRODUCTORY STATEMENT
References made in this Annual Report on Form 10-K to "Adaptec", the
"Company" or the "Registrant" refer to Adaptec, Inc. and its wholly owned
subsidiaries. Adaptec, the Adaptec logo, Ioware, EZ-SCSI and SCSISelect are
trademarks of Adaptec, Inc., which may be registered in some jurisdictions. All
other trademarks used are owned by their respective owners.
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PART I
ITEM 1. BUSINESS.
GENERAL
Adaptec is a leading supplier of input/output (I/O) hardware and software
(referred to by the Company as IOware solutions) used to eliminate performance
bottlenecks between a microcomputer's central processing unit (CPU) and its
peripheral devices, such as hard disk, optical and tape storage devices, and
network file servers. The Company's IOware products include board-based I/O
solutions using extensive proprietary software and proprietary very large scale
integration (VLSI) integrated circuits (ICs). The Company's host adapter
products are based on the Small Computer Systems Interface (SCSI) standard,
which interfaces with all standard microcomputer architectures. The Company's IC
products include single chip disk controllers for SCSI, AT and PCMCIA hard disk
drives and single chip SCSI host adapters.
BACKGROUND
The market for high-performance microcomputers and related products, which
are typically used in multiuser and multitasking environments, has continued to
grow more rapidly than the overall microcomputer market in recent years. A key
factor driving this growth has been the development of increasingly
sophisticated software for applications such as networking, transaction
processing, high resolution graphics and multimedia. These application
developments have resulted in the need for increased data transmission rates
between CPUs and peripherals to alleviate I/O bottlenecks which would limit the
overall performance of microcomputer systems. The Company addresses these needs
with products that significantly enhance and optimize overall microcomputer
system performance, particularly in complex operating environments, involving
sophisticated applications and multiple peripherals.
MARKET OVERVIEW
The Company provides value-added IOware solutions to the personal
computing, enterprise computing and mass storage markets. The Company believes
that technical leadership, product innovation, marketing expertise and brand
name recognition allow it to compete favorably in these markets.
Desktop and portable personal computers are used in a number of
environments including business, home and travel. Operating systems for
computing have historically been text-based and single-tasking such as MS-DOS.
During the past several years Graphical User Interfaces (GUIs) such as
Microsoft's Windows, have increasingly been shipped by Original Equipment
Manufacturers (OEMs) as standard in most desktop and portable computers.
Additionally, many desktop and portable personal computers are being configured
with a more diverse set of peripherals, such as CD-ROM, Tape, Write Once Read
Many (WORM), CD ROM Recordable (CDR) and Digital Audio Tape (DAT) drives, either
at the time of purchase or after the original equipment sale. When this occurs,
ease of installation and configuration are of great importance to the end user,
giving products that provide this capability a significant competitive
advantage.
The enterprise computing market is characterized by increasingly more
sophisticated and I/O-intensive applications, such as network management
software, and distributed multimedia and business applications. During the past
several years, these applications have been migrating from minicomputers to
client/server environments. These applications typically require a file server
to be configured with multiple peripherals such as WORM, CD-ROM and DAT drives,
together with hard disk subsystems that provide security and data integrity
capabilities such as Redundant Array of Inexpensive Disks (RAID). Successful
implementation of such mission critical systems requires significant knowledge
of networking software and I/O subsystems.
Virtually every microcomputer is shipped with inexpensive mass storage
devices which are required to store vast amounts of information and data. Such
devices include CD-ROM, tape drives and most commonly rigid or hard disk drives.
Non-hard disk devices are increasingly used in addition to a hard disk and often
have SCSI interfaces. Common uses for non-hard disk SCSI devices include data
backup and archiving for tape drives and storage needed for multimedia programs
where video, text, graphics and sound are stored on a
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CD-ROM or CDR. Hard disk drives are usually part of a standard desktop, portable
or networked microcomputer configuration, and generally are used to store
operating systems, user applications and data files. Most hard disk drives are
shipped with either an AT or a SCSI interface and have relatively fast data
access and transfer capabilities. Cost per megabyte of storage and performance
characteristics such as average seek time, data transfer rate and spindle
rotational speed continue to be critical to success in the disk drive market.
PRODUCTS
The Company's IOware products are designed and manufactured using a core
set of technologies and resources. The Company's semiconductor technology design
center develops products for all markets the Company serves. The Company
utilizes a process called concurrent engineering, in which manufacturing,
marketing and engineering work together early in the development cycle, to
decrease the "time to volume" of product shipments.
Board-based I/O Solutions
The Company's board-based I/O solutions are designed to support business,
technical and multimedia applications in the personal and enterprise computing
markets. The Company's single chip host adapters are the principal component of
these products. These ICs, together with the Company's extensive array of
software products, provide customers the most comprehensive board-based I/O
solutions available in the markets it serves. The Company provides bus
mastering, multitasking host adapters that manage all I/O processing activity,
thereby freeing the CPU to focus most of its power on task processing. The
Company also provides non-bus mastering host adapters which provide standardized
SCSI connectivity between the CPU and its peripherals. The Company's board-based
I/O solutions are capable of interfacing with most major microcomputer
architectures, including PCI, VESA, ISA, EISA and Micro Channel. Demand for the
Company's board-based I/O solutions has increased with the continued adoption of
SCSI as the high-performance I/O standard in personal computing. Additionally,
demand is being driven by the increased use of file servers where SCSI usage
approaches 100%. To meet this increased demand, the Company continues to develop
and market I/Oware solutions meeting specific OEM requirements and turnkey kits
for the distributor channels. These kits include a SCSI host adapter and related
software, that enable end-users to connect SCSI peripherals to their
microcomputer system.
To facilitate the use of SCSI in microcomputer systems, the Company
developed Advanced SCSI Programming Interface (ASPI), an operating system-level
interface allowing seamless connectivity between SCSI host adapters and
operating systems. ASPI enables users to integrate high-performance SCSI
peripherals with microcomputers using popular operating systems, such as DOS,
NetWare, OS/2 and UNIX. Additionally, ASPI supports the current release of
Microsoft Windows operating environment; the Company has also been working with
Microsoft to ensure that ASPI will support Windows 95. The Company is engaged in
strategic relationships with leading operating system vendors, such as IBM,
Microsoft and Novell, resulting in joint development projects to embed the
Company's software within their operating systems. In addition, the Company has
developed several software utilities such as Adaptec EZ-SCSI and SCSISelect
products, which simplify connecting a SCSI host adapter and peripherals to a
microcomputer system.
Integrated Circuits
The Company develops proprietary integrated circuits for use in mass
storage devices and microcomputer systems and for use in its own board-based
SCSI host adapters. Adaptec's proprietary integrated circuits provide innovative
solutions for managing complex I/O functions in high-performance microcomputer
and storage applications. Working closely with customers, the Company provides
complete solutions that include sophisticated integrated circuits, with related
firmware and software, to optimize overall subsystem design. In addition, the
Company seeks to establish its proprietary integrated circuits as industry
standards, thereby increasing market acceptance by new customers.
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The Company's current IC products include SCSI, PCMCIA and AT programmable
storage controllers and single-chip SCSI host adapters. All of the Company's IC
products are developed using advanced design technologies to meet market
requirements for higher levels of physical integration, increased functionality
and performance. The Company's programmable SCSI and AT storage controllers are
typically configured to address specific customer requirements in the mass
storage market and are used primarily in high capacity hard disk drives. The
Company's SCSI host adapter integrated circuits incorporate similar technology
and are used by system manufacturers to embed SCSI on the system motherboard and
by multifunction card companies to provide a SCSI interface.
RESEARCH AND DEVELOPMENT
The Company believes research and development is fundamental to its
success, especially in integrated circuit design and software development. The
development of proprietary integrated circuits that support multiple
architectures and peripheral devices requires a combination of engineering
disciplines. In addition, extensive knowledge of computer and subsystem
architectures, expertise in the design of high-speed digital integrated circuits
and knowledge of operating system software is essential. The integration of
these specialized disciplines has enabled the Company to address more
comprehensively the needs of the I/O microcomputer industry.
The Company continues to leverage its technical expertise and product
innovation capabilities to address applications requiring the management and
high-speed transmission of microcomputer system data. Among the products under
development are higher performance host adapters for microcomputers using PCI
and ISA architectures, more highly integrated and functionally robust integrated
circuits and software support for additional operating systems. While SCSI
solutions currently remain the core of the Company's business, in fiscal 1995
the Company broadened its development efforts to include asynchronous transfer
mode (ATM), RAID, Serial I/O, and infrared technologies.
Approximately 22% of the Company's employees are engaged in research and
development. In fiscal 1995, 1994 and 1993, the Company spent approximately
$60.8 million, $40.0 million, and $26.3 million respectively, for research and
development.
MARKETING AND CUSTOMERS
The Company sells its products through both OEM and distributor channels
and packages these products to meet the specific requirements of system
integrators and end users. The Company works closely with its OEM customers on
the design of current and next generation products that incorporate the
Company's SCSI host adapters and integrated circuits. The Company provides its
OEM customers with extensive applications and system design support. The Company
also sells host adapters to end users through major computer product
distributors. The Company believes it has successfully positioned itself as a
leading supplier of SCSI-based solutions in both OEM and distributor channels.
The Company focuses its worldwide marketing efforts on major OEM customers
and major distributors through its direct sales force located in the United
States and major industrial centers in Europe and the Far East. The Company also
makes selective use of sales representatives on a worldwide basis. OEM customers
include Conner Peripherals, Digital Equipment Corporation, Dell Computer
Corporation, Fujitsu, Hewlett-Packard Company, IBM Corporation, Intel
Corporation, Maxtor Corporation, NEC Technologies, Samsung, Seagate Technology,
Siemens and Toshiba America. Distribution customers include, Actebis, Anthem
Electronics, Gates/Arrow, Globelle, Ingram Micro, Merisel, Nissho, and Tech
Data. In fiscal 1995 and fiscal 1994 no customer accounted for more than 10% of
the Company's net revenues. In fiscal 1993, Apple Computer, Inc. accounted for
16% of the Company's net revenues, substantially all of which was derived from
the sale of the Company's discontinued laser printer controllers, and Maxtor
accounted for approximately 10% of the Company's net revenues.
The Company emphasizes solution-oriented customer support as a key element
of its marketing strategy and maintains technical applications groups in the
field as well as at the Company's headquarters. Support provided by these groups
includes assisting current and prospective customers in the use of the Company's
products, writing application notes and conducting seminars for use by system
designers. The systems-level expertise and software experience of the Company's
engineering staff are also available to customers with
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particularly difficult I/O design problems. A high level of customer support is
also maintained through technical support hotlines, electronic bulletin boards
and dial-in-fax capability.
International net revenues accounted for approximately 62%, 58% and 50% of
net revenues in fiscal 1995, 1994, and 1993, respectively. Sales of the
Company's products internationally are subject to certain risks common to all
export activities, such as governmental regulation and the risk of imposition of
tariffs or other trade barriers. Sales to customers are primarily denominated in
U.S. dollars. As a result, the Company believes its corresponding foreign
currency risk is minimal.
BACKLOG
The Company's backlog was approximately $65.6 million and $61.7 million at
March 31, 1995 and March 31, 1994, respectively. These backlog figures include
only orders scheduled for shipment within six months, of which the majority are
scheduled for delivery within 90 days.
In the past, the Company has experienced delays in receipt of expected
purchase orders, and in some cases purchase orders have been rescheduled or
canceled due to changes in customer requirements. These changes may occur even
after the Company has been notified of design wins or has executed purchase
agreements with customers. The Company's customers may cancel or delay purchase
orders for a variety of reasons, including rescheduling of new product
introductions and changes in inventory policies and forecasted demand.
Accordingly, the Company's backlog as of any particular date may not be
indicative of the Company's actual sales for any succeeding fiscal period.
The demand for the Company's products is strongly related to the demand for
high-performance microcomputers. This segment of the microcomputer industry is
continuing to experience significant growth due to migration of minicomputer
applications to microcomputers and the implementation of more complex business
applications. Should these rates of growth decline, the Company's revenues and
income may be adversely affected by a decrease in demand for the Company's
products, and pricing pressures could increase from both competitors and
customers.
COMPETITION
In the personal and enterprise computing markets, the Company's principal
competitors are small, privately-held host adapter companies. The Company's
competitive strategy is to leverage its technical leadership and concentrate on
the most technology-intensive solutions. To address the competitive nature of
the business the Company designs advanced features into its products, with
particular emphasis on data transfer rates, software-defined features and
compatibility with major operating systems and most peripherals. The Company
believes that it obtains a significant competitive advantage by supplying its
customers with a comprehensive array of I/O solutions ranging from connectivity
products for the personal computing market to high performance products for
enterprise-wide computing and networked environments. In addition, technical
leadership, product innovation, marketing expertise, and brand awareness
successfully position the Company in these markets.
The Company's principal competitor in the mass storage market is Cirrus
Logic, Inc. The Company believes that its competitive strengths in the mass
storage market include its ability to obtain major design wins as the result of
its systems level expertise, integrated circuit design capability and
substantial experience in I/O applications. The Company believes the principal
competitive factors in design wins are performance, product features, price,
quality and technical and administrative support. Based on these factors, the
Company believes it has, in the past, successfully competed for design wins.
The markets for the Company's products are highly competitive and are
characterized by rapid technological advances, frequent new product
introductions and evolving industry standards. The Company's competitors
continue to introduce products with improved performance characteristics and its
customers continue to develop new applications. The Company will have to
continue to develop and market appropriate products to remain competitive. While
the Company continues to devote significant resources to research and
development, there can be no assurance that such efforts will be successful or
that the Company will develop and introduce new technology and products in a
timely manner. In addition, while relatively few competitors offer a full range
of IOware solutions, additional domestic and foreign manufacturers may increase
their presence in, and the resources devoted to, these markets.
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MANUFACTURING
In August 1988, the Company opened its Singapore manufacturing facility for
the production and testing of high volume host adapter products. The Singapore
facility has earned ISO 9002 certification, a stringent quality standard that
has become a requirement for doing business globally. During fiscal 1995, the
Company purchased a fifth and sixth surface mount manufacturing line to support
its continued growth. In addition, the Company completed the move of its IC
production test facility to Singapore. This move affords the Company lower
costs, shorter manufacturing cycle times, and improved service to customers.
The Company's products make extensive use of standard logic, printed
circuit boards and static random access memory supplied by several outside
sources. An extended shortage or a major increase in the market prices of these
components could have an adverse affect on the Company's business. In addition,
foreign manufacturing is also subject to certain risks, including changes of
governmental policies, transportation delays and interruptions and the
imposition of tariffs and import and export controls. Currency exchange
fluctuations could increase the cost of components manufactured abroad, although
non-dollar denominated purchases do not currently represent a significant
portion of the Company's purchases. In addition, there is no assurance that the
Company will achieve its product cost objectives.
All semiconductor wafers used to manufacture the Company's products are
processed to its specification by outside suppliers. The Company believes that
its current wafer volume and manufacturing technology requirements do not
justify owning and operating a fabrication facility. The Company's reliance on
third party semiconductor manufacturers involves several risks, including the
absence of guaranteed capacity, the possible unavailability of or delays in
obtaining access to certain process technologies, and the absence of control
over wafer delivery schedules, manufacturing yields and production costs. To
reduce these risks, in fiscal 1994 the Company entered into a deposit and supply
agreement with Taiwan Semiconductor Manufacturing Co., Ltd. Under this
agreement, the Company is entitled to guaranteed sub micron wafer foundry
capacity through June 1997 and as of March 31, 1995 is committed to $44.6
million of purchases over the remaining term of the contract. The Company has
made available to the supplier advances aggregating $14.7 million to secure the
supply of silicon wafers pursuant to this agreement. The advances are repayable
at the expiration of the supply agreement and the supplier has provided an
irrevocable standby letter of credit to the Company in an equal amount to
guarantee the repayment of amounts made available by the Company.
PATENTS AND LICENSES
The Company believes that patents are of less significance in its industry
than such factors as innovative skills, technological expertise and marketing
abilities. However, the Company encourages its engineers to document patentable
inventions, and has applied for and continues to apply for patents both in the
United States and in foreign countries when it deems it to be advantageous to do
so. There can be no assurance that patents will be issued or that any patent
issued will provide significant protection or could be successfully defended.
As is the case with many companies in the electronics industry, it may be
desirable in the future for the Company to obtain technology licenses from other
companies. The Company has occasionally received notices of claimed infringement
of intellectual property rights and may receive additional such claims in the
future. The Company evaluates all such claims and, if necessary, will seek to
obtain appropriate licenses. There can be no assurance that any such licenses,
if required, will be available on acceptable terms.
EMPLOYEES
At March 31, 1995, the Company had 1,697 employees, including 379 in
engineering, 871 in manufacturing (including 748 at its Singapore facility), 67
in customer technical support, 119 in marketing, 116 in sales, and 145 in
finance and administration. The Company's continued success will depend in large
measure on its ability to attract and retain highly skilled employees who are in
great demand. None of the Company's employees is represented by a labor union.
FOREIGN AND DOMESTIC OPERATIONS
Incorporated by reference from information under the caption "Segment
Information" on Pages 45 and 46 of the Annual Report to Shareholders for the
fiscal year ended March 31, 1995.
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FACTORS AFFECTING STOCK PRICE
Factors such as technological innovations or new product introductions by
Adaptec, its competitors or its customers may have a significant impact on the
market price of Adaptec's Common Stock. In addition, quarter-to-quarter
fluctuations in the Company's results of operations, caused by changes in
customer demand, changes in the microcomputer and peripherals markets, or other
factors, may have a significant impact on the market price of the Company's
Common Stock. These conditions, as well as factors which generally affect the
market for stocks of high technology companies, could cause the price of the
Company's stock to fluctuate substantially over short periods.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect to the executive
officers of the Company, and their ages, as of March 31, 1995.
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NAME AGE POSITION
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John G. Adler............................ 58 Chairman of the Board of Directors,
and Chief Executive Officer
F. Grant Saviers......................... 50 President and Chief Operating Officer
Daniel W. Bowman......................... 50 Vice President of Administration
Martin Brauns............................ 35 Vice President of Sales
Andrew J. Brown.......................... 35 Corporate Controller
and Principal Accounting Officer
John D. Hamm............................. 35 Vice President and General Manager
Paul G. Hansen........................... 47 Vice President of Finance, Chief
Financial Officer and Assistant Secretary
Sam Kazarian............................. 52 Vice President of Operations
Christopher G. O'Meara................... 37 Vice President and Treasurer
S. Sundaresh............................. 38 Vice President and General Manager
Henry P. Massey, Jr...................... 55 Secretary
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Executive officers serve at the pleasure of the Board of Directors of the
Company. There are no family relationships between any directors or executive
officers of the Company.
Mr. Adler has served as Chief Executive Officer since December 1986, and as
a Director since February 1986. Mr. Adler served as Chief Operating Officer from
May 1985 to December 1986 and President from May 1985 to July 1992.
Mr. Saviers has served as President and Chief Operating Officer of the
Company since August 1992. Mr. Saviers was also appointed a member of the Board
of Directors at that time. Prior to that time, Mr. Saviers held several senior
level management positions in his 24 year tenure with Digital Equipment
Corporation, and most recently served as Vice President of Digital's personal
computer systems and peripherals operations.
Mr. Bowman has served as Vice President of Administration since December
1990 and from September 1988 to December 1990, was Director of Administration.
Mr. Brauns has served as Vice President of Sales since February 1994. From
March 1993 to January 1994, he served as Director of Sales. Between April 1991
and February 1993 Mr. Brauns held the position of Vice President of Marketing
and General Manager at Librex Computer Systems, Inc. From June 1987 to March
1991, he held a number of management positions at Wyse Technologies, Inc.
Mr. Brown has served as Corporate Controller and Principal Accounting
Officer since May 1994. From July of 1988 to April of 1994 he served in various
financial roles with the Company, the most recent as Operations Accounting
Controller.
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Mr. Hamm has served as Vice President and General Manager since February
1994, after serving as Vice President of Sales from December 1990 to February
1994. Between February 1988 and August 1990, Mr. Hamm served as Director of
Original Equipment Sales and held other various sales management positions at
Western Digital Corporation.
Mr. Hansen, a certified public accountant, has served as Vice President of
Finance and Chief Financial Officer since January 1988, after serving as
Corporate Controller from March 1985 to December 1987 and Director of Accounting
from March 1984 to March 1985.
Mr. Kazarian has served as Vice President of Operations since May 1990.
Before joining Adaptec, he served as Executive Vice President and Chief
Operating Officer at Rugged Digital Systems from January 1988 to April 1990.
Mr. O'Meara has served as a Vice President since July 1992 and as Treasurer
since April 1989. Between May 1988 and April 1989, Mr. O'Meara served as the
Company's Director of Financial Planning.
Mr. Sundaresh has served as Vice President and General Manager since
February 1994. From March of 1993 until January of 1994 he served as Director of
Marketing. From 1991 to 1993 he served as Director of PC Marketing at Hyundai
Electronics America. From 1983 to 1991, Mr. Sundaresh held several marketing
management positions at Hewlett-Packard Company.
Mr. Massey has served as Secretary since November 1989. For more than the
last five years, Mr. Massey has been a practicing lawyer and a member of Wilson,
Sonsini, Goodrich & Rosati, Professional Corporation, a law firm and general
outside counsel to the Company.
ITEM 2. PROPERTIES.
The Company owns six buildings (approximately 375,000 square feet) in
Milpitas, California. Five buildings are used by the Company for corporate
offices, research, manufacturing, marketing and sales. The sixth building,
consisting of office and warehouse facilities, (approximately 101,000 square
feet) is currently leased to third parties. The Company leases a facility in
Boulder, Colorado (47,000 square feet) to support technical design efforts and
sales.
Adaptec Manufacturing Singapore is located in two leased facilities
(approximately 103,000 square feet). The two buildings are used by the Company
for research, manufacturing and sales. The Company also leases seven sales
offices in the United States, and one sales office each in Brussels, Belgium;
Munich, Germany; Bretonneux, France; Fleet, England; Singapore; and Tokyo,
Japan. The Company believes its existing facilities and equipment are well
maintained and in good operating condition and believes its manufacturing
facilities, together with the use of independent manufacturers where required or
desirable, will be sufficient to meet its anticipated manufacturing needs
through fiscal 1996. The Company's future facilities requirements will depend
upon the Company's business and, the Company believes additional space, if
required, may be obtained on reasonable terms.
ITEM 3. LEGAL PROCEEDINGS.
A class action lawsuit alleging federal securities law violations and
negligent misrepresentation was filed against the Company, its directors, and
certain of its officers in February, 1991. That action was settled by letter
agreement on July 29, 1993. The Company has made all payments required under the
terms of the letter agreement. On March 7, 1995, the Court issued an Order
preliminarily approving the class action settlement. Notice of the settlement
has been given to class members. Final approval of the class action settlement
is pending final order from the Court.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
Incorporated by reference from the information under the caption "Common
Stock Prices and Dividends" on page 48 of the Annual Report to Shareholders for
the fiscal year ended March 31, 1995.
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated by reference from the information under the caption "Selected
Financial Data" on page 48 of the Annual Report to Shareholders for the fiscal
year ended March 31, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Incorporated by reference from the information under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" from pages 31 through 34 of the Annual Report to Shareholders for
the fiscal year ended March 31, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Consolidated financial statements of Adaptec, Inc. at March 31, 1995 and
1994 and for each of the three years in the period ended March 31, 1995 and the
independent accountants' report thereon are incorporated by reference from pages
35 through 47 of the Annual Report to Shareholders for the fiscal year ended
March 31, 1995. The financial statements of Adaptec, Inc. as of and for the two
years ended March 31, 1994 were audited by other independent accountants as
indicated in the previously mentioned independent accountants' report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The change in accountants during fiscal 1995 was reported of Forms 8-K
filed May 4, 1994 and June 23, 1994. Additionally, Form 8-K/A-2 dated July
11,1994 was filed amending the original Form 8-K filed on May 4, 1994.
On May 3, 1994, the Company dismissed Arthur Andersen LLP as its auditors.
This decision was recommended by management and approved by the Audit Committee
of the Board of Directors. The Company believes there were no disagreements with
Arthur Andersen LLP within the meaning of Instruction 4 of Item 304 of
Regulation S-K for the fiscal years ended March 31, 1993 or 1994, or with
respect to the subsequent period ended May 3, 1994.
During the fiscal years ended March 31, 1993 and 1994 and through May 3,
1994 there were no reportable events (as defined in Item 304 of Regulation S-K)
with Arthur Andersen LLP.
A letter from Arthur Andersen LLP addressed to the Securities and Exchange
Commission is included as an exhibit to this Form 10-K and incorporated by
reference from the aforementioned Form 8-K/A-2 dated July 11, 1994. This letter
states that the firm agrees with the statements made by the Company pursuant to
Item 304 of Regulation S-K.
The Company appointed Price Waterhouse LLP as its independent accountants
on June 21, 1994. This appointment is included in the Company's Form 8-K filed
June 23, 1994.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors of Adaptec is incorporated by
reference from the information under the captions "Election of
Directors -- Nominees" and "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Company's definitive Proxy Statement for the annual
meeting of shareholders to be held, August 24, 1995 (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated by reference from the information under the caption "Executive
Compensation and Other Matters" and "Election of Directors, Certain
Relationships and Related Transactions" in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference from the information under the caption; "Election
of Directors -- Security Ownership of Management" in the Company's Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated by reference from the information under the caption "Election
of Directors, Certain Relationships and Related Transactions" in the Company's
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
The following Consolidated Financial Statements of Adaptec, Inc. and the
Report of Independent Public Accountants, as listed under (a)(1) below, are
incorporated herein by reference to the Registrant's Annual Report to
Shareholders for the year ended March 31, 1995.
(a)(1) Financial Statements:
<TABLE>
<CAPTION>
PAGE IN
ANNUAL
REPORT
-------
<S> <C> <C>
Consolidated Statements of Operations -- Fiscal Years ended March 31,
1995, 1994 and 1993.................................................. 35
Consolidated Balance Sheets at March 31, 1995 and 1994............... 36
Consolidated Statements of Cash Flows -- Fiscal Years ended March 31,
1995, 1994 and 1993.................................................. 37
Consolidated Statements of Shareholders' Equity -- Fiscal Years ended
March 31, 1995, 1994 and 1993........................................ 38
Notes to Consolidated Financial Statements........................... 39-46
Report of Management................................................. 47
Report of Independent Accountants.................................... 47
</TABLE>
(2) All schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or notes thereto.
10
<PAGE> 12
(3) Exhibits included herein (numbered in accordance with Item 601 of
Regulation S-K):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION NOTES
- ----------- ----------------------------------------------------------------------------------
<S> <C> <C>
3.1 Seventh Amended and Restated Articles of Incorporation of Registrant. (1)
3.2 Bylaws of Registrant, as amended. (2)
4.1 First Amended and Restated Common Shares Rights Agreement dated June
30, 1992, between Registrant and Chemical Trust Company of California
as Rights Agents. (3)
10.1* Registrant's 1982 Incentive Stock Option Agreement and Nonstatutory
Stock Option Agreement. (4)
10.2* Registrant's 1986 Employee Stock Purchase Plan. (1)
10.3 Industrial Lease Agreement dated February 26, 1987 between the
Registrant, as Lessee, and Jurong Town Corporation, as Lessor. (5)
10.4 Technology License Agreement dated January 1, 1985 between the
Registrant and International Business Machines Corporation. (6), (7)
10.5* Registrant's Savings and Retirement Plan. (5)
10.6* 1990 Stock Plan, as amended. (9)
10.7* Forms of Stock Option Agreement, Tandem Stock Option/SAR Agreement,
Restricted Stock Purchase Agreement, Stock Appreciation Rights
Agreement, and Incentive Stock Rights Agreement for use in connection
with the 1990 Stock Plan, as amended. (2)
10.8* 1990 Directors' Option Plan and forms of Stock Option Agreement. (1)
10.9 Revolving Loan Agreement dated June 3, 1992 between Registrant and
Plaza Bank of Commerce (incorporated by reference to Exhibit 10.26
filed with Registrant's Annual Report on Form 10-K for fiscal year
ended March 31, 1992) and Amendment Number Three to the Revolving
Credit Loan Agreement dated April 29, 1994 between the Registrant and
Comerica Bank -- California (formerly Plaza Bank of Commerce) expiring
August 31, 1997. (1)
10.10 Admendments Four, Five and Six to the Revolving Credit Loan Agreement
dated April 29, 1994 between the Registrant and Comerica
Bank -- California expiring August 31, 1997.
10.11 Form of Indemnification Agreement entered into with directors and
officers of the Company. (8)
10.12 Term Loan Agreement dated June 24, 1992 between the Registrant and
Plaza Bank of Commerce expiring June 30, 1998. (8)
10.13* Letter agreement between F. Grant Saviers and the Company dated July
27, 1992. (2)
10.14** Deposit and Supply Agreement between Taiwan Semiconductor Manufacturing
Co., Ltd. and Adaptec Manufacturing Pte. Ltd. (1)
10.15 Purchase and Sale Agreement dated April 25, 1994 between the Registrant
and the Prudential Insurance Company of America. (1)
10.16 Industrial Lease Agreements between the Registrant, as Lessee, and
Jurong Town Corporation, as Lessor.
13.1 Annual Report to Shareholders for the fiscal year ended March 31, 1995.
16.1 Letter from Arthur Andersen LLP to the Securities and Exchange
Commission dated July 11, 1994. (10)
21.1 Subsidiaries of Registrant. (11)
23.1 Consent of Independent Accountants. Price Waterhouse LLP (See page 13).
23.2 Consent of Independent Public Accountants. Arthur Andersen LLP (See
Page 14).
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION NOTES
- ----------- ----------------------------------------------------------------------------------
<S> <C> <C>
23.3 Report of Independent Public Accountants, Arthur Andersen LLP (See Page
15).
24.1 Power of Attorney (See Page 16).
27.1 Financial Data Schedule for the year ended March 31, 1995.
</TABLE>
- ---------------
(1) Incorporated by reference to exhibits filed with Registrant's Annual Report
on Form 10-K for the year ended March 31, 1994.
(2) Incorporated by reference to exhibits filed with Registrant's Annual Report
on Form 10-K for the year ended March 31, 1993.
(3) Incorporated by reference to Exhibit A filed with the Registrant's
Registration Statement Number 0-15071 on Form 8-A on May 11, 1989 and to
Exhibit 1.1 to Form 8 Amendments No. 1, No. 2 and No. 3 thereto as filed
June 5, 1990, April 8, 1992 and July 20, 1992, respectively.
(4) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1990.
(5) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1987.
(6) Incorporated by reference to Exhibit 10.15 filed in response to Item 16(a)
"Exhibits", of the Registrant's Registration Statement on Form S-1 and
Amendment No. 1 and Amendment No. 2 thereto (file No. 33-5519), which
became effective on June 11, 1986.
(7) Confidential treatment granted by order effective June 11, 1986 and
extended by orders dated August 12, 1992 through June 30, 1995.
(8) Incorporated by reference to exhibits filed with Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1992.
(9) Incorporated by reference to Exhibit 4.2 to Form S-8 as filed October 26,
1994.
(10) Incorporated by reference to Exhibit 16 to Form 8-K/A-2 dated July 11,
1994.
(11) Incorporated by reference from the information under the caption "Corporate
Information" included in the Annual Report to Shareholders for the fiscal
year ended March 31, 1995.
* Designates management contracts or compensatory plan arrangements required
to be filed as an exhibit pursuant to item 14(c) of this report on Form
10-K.
** Confidential treatment has been requested for portions of this agreement.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter.
12
<PAGE> 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-85652) of Adaptec, Inc. of our report dated April
20, 1995 appearing on page 47 of the Annual Report to Shareholders which is
incorporated by reference in this Annual Report on Form 10-K.
PRICE WATERHOUSE, LLP
--------------------------------------
San Jose, California
June 23, 1995
13
<PAGE> 15
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K, into the Company's previously filed
Registration Statements File No. 33-36353, No. 33-36352, No. 33-32071, No.
33-25237, No. 33-19125, No. 33-19124, No. 33-8846 and No.33-68630.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Arthur Andersen LLP
San Jose, California
June 23, 1995
14
<PAGE> 16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Adaptec, Inc.:
We have audited the consolidated balance sheet of Adaptec, Inc. (a
California corporation) and subsidiaries as of March 31, 1994, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended March 31, 1994 and 1993 (incorporated by reference herein).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Adaptec, Inc. and
subsidiaries as of March 31, 1994, and the results of their operations and their
cash flows for the years ended March 31, 1994 and 1993 in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Arthur Andersen LLP
San Jose, California
April 25, 1994
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ADAPTEC, INC.
Date: June 23, 1995 /s/ JOHN G. ADLER
--------------------------------------
John G. Adler
Chairman of the Board of Directors,
Chief Executive Officer
16
<PAGE> 18
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints John G. Adler and Paul G. Hansen, jointly and
severally, his attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any amendments to this Report on Form 10-K,
and to file the same, with exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ----------------
<C> <S> <C>
/s/ JOHN G. ADLER Chairman of the Board of June 23, 1995
------------------------------ Directors, Chief Executive
(John G. Adler) Officer(Principal Executive
Officer)
/s/ F. GRANT SAVIERS President, and Chief Operating June 23, 1995
-------------------------------- Officer
(F. Grant Saviers)
/s/ PAUL G. HANSEN Vice President of Finance and June 23, 1995
--------------------------------- Chief Financial Officer
(Paul G. Hansen) (Principal Financial Officer)
Assistant Secretary
/s/ ANDREW J. BROWN Corporate Controller and June 23, 1995
--------------------------------- Principal Accounting Officer
(Andrew J. Brown)
/s/ LAURENCE B. BOUCHER Director June 23, 1995
----------------------------------
(Laurence B. Boucher)
/s/ ROBERT J. LOARIE Director June 23, 1995
-----------------------------------
(Robert J. Loarie)
/s/ B. J. MOORE Director June 23, 1995
-------------------------------------
(B. J. Moore)
/s/ W. FERRELL SANDERS Director June 23, 1995
------------------------------------
(W. Ferrell Sanders)
/s/ PHILLIP E. WHITE Director June 23, 1995
------------------------------------
(Phillip E. White)
</TABLE>
17
<PAGE> 1
EXHIBIT 10.10
AMENDMENT NUMBER FOUR TO REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT NUMBER FOUR TO REVOLVING CREDIT LOAN AGREEMENT dated as of
July 13, 1994 (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 entered into the Revolving Credit Loan
Agreement dated as of June 3, 1992, as amended by Amendment Number One dated as
of August 21, 1992, Amendment Number Two dated as of December 31, 1992, and
Amendment Number Three dated as of April 29, 1994 (as the same may be further
amended, restated, supplemented or otherwise modified from time to time, 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 6.2 of the Agreement is hereby amended to read in its entirety
as follows:
'6.2 Stock Acquisition. Purchase, redeem, retire or otherwise acquire
any of the shares of its capital stock, or make any commitment to do so, in
amounts which are, in the aggregate, greater than (a) Thirty Million
Dollars ($30,000,000) in the Borrower's fiscal year ending March 31, 1995,
and (b) Ten Million Dollars ($10,000,000) in any other fiscal year of the
Borrower. Any such amount which is unused in any fiscal year shall not be
available to carry forward for use in any subsequent fiscal year.'
3. The Borrower hereby represents and warrants to the Bank that (a) the
representations and warranties contained in the Agreement are true in all
material respects on and as of the date of this Amendment, and (b) no Default
has occurred and is continuing.
<PAGE> 2
4. Except as specifically amended pursuant to the foregoing paragraphs of
this Amendment, all recitals, representations, warranties, covenants,
undertakings, promises, indemnities, terms, conditions and provisions of the
Agreement shall remain in full force and effect and shall be and remain
unaffected by this Amendment.
5. 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. The 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. This Amendment shall become effective
when executed by each of the parties hereto and delivered to the Bank.
6. This Amendment shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California other than
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/ CHRISTOPHER G. O'MEARA
------------------------------------
Christopher G. O'Meara
Its: Vice President and Treasurer
COMERICA BANK-CALIFORNIA
(formerly known as Plaza)
Bank of Commerce)
By: /s/ LORI EDWARDS
------------------------------------
Lori Edwards
Its: First Vice President
2
<PAGE> 3
AMENDMENT NUMBER FIVE TO
REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT NUMBER FIVE TO REVOLVING CREDIT LOAN AGREEMENT dated as of
September 21, 1994 (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 entered into the Revolving Credit Loan
Agreement dated as of June 3, 1992, as amended by Amendment Number One dated as
of August 21, 1992, Amendment Number Two dated as of December 31, 1992,
Amendment Number Three dated as of April 29, 1994, and Amendment Number Four
dated as of July 13, 1994 (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, 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 6.2 of the Agreement is hereby amended to read in its entirety
as follows:
'6.2 Stock Acquisition. Purchase, redeem, retire or otherwise acquire
any of the shares of its capital stock, or make any commitment to do so, in
amounts which are, in the aggregate, greater than (a) Fifty Million Dollars
($50,000,000) in the Borrower's fiscal year ending March 31, 1995, and (b)
Ten Million Dollars ($10,000,000) in any other fiscal year of the Borrower.
Any such amount which is unused in any fiscal year shall not be available
to carry forward for use in any subsequent fiscal year.'
3. The Borrower hereby represents and warrants to the Bank that (a) the
representations and warranties contained in the Agreement are true in all
material respects on and as of the date of this Amendment, and (b) no Default
has occurred and is continuing.
<PAGE> 4
4. Except as specifically amended pursuant to the foregoing paragraphs of
this Amendment, all recitals, representations, warranties, covenants,
undertakings, promises, indemnities, terms, conditions and provisions of the
Agreement shall remain in full force and effect and shall be and remain
unaffected by this Amendment.
5. 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. 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. This Amendment shall become effective
when executed by each of the parties hereto and delivered to the Bank.
6. This Amendment shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California other than
principles of conflicts of law.
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/ CHRISTOPHER G. O'MEARA
------------------------------------
Christopher G. O'Meara
Its: Vice President and Treasurer
COMERICA BANK-CALIFORNIA
(formerly known as Plaza)
Bank of Commerce)
By: /s/ LORI EDWARDS
------------------------------------
Lori Edwards
Its: First Vice President
2
<PAGE> 5
AMENDMENT NUMBER SIX TO
REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT NUMBER SIX TO REVOLVING CREDIT LOAN AGREEMENT dated as of
December 9, 1994 (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").
W I T N E S S E T H:
WHEREAS, the Borrower and the Bank are parties to a certain Revolving
Credit Loan Agreement dated as of June 3, 1992, as amended by Amendment Number
One dated as of August 21, 1992, Amendment Number Two dated as of December 31,
1992, Amendment Number Three dated as of April 29, 1994, Amendment Number Four
dated as of July 13, 1994, and Amendment Number Five dated as of September 21,
1994 (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. The definition of "Termination Date" set forth in Section 1.1 of the
Agreement is hereby amended to read in its entirety as follows:
' "Termination Date" shall mean December 31, 1996 (or such later date
as extended pursuant to Section 2.6 or such earlier date on which the
Borrower shall permanently terminate the Bank's commitment under Section
2.14).'
3. Section 2.12.1 of the Agreement is hereby amended to read in its
entirety as follows:
' 2.12.1 Commitment Fees. The Borrower shall pay to the Bank a
commitment fee for the period from the Effective Date to and including the
Termination Date equal to the average daily excess of the Commitment Amount
over the sum of (a) the aggregate outstanding
<PAGE> 6
principal amount of all outstanding Revolving Loans, plus (b) the aggregate
outstanding Letter of Credit Face Amounts of all outstanding standby
Letters of Credit, plus (c) the aggregate outstanding principal amount of
all Letter of Credit Loans outstanding, multiplied by (i) from the
Effective Date to and including November 30, 1994, three-eighths of one
percent (0.375%) per annum, and (ii) from December 1, 1994 to and including
the Termination Date, one-quarter of one percent (0.25%), in each case
based on a year of 360 days for the actual number of days elapsed. Such
commitment fees shall be computed without regard to any Default and shall
be paid in arrears on the last day of each March, June, September and
December, commencing September 30, 1992, and also on the Termination Date.'
4. The Borrower hereby represents and warrants to the Bank that (a) the
representations and warrants contained in the Agreement are true in all material
respects on and as of the date of this Amendment, and (b) no Default has
occurred and is continuing.
5. Except as specifically amended pursuant to the foregoing paragraphs of
this Amendment, all recitals, representations, warranties, covenants,
undertakings, promises, indemnities, terms, conditions and provisions of the
Agreement shall remain in full force and effect and shall be and remain
unaffected by this Amendment.
6. 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. 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. This Amendment shall become effective
when executed by each of the parties hereto and delivered to the Bank.
7. This Amendment shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California other than
principles of conflicts of laws.
2
<PAGE> 7
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/ CHRISTOPHER G. O'MEARA
------------------------------------
Christopher G. O'Meara
Vice President and Treasurer
COMERICA BANK-CALIFORNIA
(formerly known as Plaza Bank
of Commerce)
By: /s/ LORI EDWARDS
------------------------------------
Lori S. Edwards
First Vice President
3
<PAGE> 1
EXHIBIT 10.16
[LOGO]
REGISTRATION NO: PF 20530/93
FILE NO: JTC(L)3729/1210 Pt 1/LPH/SL(AT)
TENANCY AGREEMENT RELATING TO PRIVATE LOT A12733(c)
NO. #06-14 AT 1003 BUKIT MERAH CENTRAL
REDHILL INDUSTRIAL ESTATE
BETWEEN
JURONG TOWN CORPORATION
AND
ADAPTEC MFG (S) PTE LTD
<PAGE> 2
TENANCY OF FLATTED FACTORY UNIT
This Tenancy is made the 11th day of February 1993 between the JURONG
TOWN CORPORATION incorporated under the Jurong Town Corporation Act, having its
Head Office at Jurong Town Hall, Jurong Town Hall Road, Singapore (hereinafter
called "the Landlord") of the one part and ADAPTEC MFG (S) PTE LTD and having
its registered office at 10 Hoe Chiang Road, #17-02 Keppel Tower, Singapore 0208
(hereinafter called "the Tenant" which expression shall where the context so
admits include its successors and permitted assigns) of the other part.
WITNESSETH as follows :-
1 The Landlord hereby lets and the Tenant hereby takes ALL that portion
of the SIXTH (6TH) storeys of the Building known as 1003 BUKIT MERAH CENTRAL
#06-14 REDHILL INDUSTRIAL ESTATE (hereinafter called "the Building") containing
an approximate area of 393.8 square metres (which said area may be adjusted on
completion of survey, if any) more particularly delineated and coloured red on
the plan annexed hereto (which portion is hereinafter called "the Factory
Unit") TOGETHER with the use of the lavatories and conveniences thereat
together also with the use for the Tenant the Tenant's servants and visitors of
the lifts and the entrances staircases corridors and passages and accesses to
the Building for the purpose only of ingress and egress to and from the Factory
Unit with or without parcels and packages TO HOLD the same UNTO the Tenant for
the term of TWO (2) YEARS AND TEN (10) MONTHS from the 1ST day of SEPTEMBER
1992 YIELDING AND PAYING therefor during the said term the rent
(1) at the discounted rate of Dollars TWELVE AND CENTS THIRTY-FIVE
ONLY ($12.35CTS) per square metre per month for so long as the
Tenant shall occupy under tenancy an aggregate floor area of
393.8 square metres in the Building or in the various Flatted
Factories belonging to the Landlord; and
<PAGE> 3
- 2 -
(2) in the event that the said aggregate floor area occupied is at
any time henceforth and for any reason whatever reduced to
below 5,000 square metres whence the discount shall be totally
withdrawn from and in respect of the Factory Unit and all
other premises occupied by the Tenant, then and with effect
from the date of the reduction of the said aggregate floor
area, at the normal rate of Dollars THIRTEEN ONLY ($13.00) per
square metre per month to be paid clear of all deduction and
in advance and without demand on the lst day of each of the
calendar month of the year (i.e., the 1st day of January,
February, March, etc.) the first of such payments to be made
on the 1ST day of SEPTEMBER 1992.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent at the rates, on the days and in the
manner aforesaid.
(2) To pay in addition to the said rent during the said term the
sum of Dollars ONE AND CENTS SEVENTY ONLY ($1.70CTS) per
square metre per month in advance on the same dates and in the
same manner as for the said rent as charges for services to be
undertaken by the Landlord as hereinbefore mentioned
(hereinafter referred to as "the Service Charge") PROVIDED
THAT if the cost of services shall increase, the Landlord may
revise the Service Charge and on serving a notice in writing
to the Tenant to this effect such revised Service Charge shall
be payable as from the date specified in the said notice.
(3) (i) To pay a deposit equivalent to three (3) months' rent
at the discounted rate and service charge on or
before the execution of this Agreement, or
commencement of the said term whichever is earlier,
as security against breach of any or all of the
covenants herein contained which cash deposit shall
be maintained at this figure during the said term and
shall be repayable without interest on the
termination of this tenancy subject however to an
appropriate deductions as damages in respect of any
such breach.
(ii) In lieu of the aforesaid cash deposit to provide an
acceptable banker's guarantee for the same equivalent
amount, which guarantee shall be valid and
irrevocable for the whole of the said term or the
unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the
said term and in a form approved by the Landlord, or
to provide such other form of security as the
Landlord may in Landlord's absolute discretion permit
or accept.
<PAGE> 4
- 3 -
(iii) If the rent at the discounted rate hereinbefore
mentioned in clause 1(1) shall at any time be
increased to the rent at normal rate in accordance
with Clause 1(2), or if the Service Charge has been
increased by the Landlord in accordance with Clause 2
(2) hereof , to forthwith pay the amount of such
increase so that the cash deposit stipulated in
sub-clause (i) above shall at all times be equal to
three (3) months' rent (at the discounted or normal
rate as the case may be) and service charge.
(4) During the said term or any renewal thereof to pay any
increase of property tax which may be imposed whether by way
of an increase in the annual value or an increase in the rate
per cent. For the purpose of ascertaining the additional
amount payable under this clause any such increase in property
tax shall be apportioned in the same proportion as the rent
payable under this Agreement bears to the total assessed
annual value of the Building at the date such increase comes
into force.
(5) To pay all charges and outgoings whatsoever in respect of the
supply of electricity and water used by the Tenant at the
Factory Unit as shown by the separate meters belonging thereto
and also pay all charges for the use and maintenance of such
meters PROVIDED ALWAYS that subject to the prior written
consent of the Landlord and to all approvals being obtained by
the Tenant from the relevant authorities the water sub-meter
will be installed in the Factory Unit by the Tenant at the
Tenant's own cost.
(6) At all times to use and occupy the Factory Unit for the
purpose of MANUFACTURING OF APPLICATION SPECIFIC INTEGRATED
CIRCUITS (ASIC) AND PRINTED CIRCUIT BOARD ASSEMBLY (PCBA) ONLY
and for no other purposes whatever.
(7) Not to place or allow to be placed upon the Factory Unit or on
any of the floors in the Building any article machinery or
load in excess of 10 kiloNewtons per square metre and not to
place or allow to be placed in the goods lifts of the factory
building any article machinery or load in excess of 2000
kilograms.
<PAGE> 5
- 4 -
(8) To keep the interior of the Factory Unit (including the doors
and windows thereof and all the Landlord's other fixtures and
fittings therein) clean and in good and substantial repair and
condition (fair wear and tear and damage by fire lightning
riot or tempest alone excepted) and also to clean and keep
clean the exterior of the windows thereof.
(9) Not to make or cause to be made any alteration in or addition
to the Factory Unit without the prior written consent of the
Landlord and the relevant authorities PROVIDED THAT on the
granting of such consent and without prejudice to other terms
and conditions which may be imposed the Tenant shall place
with the Landlord a deposit equivalent to such amount as the
Landlord may deem sufficient for the reinstatement of the
Factory Unit to its original condition. Further the Tenant
shall not use any inflammable building materials for internal
partitioning.
(10) Not to modify any existing electrical wirings or modify or
replace any existing fire alarm fixtures and fittings or affix
or install any further or additional electrical and fire alarm
wiring extension in or about the Factory Unit without the
written consent of the Landlord having been first obtained and
PROVIDED FURTHER THAT all such work shall be carried out by a
licensed electrical contractor or competent person as approved
by the Landlord to be employed and paid by the Tenant who
shall ensure as part of the work that the existing circuits
and equipment are not overloaded or unbalanced. Prior to any
electrical and fire alarm installation or modification work,
the Tenant will be required to submit the necessary plans as
hereinafter specified under clauses 2(29) and 2(30) to the
Landlord for approval.
(11) To permit the Landlord or the Landlord's agents with or
without workmen or others at all reasonable times to enter the
Factory Unit to take inventories of the Landlord's
<PAGE> 6
- 5 -
fixtures and fittings therein and to view the condition
thereof and examine the state of repair of the Factory Unit
and thereupon the Landlord may serve upon the Tenant notice in
writing specifying any work or repairs necessary to be done
which are within the responsibility of the Tenant under the
terms of this Agreement and require the Tenant forthwith to
execute the same and the Tenant shall pay the Landlord's
reasonable costs of survey attending the preparation of the
notice and if the Tenant shall not within ten days after the
service of such notice proceed diligently and in workman-like
manner with the execution of such work or repairs then to
permit the Landlord (who shall not be under any obligation so
to do) to enter upon the Factory Unit and execute such work or
repairs and the cost thereof shall be a debt due from the
Tenant to the Landlord and be forthwith recoverable PROVIDED
ALWAYS that the Landlord shall not be liable to the Tenant for
any loss damage or inconvenience caused by such work or
repairs.
(12) To be wholly responsible for all damages and to bear the full
cost of repairs and reinstatement of such damaged building
equipment fixtures drains wiring and piping above and below
ground level if the cause or causes of such damages can be
traced directly or indirectly back to the Tenant's activities.
(13) To permit the Landlord, the Landlord's agents or workmen and
others to enter the Factory Unit at reasonable hours to do
structural or external repairs and execute such work as may be
necessary to the Factory Unit or to other portions of the
Building of which the Factory Unit may form a part but which
are not conveniently accessible otherwise than from or through
the Factory Unit.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article to permit the Landlord to execute the
said repairs and works and if the Tenant shall fail to observe
or perform this covenant the Landlord shall remove the same
and all costs and expenses incurred thereby shall
<PAGE> 7
- 6 -
be recoverable from the Tenant as a debt PROVIDED ALWAYS that
the Landlord shall not be liable to the Tenant for any loss
damage or inconvenience caused by such removal.
(15) Subject always to clause 2(27) hereinafter appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
(16) To make good and sufficient provision for the safe and
efficient disposal of all waste generated at the Factory Unit
including but not limited to pollutants to the requirements
and satisfaction of the Landlord and/or relevant Government
authorities PROVIDED THAT in the event of any default by the
Tenant under this covenant the Landlord may carry out such
remedial measures as he thinks necessary and all costs and
expenses incurred thereby shall forthwith be recoverable in
full from the Tenant as a debt.
(17) To provide and maintain refuse receptacles for all waste and
refuse produced at the Factory Unit in conformity with the
requirements and standards prescribed by the health authority
and to keep the same out of sight of the public during the
hours of business and to transfer such waste and refuse in
suitable receptacles to such area and at such times each day
as may be prescribed by the Landlord.
(18) Not to keep or allow to be kept livestock or other animals at
the Factory Unit.
(19) Not to do or suffer to be done on or in the Factory Unit
anything whereby the insurances of the same or of the Building
or any part thereof may be rendered void or voidable or
whereby the premium thereon may be increased and to repay to
the Landlord on demand all sums paid by the Landlord by way of
increased premium and all expenses incurred by the Landlord in
connection therewith and/or all loss damages and expenses
resulting from a breach or non-observance of this covenant
without prejudice to any other rights and remedies available
to the Landlord.
<PAGE> 8
- 7 -
(20) Not to do or permit or suffer to be done anything in or upon
the Factory Unit or any part of the Building which in the
opinion of the Landlord is a nuisance or cause annoyance to or
in any way interfere with the business or the quiet or comfort
of the other occupants of the Building PROVIDED THAT the
Landlord shall not be responsible to the Tenant for any loss,
damage or inconvenience as a result of nuisance, annoyance or
any interference whatsoever caused by the other occupants of
the Building.
(21) Not to use the said premises for any illegal or immoral
purpose.
(22) Not to cause any obstruction in or on the approaches private
roads or passage way adjacent to or leading to the Building by
leaving or parking or permitting to be left or parked any
motor vehicle or other carriages belonging to or used by the
Tenant or by any of the Tenant's friends servants or visitors.
And also to observe all regulations made by the Landlord
relating to the parking of such vehicles or carriages and to
pay such carpark charges as may be imposed by the Landlord.
(23) Not to effect any sale by auction in the Building.
(24) Not to affix paint or otherwise exhibit on the exterior of the
Factory Unit or the windows thereof or of the Building or in
any of the passages corridors or stairs of the Building any
name plate placard poster or advertisement or any flag-staff
or other thing whatsoever save only the name of the Tenant in
such places only and not elsewhere and in such manner and
position only as shall be approved in writing by the Landlord.
(25) Not to cause any obstruction to the common stairways
passageways and other common parts of the Building or accesses
to the Building. PROVIDED ALWAYS that the
<PAGE> 9
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Landlord shall have the full right and liberty and absolute
discretion to remove and clear any such obstruction and all
costs and expenses incurred thereby shall be recoverable from
the Tenant as a debt. FURTHER PROVIDED THAT the Landlord
shall not be liable to the Tenant or any third party for any
loss damage or inconvenience caused by such removal and the
Tenant hereby indemnifies the Landlord in this respect.
(26) Not to install any machinery or fixture in the Factory Unit
without the permission in writing of the Landlord and to
submit a layout plan of the Tenant's machinery for the
approval of the Landlord and/or relevant authorities prior to
the actual fixing of the machineries.
(27) Not to assign sublet grant a licence or part with or share the
possession of the Factory Unit or any part thereof without
first obtaining the written consent of the Landlord, which
consent if granted shall be subject to such terms and
conditions as the Landlord may think fit to impose. The
restrictions contained in Section 17 of the Conveyancing and
Law of Property Act (Chapter 61 shall not apply.
(28) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Factory Unit and/or in respect of
the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Landlord against all actions, proceedings, costs, expenses,
claims, fines, losses, penalties and demands in respect of any
act matter or thing done or omitted to be done in
contravention of the said provisions.
(29) To install electrical switch board wirings and equipment to
the Factory Unit including the following electrical protective
devices, all at the Tenant's own expense, subject to the
approval of the Landlord:-
<PAGE> 10
- 9 -
(a) Overcurrent protective devices in the Landlord's
Switch Room;
(b) Overcurrent and earth-leakage protective devices in
the Factory Unit,
PROVIDED THAT-
(i) the Tenant shall submit 3 sets of 'electrical
single-line diagram' of the Factory Unit wirings for
the approval of the Landlord prior to the actual
installation of the wirings; and
(ii) it shall be the responsibility of the Tenant to keep
all or any of the aforesaid switch board wirings,
equipment and devices installed by the Tenant in good
condition at all times.
(30) To carry out such modification work on the existing fire alarm
wirings, heat detectors and fixtures in the Factory Unit as
shall be necessary to suit the factory operation, including
the installation of additional wirings and connections of the
heat detectors and fixtures to the Landlord's common fire
alarm system, to the approval of the Landlord and all at the
Tenant's own expense PROVIDED THAT:
(a) The Tenant shall submit 2 copies of the fire alarm
drawings of the Factory Unit indicating the existing
fixtures, the proposed modifications and the layout
of the Tenant's machinery for the approval of the
Landlord prior to the commencement of the
modification work.
(b) The Tenant shall at the Tenant's own expense ensure
that the existing fire alarm wirings, heat detectors
and fixtures and any additional wirings and fixtures
installed by the Tenant in the Factory Unit are
serviced monthly and in good condition at all times
including the payment of any fee(s) in connection
with servicing and maintenance works.
<PAGE> 11
- 10 -
(c) Any item of replacement required for the effective
maintenance of the fire alarm wirings, heat detectors
and fixtures shall be of a quality and has an
operational characteristic similar to the item to be
replaced and shall be subject to the approval of the
Landlord. The Tenant shall be required to replace
any or all items of dissimilar quality and
operational characteristic found in use.
(31) To close the Factory Unit during such hours as the Landlord
may specify by notice in writing to the Tenant for any
maintenance or repair work to be executed by the Landlord.
(32) At all times during the three calendar months immediately
preceding the determination of the said term to permit
intending tenants and others with written authority from the
Landlord or his agents at reasonable times of the day to view
the Factory Unit.
(33) At the determination of the said term by expiry or otherwise
to yield up the Factory Unit and all the Landlord's fixtures
fittings fastenings or appertaining in such good and
substantial repair fair wear and tear excepted as shall be in
accordance with the covenants of the Tenant herein contained
and with all locks and keys complete.
(34) In addition to the foregoing and immediately prior to the
determination of the said term or the renewal thereof as the
case may be to restore the Factory Unit in all respects to its
original state and condition if so required by the Landlord to
redecorate including painting the interior
<PAGE> 12
- 11 -
thereof to the satisfaction of the Landlord PROVIDED ALWAYS
that if the Tenant shall fail to observe or perform this
covenant the Landlord shall execute such work for the said
restoration and redecoration and recover the cost thereof from
the Tenant together with all rent and service charge and other
amounts which the Landlord would have been entitled to receive
from the Tenant had the period within which such restoration
and redecoration are effected by the Landlord been added to
the said term.
(35) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Landlord in
respect of any outstanding amount payable under this Agreement
from the date such amount becomes due until payment in full is
received by the Landlord.
(36) Not to install and/or use any electrical installation, machine
or apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the
service or use of any communication system or affects the
operation of other equipment, installations, machinery,
apparatus or plants of other Tenants and in connection
therewith, to allow the Landlord or any authorised person(s)
to inspect at all reasonable times, such installation, machine
or apparatus in the Factory Unit to determine the source of
the interference or disturbance and thereupon, to take
suitable measures, at the Tenant's own expense, to eliminate
or reduce such interference or disturbance to the Landlord's
satisfaction, if it is found by the Landlord or such
authorised person(s) that the Tenant's electrical
installation, machine or apparatus is causing or contributing
to the said interference or disturbance.
(37) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs,
<PAGE> 13
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demands which may arise in connection with clause 2(36) above.
(38) To perform and observe all the obligations which the Landlord
of the Factory Unit may be liable to perform or observe during
the said term by any direction or requirement of any public or
local authority and if the Tenant shall fail to observe or
perform this covenant the Landlord may in its absolute
discretion perform the same and all expenses and costs
incurred thereby shall be recoverable from the Tenant as a
debt PROVIDED ALWAYS that the Landlord shall not be liable to
the Tenant for any loss damage or inconvenience caused
thereby.
(39) To ensure that
(i) at least 60% of the overall floor area shall be used
for purely industrial activities and
(ii) the remaining 40% shall be used as ancillary stores
and offices, neutral areas and communal facilities
PROVIDED THAT the said ancillary offices shall not
exceed 25% of the overall floor area.
(40) Not to use and occupy the Factory Unit for the purpose of
commercial office and storage unrelated to the Tenant's
approved industrial activity.
(41) To permit the Landlord, the Landlord's agents or workmen and
others at any time during the said term to enter the Factory
Unit to replace the louvre/casement windows and timber doors
with such other windows and doors as the Landlord may think
fit and to install or replace service ducts/pipes ("the said
replacement or installation works"). If so required by the
Landlord the Tenant shall remove such installation, machinery,
partition or any article to permit the Landlord to execute the
said replacement or installation works, and if the Tenant
shall fail to observe or perform this covenant the Landlord
shall have the right to (without prejudice to any other right
or remedy the Landlord may have against the Tenant) remove the
same, and all costs and expenses incurred thereby shall
forthwith be recoverable from the Tenant as a debt PROVIDED
ALWAYS that the Landlord shall not be liable to the Tenant for
any loss, damage or inconvenience caused whatsoever by such
removal and the said replacement or installation works.
(42) Without prejudice to Clause 2(6) hereof and subject to the
prior written approval of the Landlord, to provide thermal
insulation to the floor, ceiling and the walls of rooms, if
the rooms are used for purposes requiring low temperature air
conditioning or cooling that would result in moisture
condensation on the external, ceiling or floor within or
outside the Factory Unit.
(43) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Factory Unit or any part
thereof, to forthwith give the Landlord written notice of
damage.
<PAGE> 14
- 13 -
(44) Not to commence operation in the Factory Unit after the
installation(s) of the machinery equipment, etcetera have been
completed until a final inspection of the installation(s) has
been carried out and approval of the same is given by the
Landlord.
(45) The Tenant accepts the Factory Unit with full knowledge that
refurbishment and upgrading works (hereinafter referred to as
"the refurbishment") are being or may be carried out in the
Building and the estate in which the Building is situated.
The Tenant shall, if required by the Landlord and within the
time stipulated by the Landlord, at the cost and expense of
the Tenant properly and in accordance with the obligations of
the Tenant under this Agreement remove, re-locate and/or
modify temporarily or permanently as may be stipulated by the
Landlord every installation, fixture, fittings, device,
equipment and article existing at the time outside the Factory
Unit as the Landlord may think fit for the purpose of
permitting the Landlord, his servant, agent, contractor and
subcontractor to properly carry out the refurbishment or for
the purpose of improving the appearance or aesthetics of the
Building. PROVIDED THAT if the Tenant shall fail to observe
or perform this covenant or any part thereof the Landlord
shall have the right (without prejudice to any other right or
remedy the Landlord may have against the Tenant) to remove,
re-locate and/or modify any or every such installation,
fixture, fitting, device, equipment and article, and all costs
and expenses incurred thereby shall forthwith be recoverable
from the Tenant as a debt. PROVIDED ALWAYS and it is hereby
agreed that the Landlord shall not be liable in any way to the
Tenant or any other person for any loss, damage, claim, cost,
expense, disruption, interference and/or inconvenience caused
howsoever or whatsoever by or in connection with the
refurbishment and/or the removal, re-location or modification.
3 The Landlord hereby covenants with the Tenant as follows:
(1) To pay the property tax payable in respect of the Factory Unit
PROVIDED ALWAYS that if the rate of such property tax shall be
increased whether by way of an increase in the annual value or
an increase in the rate per cent then the Landlord shall not
hereunder be liable to pay the said increase but the Tenant
shall pay such increase as provided under Clause 2(4) hereof.
(2) To keep the exterior and roof of the building and the lift
entrances corridors passages staircases lavatories water
closets and other conveniences intended for the use of the
Tenant at all times in complete repair and in proper sanitary
and clean condition.
(3) To keep the stairs and passages leading to the Factory Unit
and the lifts and lavatories well and sufficiently lighted and
the lifts in proper working order PROVIDED THAT the Landlord
shall not be responsible for any loss the Tenant may sustain
by reason of any damage or injury caused by or in consequence
of any breakage of or defect in any of the pipes wire or other
apparatus of the Landlord used in or about the Building.
<PAGE> 15
- 14 -
(4) To keep the Building insured against loss or damage by fire
and in the event of such loss or damage (unless resulting from
some act or default of the Tenant) to rebuild and reinstate
the damaged part of the Building PROVIDED THAT it is expressly
agreed and understood that the terms loss or damage by fire as
used in this clause do not include any loss or damage caused
to the Tenant's fixtures or loss due to the factory being
rendered out of commission and in any such event the Landlord
shall not be held liable for any such loss or damage sustained
by the Tenant.
(5) That the Tenant paying the rent and observing and performing
the several covenants and stipulations on the Tenant's part
herein contained shall during the said term quietly enjoy the
Factory Unit without any interruption by the Landlord or any
person or persons lawfully claiming under or in trust for the
Tenant.
4 PROVIDED ALWAYS THAT and it is hereby agreed as follows:
(1) If the rent hereby reserved or any part thereof shall at any
time be in arrears unpaid for twenty-one (21) days after
becoming payable (whether formally demanded or not) or if the
Tenant shall neglect to observe and perform any covenant or
stipulation on the Tenant's part herein contained or if the
Tenant shall make any assignment for the benefit of the
Tenant's creditors or enter into any arrangement with its
creditors by composition or otherwise or suffer any distress
or attachment or execution to be levied against the Tenant's
goods or if the Tenant for the time being shall be a company
and shall enter into liquidation whether compulsory or
voluntary (save for the purpose of reconstruction or
amalgamation) or being an individual shall be lawful for the
Landlord at any time thereafter to re-enter upon the Factory
Unit or any part thereof in the name of the whole and
thereupon this Tenancy shall absolutely determine but without
prejudice to the rights of action of the Landlord in respect
of any breach of the covenants on the part of the Tenant
herein contained.
(2) That the Landlord shall on written request of the Tenant made
not less than three (3) months before the expiration of the
term hereby created and if there shall not at the time of such
request be any existing breach or non-observance by the Tenant
of any of the terms, covenants and stipulations contained in
this Agreement, at the cost and expense of the Tenant grant to
the Tenant a tenancy of the Factory Unit for a further term to
be mutually agreed upon by the parties hereto and at a revised
rent to be determined by the Landlord and containing the like
terms, covenants and stipulations as are herein contained or
such variations or modifications thereof together with such
other terms covenants and stipulations as may be imposed by
the Landlord with the exception of the present covenant for
renewal.
(3) Any notice requiring to be served hereunder shall be
sufficiently served on the Tenant if it is left addressed to
the Tenant at the Factory Unit or forwarded to the Tenant by
registered post to the Tenant's last known place of business
and shall be sufficiently served on the Landlord if it is
addressed to the Landlord and sent by registered post to the
Head Office. In the event of the action in respect of the
tenancy created herein (including any action for the recovery
of the rent and/or service charge herein reserved) the Tenant
agrees and accepts that the originating process shall be
sufficiently served on the Tenant if it is addressed to the
Tenant at the address specified in this Agreement or if it is
left posted upon a conspicuous part of the Factory Unit or
forwarded to the Tenant by post at the Tenant's last known
place of business.
<PAGE> 16
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(4) Letters or parcels whether registered or otherwise and
telegrams or keys received by any servant(s) of the Landlord
on behalf of the Tenant will be received solely at the risk of
the Tenant.
(5) No waiver expressed or implied by the Landlord of any breach
of any covenant, condition or duty of the Tenant shall be
construed as a waiver of any other breach of the same or any
other covenant, condition or duty and shall not prejudice in
any way the rights, powers and remedies of the Landlord herein
contained. Any acceptance of rent and/or service charge shall
not be deemed to operate as a waiver by the Landlord of any
right to proceed against the Tenant for any of the Tenant's
obligations hereunder.
(6) The Landlord shall not be responsible for any loss damage or
inconvenience occasioned by the closing of the lift or lifts
for repairs or any other necessary purpose or for any accident
that may occur to the Tenant or other person using the lift.
(7) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the Factory
Unit or the Building or any part thereof for any accident(s) or
injuries sustained or loss or damage to property in the
Factory Unit or the Building or any part thereof.
(8) The Landlord shall not be liable to the Tenant in respect of:
(i) any interruption in the services provided by the
Landlord by reason of necessary repair or maintenance
of any installation or apparatus or damage thereto or
by reason of mechanical or other defect or breakdown
including but not limited to breakdown in electricity
and water supply.
<PAGE> 17
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(ii) any act, omission, default, misconduct or negligence
of any servant or employee of the Landlord in or
about the performance or purported performance of any
duty relating to the provision of the said services.
(9) The Landlord shall be entitled to let any other part or parts
of the Building subject to any term(s) or condition(s) which
the Landlord may think fit to impose and nothing herein
contained shall be deemed to create a letting scheme for the
Building or any part thereof and neither the Tenant nor the
persons deriving title under the Tenant shall have the benefit
of or the right to enforce or to have enforced or to prevent
the release or modification of any covenant agreement or
condition entered into by any present or future tenant.
(10) The Tenant shall pay all costs disbursements fees and charges
legal or otherwise including stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to this
Agreement.
(11) The Tenant shall pay all costs and fees legal or otherwise
including costs as between solicitor and clients in connection
with the enforcement of the covenants and conditions of this
Agreement.
(12) The Landlord shall not be liable for any loss or damage that
may be suffered by the Tenant resulting from any subsidence,
or cracking of the ground floor slabs and aprons of the
Building PROVIDED that this clause shall apply only to
Tenants occupying the ground floor of the Building.
<PAGE> 18
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IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY:
SEAH KEE POK
Manager (Factories)
for and on behalf of
JURONG TOWN CORPORATION
in the presence of:
/s/ GRACE ONG SOO HIANG
- ------------------------------
GRACE ONG SOO HIANG
SIGNED BY: Lim Kok Yong
Managing Director
for and on behalf of
ADAPTEC MFG (S) PTE LTD
in the presence of:
/s/ ANDREW NG TYA AH
- -------------------------------
(SIGNATURE OF WITNESS)
NAME OF WITNESS: Andrew Ng Tya Ah
DESIGNATION: Director of Finance & Admin.
<PAGE> 19
[LOGO]
REGISTRATION NO: FF 20799/93
FILE REF: JTC(L) 3729/1210 Pt 1/GOSH/MF(MN)
TENANCY OF FLATTED FACTORY NOS. 05-09 to 05-14
1003 BUKIT MERAH CENTRAL
REDHILL INDUSTRIAL ESTATE
BETWEEN
JURONG TOWN CORPORATION
AND
ADAPTEC MFG (S) PTE LTD
DATED
7/5/93
<PAGE> 20
TENANCY OF FLATTED FACTORY UNIT
This Tenancy is made the 7th day of May 1993 Between the JURONG TOWN
CORPORATION incorporated under the Jurong Town Corporation Act, having its Head
Office at Jurong Town Hall, Jurong Town Hall Road, Singapore (hereinafter
called "the Landlord") of the one part and ADAPTEC MFG (S) PTE LTD a company
incorporated in Singapore and having its registered office at
10 Hoe Chiang Road, #18-00, Keppel Towers, Singapore 0208
(hereinafter called "the Tenant" which expression shall where the context so
admits include the Tenant's successors and permitted assigns) of the other
part.
WITNESSETH as follows :-
1 The Landlord hereby lets and the Tenant hereby takes ALL that portion
of the FIFTH (5TH) storey of the Building known as 1003 BUKIT MERAH
CENTRAL (hereinafter called "the Building") containing an approximate
area of 1118.4 square metres (which said area may be adjusted on
completion of survey, if any) more particularly delineated and edged
red on the plan annexed hereto (which portion is hereinafter called
"the Factory Unit") TOGETHER with the use of the lavatories and
conveniences thereat together also with the use for the Tenant, the
Tenant's servants and visitors of the lifts and the entrances
staircases corridors and passages and accesses to the Building for the
purpose only of ingress and egress to and from the Factory Unit with
or without parcels and packages TO HOLD the same UNTO the Tenant for
the term of TWO (2) YEARS AND TWO AND A HALF (2 1/2) MONTHS from the
16TH day of APRIL 1993 YIELDING AND PAYING therefor during the said
term the rent-
(1) at the discounted rate of DOLLARS TWELVE AND CENTS
THIRTY-FIVE ONLY ($12.35CTS) per square metre per
month for so long as the Tenant shall occupy under
tenancy an aggregate floor area of 5,000 square
metres in the Building or in the various Flatted
Factories belonging to the Landlord; and
<PAGE> 21
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(2) in the event that the said aggregate floor area is
occupied at any time henceforth and for any reason
whatever reduced to below 5,000 square metres whence
the discount shall be totally withdrawn from and in
respect of the Factory Unit and all other premises
occupied by the Tenant, then and with effect from the
date of the reduction of the said aggregate floor
area, at the normal rate of DOLLARS THIRTEEN ONLY
($13.00CTS) per square metre per month to be paid
clear of all deduction and in advance and without
demand on the 1st day of each of the calendar month
of the year (i.e., the 1st day of January, February,
March, etc.) the first of such payments to be made on
the 16TH day of APRIL 1993.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid.
(2) To pay in addition to the said rent during the said term the
sum of DOLLARS ONE AND CENTS SEVENTY ONLY ($1.70CTS) per
square metre per month in advance on the same dates and in the
same manner as for the said rent as charges for services to be
undertaken by the Landlord as hereinbefore mentioned
(hereinafter referred to as "the Service Charge") PROVIDED
THAT if the cost of services shall increase, the Landlord may
revise the Service Charge and on serving a notice in writing
to the Tenant to this effect such revised Service Charge shall
be payable as from the date specified in the said notice.
(3) (i) To pay a deposit equivalent to three (3) months' rent
at the discounted rate and service charge on or
before the execution of this Agreement or
commencement of the said term, whichever is the
earlier, as security against breach of any of the
covenants herein contained which cash deposit shall
be maintained at this figure during the said term and
shall be repayable without interest on the
termination of this tenancy subject however to an
appropriate deduction as damages in respect of any
such breach.
(ii) In lieu of the aforesaid cash deposit to provide an
acceptable banker's guarantee for the same equivalent
amount, which guarantee shall be valid and
irrevocable for the whole of the said term or the
unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the
said term and in a form approved by the Landlord or
to provide such other form of security as the
Landlord may in the Landlord's absolute discretion
permit or accept.
<PAGE> 22
- 3 -
(iii) If the rent at the discounted rate hereinbefore
mentioned in clause 1(1) shall at any time be
increased to the rent at the normal rate in
accordance with Clause 1(2), or if the Service Charge
has been increased by the Landlord in accordance with
Clause 2(2) hereof, to pay the amount of such
increase so that the cash deposit stipulated in sub-
clause (i) above shall at all times be equal to three
(3) months' rent and service charge.
(4) During the said term or any renewal thereof to pay any
increase of property tax which may be imposed whether by way
of an increase in the annual value or an increase in the rate
per cent. For the purpose of ascertaining the additional
amount payable under this clause any such increase in property
tax shall be apportioned in the same proportion as the rent
payable under this Agreement bears to the total assessed
annual value of the Building at the date such increase comes
into force.
(5) To pay all charges and outgoings whatsoever in respect of the
supply of electricity and water used by the Tenant at the
Factory Unit as shown by the separate meters belonging thereto
and also pay all charges for the use and maintenance of such
meters PROVIDED ALWAYS that subject to the prior written
consent of the Landlord and to all approvals being obtained by
the Tenant from the relevant authorities the water sub-meter
will be installed in the Factory Unit by the Tenant at the
Tenant's own cost.
(6) At all times to use and occupy the Factory Unit for the
purpose of ASSEMBLY OF PRINTED CIRCUIT BOARDS AND TESTING OF
INTEGRATED CIRCUITS ONLY and for no other purposes whatever.
(7) Not to place or allow to be placed upon the Factory Unit or on
any of the floors in the Building any article machinery or
load in excess of 10 kiloNewtons per square metre and not to
place or allow to be placed in the goods lifts of the Building
any article machinery or load in excess of 2,000 kilograms.
<PAGE> 23
- 4 -
(8) To keep the interior of the Factory Unit (including the doors
and windows thereof and all the Landlord's other fixtures and
fittings therein) clean and in good and substantial repair and
condition (fair wear and tear and damage by fire lightning
riot or tempest alone excepted) and also to clean and keep
clean the exterior of the windows thereof.
(9) Not to make or cause to be made any alteration in or addition
to the Factory Unit without the prior written consent of the
Landlord and the relevant authorities PROVIDED THAT on the
granting of such consent and without prejudice to other terms
and conditions which may be imposed the Tenant shall place
with the Landlord a deposit equivalent to such amount as the
Landlord may deem sufficient for the reinstatement of the
Factory Unit to its original condition. Further the Tenant
shall not use any inflammable building materials for internal
partitioning.
(10) Not to modify any existing electrical wirings or modify or
replace any existing fire alarm fixtures and fittings or affix
or install any further or additional electrical and fire alarm
wiring extension in or about the Factory Unit without the
written consent of the Landlord having been first obtained and
PROVIDED FURTHER THAT all such work shall be carried out by a
licensed electrical contractor or competent person as approved
by the Landlord to be employed and paid by the Tenant who
shall ensure as part of the work that the existing circuits
and equipment are not overloaded or unbalanced. Prior to any
electrical and fire alarm installation or modification work,
the Tenant will be required to submit the necessary plans as
hereinafter specified under clauses 2(29) and 2(30) to the
Landlord for approval.
(11) To permit the Landlord or the Landlord's agents with or
without workmen or others at all reasonable times to enter the
Factory Unit to take inventories of the Landlord's fixtures
and fittings therein and to view the condition thereof and
examine the state of repair of the Factory Unit and thereupon
the Landlord may serve upon the Tenant notice in writing
specifying any work or repairs necessary to be done which are
within the responsibility of the Tenant under
<PAGE> 24
- 5 -
the terms of this Agreement and require the Tenant forthwith
to execute the same and the Tenant shall pay the Landlord's
reasonable costs of survey attending the preparation of the
notice and if the Tenant shall not within ten days after the
service of such notice proceed diligently and in workman-like
manner with the execution of such work or repairs then to
permit the Landlord (who shall not be under any obligation so
to do) to enter upon the Factory Unit and execute such work or
repairs and the cost thereof shall be a debt due from the
Tenant to the Landlord and be forthwith recoverable PROVIDED
ALWAYS that the Landlord shall not be liable to the Tenant for
any loss damage or inconvenience caused by such work or
repairs.
(12) To be wholly responsible for all damages and to bear the full
cost of repairs and reinstatement of such damaged building
equipment fixtures drains wiring and piping above and below
ground level if the cause or causes of such damages can be
traced directly or indirectly back to the Tenant's activities.
(13) To permit the Landlord, the Landlord's agents or workmen and
others to enter the Factory Unit at reasonable hours to do
structural or external repairs and execute such work as may be
necessary to the Factory Unit or to other portions of the
Building of which the Factory Unit may form a part but which
are not conveniently accessible otherwise than from or through
the Factory Unit.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article to permit the Landlord to execute the
said repairs and works and if the Tenant shall fail to observe
or perform this covenant the Landlord shall remove the same
and all costs and expenses incurred thereby shall be
recoverable from the Tenant as a debt PROVIDED ALWAYS that the
Landlord shall not be liable to the Tenant for any loss damage
or inconvenience caused by such removal.
(15) Subject always to clause 2(27) hereinafter appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
<PAGE> 25
- 6 -
(16) To make good and sufficient provision for the safe and
efficient disposal of all waste generated at the Factory Unit
including but not limited to pollutants to the requirements
and satisfaction of the Landlord and/or relevant Government
authorities PROVIDED THAT in the event of any default by the
Tenant under this covenant the Landlord may carry out such
remedial measures as he thinks necessary and all costs and
expenses incurred thereby shall forthwith be recoverable in
full from the Tenant as a debt.
(17) To provide and maintain refuse receptacles for all waste and
refuse produced at the Factory Unit in conformity with the
requirements and standards prescribed by the health authority
and to keep the same out of sight of the public during the
hours of business and to transfer such waste and refuse in
suitable receptacles to such area and at such times each day
as may be prescribed by the Landlord.
(18) Not to keep or allow to be kept livestock or other animals at
the Factory Unit.
(19) Not to do or suffer to be done on or in the Factory Unit
anything whereby the insurances of the same or of the Building
or any part thereof may be rendered void or voidable or
whereby the premium thereon may be increased and to repay to
the Landlord on demand all sums paid by the Landlord by way of
increased premium and all expenses incurred by the Landlord in
connection therewith and/or all loss damages and expenses
resulting from a breach or non-observance of this covenant
without prejudice to any other rights and remedies available
to the Landlord.
(20) Not to do or permit or suffer to be done anything in or upon
the Factory Unit or any part of the Building which in the
opinion of the Landlord is a nuisance or cause annoyance to or
in any way interfere with the business or the quiet or comfort
of the other occupants of the Building PROVIDED THAT the
Landlord shall not be responsible to the Tenant for any loss,
damage or inconvenience as a result of nuisance, annoyance or
any interference whatsoever caused by the other occupants of
the Building.
(21) Not to use the Factory Unit for any illegal or immoral purpose.
(22) Not to cause any obstruction in or on the approaches private
roads or passage way adjacent to or leading to the Building by
leaving or parking or permitting to be left or parked any
motor vehicle or other carriages belonging to or used by the
Tenant or by any of the Tenant's friends servants or visitors.
And also to observe all regulations made by the Landlord
<PAGE> 26
- 7 -
relating to the parking of such vehicles or carriages and to
pay such carpark charges as may be imposed by the Landlord.
(23) Not to effect any sale by auction in the Building.
(24) Not to affix paint or otherwise exhibit on the exterior of the
Factory Unit or the windows thereof or of the Building or in
any of the passages corridors or stairs of the Building any
name plate placard poster or advertisement or any flag-staff
or other thing whatsoever save only the name of the Tenant in
such places only and not elsewhere and in such manner and
position only as shall be approved in writing by the Landlord.
(25) Not to cause any obstruction to the common stairways
passageways and other common parts of the Building or accesses
to the Building. PROVIDED ALWAYS that the Landlord shall have
the full right and liberty and absolute discretion to remove
and clear any such obstruction and all costs and expenses
incurred thereby shall be recoverable from the Tenant as a
debt. FURTHER PROVIDED THAT the Landlord shall not be liable
to the Tenant or any third party for any loss damage or
inconvenience caused by such removal and the Tenant hereby
indemnifies the Landlord in this respect.
(26) Not to install any machinery or fixture in the Factory Unit
without the permission in writing of the Landlord and to
submit a layout plan of the Tenant's machinery for the
approval of the Landlord and/or relevant authorities prior to
the actual fixing of the machineries.
(27) Not to assign create a trust sublet grant a licence or part
with or share the possession or occupation of the Factory Unit
or any part thereof or leave the Factory Unit or any part
thereof vacant and unoccupied at any time during the said
term.
(28) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Factory Unit and/or in respect of
the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Landlord against all actions, proceedings, costs, expenses,
claims, fines, losses, penalties and demands in respect of any
act matter or thing done or omitted to be done in
contravention of the said provisions.
<PAGE> 27
- 8 -
(29) To install electrical switch board wirings and equipment to
the Factory Unit including the following electrical protective
devices, all at the Tenant's own expense, subject to the
approval of the Landlord:-
(a) Overcurrent protective devices in the Landlord's
Switch Room;
(b) Overcurrent and earth-leakage protective devices in
the Factory Unit,
PROVIDED THAT-
(i) the Tenant shall submit 3 sets of 'electrical
single-line diagram' of the Factory Unit wirings for
the approval of the Landlord prior to the actual
installation of the wirings; and
(ii) it shall be the responsibility of the Tenant to keep
all or any of the aforesaid switch board wirings,
equipment and devices installed by the Tenant in good
condition at all times.
(30) To carry out such modification work on the existing fire alarm
wirings, heat detectors and fixtures in the Factory Unit as
shall be necessary to suit the factory operation, including
the installation of additional wirings and connections of the
heat detectors and fixtures to the Landlord's common fire
alarm system, to the approval of the Landlord and all at the
Tenant's own expense PROVIDED THAT:
(a) The Tenant shall submit 2 copies of the fire alarm
drawings of the Factory Unit indicating the existing
fixtures, the proposed modifications and the layout
of the Tenant's machinery for the approval of the
Landlord prior to the commencement of the
modification work.
(b) The Tenant shall at the Tenant's own expense ensure
that the existing fire alarm wirings, heat detectors
and fixtures and any additional wirings and fixtures
installed by the Tenant in the Factory Unit are
serviced monthly and in good condition at all times
including the payment of any fee(s) in connection
with servicing and maintenance works.
(c) Any item of replacement required for the effective
maintenance of the fire alarm wirings, heat detectors
and fixtures shall be of a quality and has an
operational characteristic similar to the item to be
replaced and shall be subject to the approval of the
Landlord. The Tenant shall be
<PAGE> 28
- 9 -
required to replace any or all items of dissimilar
quality and operational characteristic found in use.
(31) To close the Factory Unit during such hours as the Landlord
may specify by notice in writing to the Tenant for any
maintenance or repair work to be executed by the Landlord.
(32) At all times during the three calendar months immediately
preceding the determination of the said term to permit
intending tenants and others with written authority from the
Landlord or his agents at reasonable times of the day to view
the Factory Unit.
(33) At the determination of the said term by expiry or otherwise
to yield up the Factory Unit and all the Landlord's fixtures
fittings fastenings or appertaining in such good and
substantial repair fair wear and tear excepted as shall be in
accordance with the covenants of the Tenant herein contained
and with all locks and keys complete.
(34) In addition to the foregoing and immediately prior to the
determination of the said term or the renewal thereof as the
case may be to restore the Factory Unit in all respects to its
original state and condition including but not limited to the
removal of all the fixtures and fittings installed by the
previous tenant of the Factory Unit and if so required by the
Landlord to redecorate including painting the interior thereof
to the satisfaction of the Landlord PROVIDED ALWAYS that if
the Tenant shall fail to observe or perform this covenant the
Landlord shall execute such work for the said restoration and
redecoration and recover the cost thereof from the Tenant
together with all rent and service charge and other amounts
which the Landlord would have been entitled to receive from
the Tenant had the period within which such restoration and
redecoration are effected by the Landlord been added to the
said term.
<PAGE> 29
- 10 -
(35) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Landlord in
respect of any outstanding amount payable under this Agreement
from the date such amount becomes due until payment in full is
received by the Landlord.
(36) Not to install and/or use any electrical installation, machine
or apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the
service or use of any communication system or affects the
operation of other equipment, installations, machinery,
apparatus or plants of other Tenants and in connection
therewith, to allow the Landlord or any authorised person(s)
to inspect at all reasonable times, such installation,
machine or apparatus in the Factory Unit to determine the
source of the interference or disturbance and thereupon, to
take suitable measures, at the Tenant's own expense, to
eliminate or reduce such interference or disturbance to the
Landlord's satisfaction, if it is found by the Landlord or
such authorised person(s) that the Tenant's electrical
installation, machine or apparatus is causing or contributing
to the said interference or disturbance.
(37) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs, demands
which may arise in connection with clause 2(36) above.
(38) To perform and observe all the obligations which the Landlord
of the Factory Unit may be liable to perform or observe during
the said term by any direction or requirement of any public or
local authority and if the Tenant shall fail to observe or
perform this covenant the Landlord may in its absolute
discretion perform the same and all expenses and costs
incurred thereby shall be recoverable from the Tenant as a
debt PROVIDED ALWAYS that the Landlord shall not be liable to
the Tenant for any loss damage or inconvenience caused
thereby.
(39) To ensure that -
(i) at least 60% of the overall floor area shall be used
for purely industrial activities and
(ii) the remaining 40% shall be used as ancillary stores
and offices, neutral areas and communal facilities
PROVIDED THAT the said ancillary offices shall not
exceed 25% of the overall floor area.
<PAGE> 30
- 11 -
(40) Not to use and occupy the Factory Unit for the purpose of
commercial office and storage unrelated to the Tenant's
approved industrial activity.
(41) To permit the Landlord, the Landlord's agents or workmen and
others at any time during the said term to enter the Factory
Unit to replace the louvre/casement windows and timber doors
with such other windows and doors as the Landlord may think
fit and to install or replace service ducts/pipes ("the said
replacement or installation works"). If so required by the
Landlord the Tenant shall remove such installation, machinery,
partition or any article to permit the Landlord to execute the
said replacement or installation works, and if the Tenant
shall fail to observe or perform this covenant the Landlord
shall have the right to (without prejudice to any other right
or remedy the Landlord may have against the Tenant) remove the
same, and all costs and expenses incurred thereby shall
forthwith be recoverable from the Tenant as a debt PROVIDED
ALWAYS that the Landlord shall not be liable to the Tenant for
any loss, damage or inconvenience caused whatsoever by such
removal and the said replacement or installation works.
(42) Without prejudice to Clause 2(6) hereof and subject to the
prior written approval of the Landlord, to provide thermal
insulation to the floor, ceiling and the walls of rooms, if
the rooms are used for purposes requiring low temperature air
conditioning or cooling that would result in moisture
condensation on the external, ceiling or floor within or
outside the Factory Unit.
(43) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Factory Unit or any part
thereof, to forthwith give the Landlord written notice of
damage.
(44) Not to commence operation in the Factory Unit after the
installation(s) of any type of machinery or equipment have been
completed until a final inspection of the installation(s) has
been carried out an approval in writing of the same is given
by the Landlord.
<PAGE> 31
- 12 -
(45) The Tenant accepts the Factory Unit with full knowledge that
refurbishment and upgrading works (hereinafter referred to as
"the refurbishment") are being or may be carried out in the
Building and the estate in which the Building is situated.
The Tenant shall, if required by the Landlord and within the
time stipulated by the Landlord, at the cost and expense of
the Tenant properly and in accordance with the obligations of
the Tenant under this Agreement remove, re-locate and/or
modify temporarily or permanently as may be stipulated by the
Landlord every installation, fixture, fittings, device,
equipment and article existing at the time outside the Factory
Unit as the Landlord may think fit for the purpose of
permitting the Landlord, his servant, agent, contractor and
subcontractor to properly carry out the refurbishment or for
the purpose of improving the appearance or aesthetics of the
Building. PROVIDED THAT if the Tenant shall fail to observe
or perform this covenant or any part thereof the Landlord
shall have the right (without prejudice to any other right or
remedy the Landlord may have against the Tenant) to remove,
relocate and/or modify any or every such installation,
fixture, fittings, device, equipment and article, and all
costs and expenses incurred thereby shall forthwith be
recoverable from the Tenant as a debt. PROVIDED ALWAYS and it
is hereby agreed that the Landlord shall not be liable in any
way to the Tenant or any other person for any loss, damage,
claim, cost, expense, disruption, interference and/or
inconvenience caused howsoever or whatsoever by or in
connection with the refurbishment and/or the removal,
re-location or modification.
3 The Landlord hereby covenants with the Tenant as follows:
(1) To pay the property tax payable in respect of the Factory Unit
PROVIDED ALWAYS that if the rate of such property tax shall be
increased whether by way of an increase in the annual value or
an increase in the rate per cent then the Landlord shall not
hereunder be liable to pay the said increase but the Tenant
shall pay such increase as provided under Clause 2(4) hereof.
(2) To keep the exterior and roof of the Building and the lift
entrances corridors passages staircases lavatories water
closets and other conveniences intended for the use of the
Tenant at all times in complete repair and in proper sanitary
and clean condition.
<PAGE> 32
- 13 -
(3) To keep the stairs and passages leading to the Factory Unit
and the lifts and lavatories well and sufficiently lighted and
the lifts in proper working order PROVIDED THAT the Landlord
shall not be responsible for any loss the Tenant may sustain
by reason of any damage or injury or in consequence of any
breakage of or defect in any of the pipes wire or other
apparatus of the Landlord used in or about the Building.
(4) To keep the Building insured against loss or damage by fire
and in the event of such loss or damage (unless resulting from
some act or default of the Tenant) to rebuild and reinstate
the damaged part of the Building PROVIDED THAT it is expressly
agreed and understood that the terms loss or damage by fire as
used in this clause do not include any loss or damage caused
to the Tenant's fixtures or loss due to the factory being
rendered out of commission and in any such event the Landlord
shall not be held liable for any such loss or damage sustained
by the Tenant.
(5) That the Tenant paying the rent and observing and performing
the several covenants and stipulations on the Tenant's part
herein contained shall during the said term quietly enjoy the
Factory Unit without any interruption by the Landlord or any
person or persons lawfully claiming under or in trust for the
Tenant.
4 PROVIDED ALWAYS THAT and it is hereby agreed as follows
(1) If the rent hereby reserved or service charge or interest, or
any part thereof shall at any time remain unpaid for fourteen
(14) days after becoming payable (whether formally demanded or
not) or if the Tenant shall neglect to observe and perform any
covenant or stipulation on the Tenant's part herein contained
or if the Tenant shall make any assignment for the benefit of
the Tenant's creditors or enter into any arrangement with its
creditors by composition or otherwise or suffer any distress
or attachment or execution to be levied against the Tenant's
goods or if the Tenant for the time being shall be a company
and shall enter into liquidation whether compulsory or
voluntary (save for the purpose of reconstruction or
amalgamation) or being an individual shall have a receiving
order or an adjudicating order made against the Tenant then
and in any or such cases it shall be lawful for the Landlord
at any time thereafter to re-enter upon the Factory Unit or
any part thereof in the name of the whole and thereupon this
Tenancy shall absolutely determine but without prejudice to
the rights of action of the Landlord in respect of any breach
of the covenants on the part of the Tenant herein contained.
<PAGE> 33
- 14 -
(2) Any notice requiring to be served hereunder shall be
sufficiently served on the Tenant if it is left addressed to
the Tenant at the Factory Unit or forwarded to the Tenant by
registered post to the Tenant's last known place of business
and shall be sufficiently served on the Landlord if it is
addressed to the Landlord and sent by registered post to the
Head Office. In the event of the action in respect of the
tenancy created herein (including any action for the recovery
of the rent and/or service charge herein reserved) the Tenant
agrees and accepts that the originating process shall be
sufficiently served on the Tenant if it is addressed to the
Tenant at the address specified in this Agreement or if it is
left posted upon a conspicuous part of the Factory Unit or
forwarded to the Tenant by post at the Tenant's last known
place of business.
(3) Letters or parcels whether registered or otherwise and
telegrams or keys received by any servant(s) of the Landlord
on behalf of the Tenant will be received solely at the risk of
the Tenant.
(4) No waiver expressed or implied by the Landlord of any breach
of any covenant, condition or duty of the Tenant shall be
construed as a waiver of any other breach of the same or any
other covenant, condition or duty and shall not prejudice in
any way the rights, powers and remedies of the Landlord herein
contained. Any acceptance of rent and/or service charge shall
not be deemed to operate as a waiver by the Landlord of any
right to proceed against the Tenant for any of the Tenant's
obligations hereunder.
(5) The Landlord shall not be responsible for any loss damage or
inconvenience occasioned by the closing of the lift or lifts
for repairs or any other necessary purpose or for any accident
that may occur to the Tenant or other person using the lift.
(6) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the Factory
Unit or the Building or any part thereof for any accident(s) or
injuries sustained or loss or damage to property in the
Factory Unit or the Building or any part thereof.
(7) The Landlord shall not be liable to the Tenant in respect of:
(i) any interruption in the services provided by the
Landlord by reason of necessary repair or maintenance
of any installation or apparatus or damage thereto or
by reason of mechanical or other defect or breakdown
including but not limited to breakdown in electricity
and water supply.
(ii) any act, omission, default, misconduct or negligence
of any servant or employee of the Landlord in or
about the performance or purported performance of any
duty relating to the provision of the said services.
<PAGE> 34
- 15 -
(8) The Landlord shall be entitled to let any other part or parts
of the Building subject to any term(s) or condition(s) which
the Landlord may think fit to impose and nothing herein
contained shall be deemed to create a letting scheme for the
Building or any part thereof and neither the Tenant nor the
persons deriving title under the Tenant shall have the
benefit of or the right to enforce or to have enforced or to
prevent the release or modification of any covenant agreement
or condition entered into by any present or future tenant.
(9) The Tenant shall pay all costs disbursements fees and charges
legal or otherwise including stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to this
Agreement.
(10) The Tenant shall pay all costs and fees legal or otherwise
including costs as between solicitor and clients in connection
with the enforcement of the covenants and conditions of this
Agreement.
(11) The Landlord shall not be liable for any loss or damage that
may be suffered by the Tenant resulting from any subsidence or
cracking of the ground floor slabs and aprons of the Building
PROVIDED that this clause shall apply only to Tenants
occupying the ground floor of the Building.
(12) The Landlord shall on written request of the Tenant made not
less than three (3) months before the expiration of the term
hereby created and if there shall not at the time of such
request be any existing breach or nonobservance by the Tenant
of any of the terms, covenants and stipulations contained in
this Agreement, at the cost and expense of the Tenant grant to
the Tenant a tenancy of the Factory Unit for a further term to
be mutually agreed upon by the parties hereto and at a revised
rent to be determined by the Landlord and containing the like
terms, covenants and stipulations as are herein contained or
such variations or modifications thereof together with such
other terms covenants and stipulations as may be imposed by
the Landlord with the exception of the present covenant for
renewal.
<PAGE> 35
- 16 -
IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY:
SEAH KEE POK
MANAGER (FACTORIES)
for and on behalf of
JURONG TOWN CORPORATION
in the presence of:
/s/ GRACE ONG SOO HIANG
----------------------------
Grace Ong Soo Hiang
SIGNED BY:
LIM KOK YONG, Managing Director
for and on behalf of
ADAPTEC MFG (S) PTE LTD
in the presence of:
/s/ ANDREW NG
----------------------------
(Signature of Witness)
Name of Witness: Andrew Ng
Designation: Director, Finance & Admin
<PAGE> 36
[LOGO]
J T C
REGISTRATION NO: FF 21551/94
FILE REF: JTC(L)8339/205 Pt 1/GOSH/KS
TENANCY OF FLATTED FACTORY NOS. #07-18 TO #07-2(0)
1002 JALAN BUKIT MERAH
REDHILL INDUSTRIAL ESTATE
BETWEEN
JURONG TOWN CORPORATION
AND
ADAPTEC MFG (S) PTD LTD
DATED
8th February 1994
<PAGE> 37
TENANCY OF FLATTED FACTORY UNIT
This Tenancy is made the 8th day of February 1994 Between the JURONG
TOWN CORPORATION incorporated under the Jurong Town Hall Corporation Act,
having its Head Office at Jurong Town Hall, 301 Jurong Town Hall Road,
Singapore 2260 (hereinafter called "the Landlord" of the one part and ADAPTEC
MFG (S) PTE LTD a company incorporated in Singapore and having its registered
office at 10 Hoe Chiang Road, #18-00 Keppel Tower, Singapore 0208.
(hereinafter called "the Tenant" which expression shall where the context so
admits include the Tenant's successors-in-title and permitted assigns) of the
other part.
WITNESSETH as follows:-
1 The Landlord hereby lets and the Tenant hereby takes ALL that portion
of the storey(s) of the Building known as 1002 JALAN BUKIT MERAH
(hereinafter called "the Building") containing an approximate area of
286.5 square metres (which said area may be adjusted on completion of
survey, if any) more particularly delineated and edged red on the plan
annexed hereto (which portion is hereinafter called "the Factory
Unit") TOGETHER with the use of the lavatories and conveniences
thereat together also with the use for the Tenant, the Tenant's
servants and visitors of the lifts and the entrances staircases
corridors and passages and accesses to the Building for the purpose
only of ingress and egress to and from the Factory Unit with or
without parcels and packages TO HOLD the same UNTO the Tenant for the
term of THREE (3) YEARS from the 16TH day of JANUARY 1994 YIELDING
AND PAYING therefor during the said term the rent of
(1) at the discounted rate of DOLLARS TWELVE AND CENTS THIRTY-FIVE
($12.35CTS) ONLY PER SQUARE METRE PER MONTH for so long as the
Tenant shall occupy under tenancy an aggregate floor area of
5,000 SQUARE metres in the Building or in the various Flatted
Factories belonging to the Landlord; and
<PAGE> 38
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(2) in the event that the said aggregate floor area is occupied at
any time henceforth and for any reason whatever reduced to
below 5,000 square metres whence the discount shall be totally
withdrawn from and in respect of the Factory Unit and all
other premises occupied by the Tenant, then and with effect
from the date of the reduction of the said aggregate floor
area, at the normal rate of DOLLARS THIRTEEN ($13.00) ONLY PER
SQUARE METRE PER MONTH to be paid clear of all deduction and
in advance and without demand on the 1st day of each of the
calendar month of the year (i.e., the 1st day of January,
February, March, etc.) the first of such payments to be made
on the day of
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid.
(2) To pay in addition to the said rent during the said term the
sum of DOLLARS ONE AND CENTS SEVENTY ($1.70CTS) ONLY per
square metre per month in advance on the same dates and in the
same manner as for the said rent as charges for services to be
undertaken by the Landlord as hereinbefore mentioned
(hereinafter referred to as "the Service Charge") PROVIDED
THAT if the cost of services shall increase, the Landlord may
revise the Service Charge and on serving a notice in writing
to the Tenant to this effect such revised Service Charge shall
be payable as from the date specified in the said notice.
(3) (i) To pay a deposit equivalent to three (3) months' rent
at the discounted rate and service charge on or
before the execution of this Agreement or
commencement of the said term, whichever is the
earlier, as security against breach of any of the
covenants herein contained which cash deposit shall
be maintained at this figure during the said term and
shall be repayable without interest on the
termination of this tenancy subject however to an
appropriate deduction as damages in respect of any
such breach.
(ii) In lieu of the aforesaid cash deposit to provide an
acceptable banker's guarantee for the same equivalent
amount, which guarantee shall be valid and
irrevocable for the whole of the said term or the
unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the
said term and in a form approved by the Landlord or
to provide such other form of security as the
Landlord may in the Landlord's absolute discretion
permit or accept.
<PAGE> 39
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(iii) If the rent at the discounted rate hereinbefore
mentioned in clause 1(1) shall at any time be
increased to the rent at the normal rate in
accordance with Clause 1(2), or if the Service Charge
has been increased by the Landlord in accordance with
Clause 2(2) hereof, to pay the amount of such
increase so that the cash deposit stipulated in sub-
clause (i) above shall at all times be equal to three
(3) months' rent and service charge.
(4) During the said term or any renewal thereof to pay any
increase of property tax which may be imposed whether by way
of an increase in the annual value or an increase in the rate
per centum. For the purpose of ascertaining the additional
amount payable under this clause any such increase in property
tax shall be apportioned in the same proportion as the rent
payable under this Agreement bears to the total assessed
annual value of the Building at the date such increase comes
into force.
(5) To pay all charges and outgoings whatsoever in respect of the
supply of electricity and water used by the Tenant at the
Factory Unit as shown by the separate meters belonging thereto
and also pay all charges for the use and maintenance of such
meters PROVIDED ALWAYS that subject to the prior written
consent of the Landlord and to all approvals being obtained by
the Tenant from the relevant governmental and statutory
authorities the water sub-meter will be installed in the
Factory Unit by the Tenant at the Tenant's own cost.
(6) At all times to use and occupy the Factory Unit for the
purpose of THE TESTING OF INTEGRATED CIRCUITS ONLY and for no
other purposes whatever.
(7) Not to place or allow to be placed upon the Factory Unit or on
any of the floors in the Building any article machinery or
load in excess of 7.5 kiloNewtons per square metre and not to
place or allow to be placed in the goods lifts of the Building
any article machinery or load in excess of 1,500 kilograms.
<PAGE> 40
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(8) To keep the interior of the Factory Unit (including the doors
and windows thereof and all the Landlord's other fixtures and
fittings therein) clean and in good and substantial repair and
condition (fair wear and tear and damage by fire lightning
riot or tempest alone excepted) and also to clean and keep
clean the exterior of the windows thereof.
(9) Not to make or cause to be made any alteration in or addition
to the Factory Unit without the prior written consent of the
Landlord and the relevant governmental and statutory
authorities PROVIDED THAT on the granting of such consent and
without prejudice to other terms and conditions which may be
imposed the Tenant shall place with the Landlord a deposit
equivalent to such amount as the Landlord may deem sufficient
for the reinstatement of the Factory Unit to its original
condition. Further the Tenant shall not use any flammable
building materials for internal partitioning.
(10) Not to modify any existing electrical wirings or modify or
replace any existing fire alarm fixtures and fittings or affix
or install any further or additional electrical and fire alarm
wiring extension in or about the Factory Unit without the
written consent of the Landlord having been first obtained and
PROVIDED FURTHER THAT all such work shall be carried out by a
licensed electrical contractor or competent person as approved
by the Landlord to be employed and paid by the Tenant who
shall ensure as part of the work that the existing circuits
and equipment are not overloaded or unbalanced. Prior to any
electrical and fire alarm installation or modification work,
the Tenant shall be required to submit the necessary plans as
hereinafter specified under clauses 2(29) and 2(30) to the
Landlord for approval.
(11) To permit the Landlord or the Landlord's agents with or
without workmen or others at all reasonable times to enter the
Factory Unit to take inventories of the Landlord's fixtures
and fittings therein and to view the condition thereof and
examine the state of repair of the Factory Unit and thereupon
the Landlord may serve upon the Tenant notice in writing
specifying any work or repairs necessary to be done which are
within the responsibility of the Tenant under the terms of
this Agreement and require the Tenant forthwith to execute the
same and the Tenant shall pay the Landlord's reasonable costs
of survey attending the preparation of the notice and if the
Tenant shall not within ten days after the service of such
notice proceed diligently and in workman-like manner with the
execution of such work or repairs then to permit the Landlord
(who
<PAGE> 41
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shall not be under any obligation so to do) to enter upon the
Factory Unit and execute such work or repairs and the cost
thereof shall be a debt due from the Tenant to the Landlord
and be forthwith recoverable PROVIDED ALWAYS that the Landlord
shall not be liable to the Tenant for any loss damage or
inconvenience caused by such work or repairs.
(12) To be wholly responsible for all damages and to bear the full
cost of repairs and reinstatement of such damaged building
equipment fixtures drains wiring and piping above and below
ground level if the cause or causes of such damages can be
traced directly or indirectly back to the Tenant's activities.
(13) To permit the Landlord, the Landlord's agents or workmen and
others to enter the Factory Unit at reasonable hours to do
structural or external repairs and execute such work as may be
necessary to the Factory Unit or to other portions of the
Building of which the Factory Unit may form a part but which
are not conveniently accessible otherwise than from or through
the Factory Unit.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article to permit the Landlord to execute the
said repairs and works and if the Tenant shall fail to observe
or perform this covenant the Landlord shall remove the same
and all costs and expenses incurred thereby shall be
recoverable from the Tenant as a debt PROVIDED ALWAYS that the
Landlord shall not be liable to the Tenant for any loss damage
or inconvenience caused by such removal.
(15) Subject always to clause 2(27) hereinafter appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
(16) To make good and sufficient provision for and to ensure the
safe and efficient disposal of all waste generated at the
Factory Unit including but not limited to pollutants to the
requirements and satisfaction of the Landlord and the relevant
governmental and statutory authorities PROVIDED THAT in the
event of any default by the Tenant under this covenant the
Landlord may at the discretion of the Landlord and without
prejudice to any other rights and remedies the Landlord may
have in law or under this Agreement, carry out such remedial
measures and works as the Landlord thinks necessary and all
costs and expenses incurred thereby shall forthwith be
recoverable in full from the Tenant as a debt.
<PAGE> 42
- 6 -
(17) To provide and maintain refuse receptacles for all waste and
refuse produced at the Factory Unit in conformity with the
requirements and standards prescribed by the health authority
and to keep the same out of sight of the public during the
hours of business and to transfer such waste and refuse in
suitable receptacles to such area and at such times each day
as may be prescribed by the Landlord.
(18) Not to keep or allow to be kept livestock or other animals at
the Factory Unit.
(19) Not to do or suffer to be done on or in the Factory Unit
anything whereby the insurances of the same or of the Building
or any part thereof may be rendered void or voidable or
whereby the premium thereon may be increased and to repay to
the Landlord on demand all sums paid by the Landlord by way of
increased premium and all expenses incurred by the Landlord in
connection therewith and all loss damages and expenses
resulting from a breach or non-observance of this covenant
without prejudice to any other rights and remedies available
to the Landlord.
(20) Not to do or permit or suffer to be done anything in or upon
the Factory Unit or any part of the Building which in the
opinion of the Landlord is or may be a nuisance or cause
annoyance to or in any way interfere with the business or the
quiet or comfort of the other occupants of the Building
PROVIDED THAT the Landlord shall not be responsible to the
Tenant for any loss, damage or inconvenience as a result of
nuisance, annoyance or any interference whatsoever caused by
the other occupants of the Building.
(21) Not to use the Factory Unit for any illegal or immoral
purpose.
(22) Not to cause any obstruction in or on the approaches, private
roads or passage way adjacent to or leading to the Building by
leaving or parking or permitting to be left or parked any
motor vehicle or other carriages belonging to or used by the
Tenant or by any of the Tenant's friends servants or visitors.
And also to observe and ensure observance of all regulations
made by the Landlord relating to the parking of such vehicles
or carriages and to pay such carpark charges as may be imposed
by the Landlord or his agent.
(23) Not to effect any sale by auction in the Building.
<PAGE> 43
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(24) Not to affix paint or otherwise exhibit on the exterior of the
Factory Unit or the windows thereof or of the Building or in
any of the passages corridors or stairs of the Building any
name plate placard poster or advertisement or any flag-staff
or other thing whatsoever save only the name of the Tenant in
such places only and not elsewhere and in such manner and
position only as shall be approved in writing by the Landlord.
(25) Not to cause any obstruction to the common stairways
passageways and other common parts of the Building or accesses
to the Building. PROVIDED ALWAYS that the Landlord shall have
the full right and liberty and absolute discretion to remove
and clear any such obstruction and all costs and expenses
incurred thereby shall be recoverable from the Tenant as a
debt. FURTHER PROVIDED THAT the Landlord shall not be liable
to the Tenant or any third party for any loss damage or
inconvenience caused by such removal and the Tenant hereby
indemnifies the Landlord in this respect.
(26) Not to install any machinery or fixture in the Factory Unit
without the permission in writing of the Landlord and to
submit a layout plan of the Tenant's machinery for the
approval of the Landlord and the relevant governmental and
statutory authorities prior to the actual fixing of the
machineries.
(27) Not to assign create a trust sublet grant a licence or part
with or share the possession or occupation of the Factory Unit
or any part thereof or leave the Factory Unit or any part
thereof vacant and unoccupied at any time during the said
term.
(28) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Factory Unit and/or in respect of
the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Landlord against all actions, proceedings, costs, expenses,
claims, fines, losses, penalties and demands in respect of any
act matter or thing done or omitted to be done in
contravention of the said provisions.
(29) To install electrical switch board wirings and equipment to
the Factory Unit including the following electrical protective
devices, all at the Tenant's own expense, subject to the
approval of the Landlord:-
(a) Overcurrent protective devices in the Landlord's
Switch Room;
<PAGE> 44
- 8 -
(b) Overcurrent and earth-leakage protective devices in
the Factory Unit,
PROVIDED THAT-
(i) the Tenant shall submit 3 sets of 'electrical
single-line diagram' of the Factory Unit wirings for
the approval of the Landlord prior to the actual
installation of the wirings; and
(ii) it shall be the responsibility of the Tenant to keep
all or any of the aforesaid switch board wirings,
equipment and devices installed by the Tenant in good
condition at all times.
(30) To carry out such modification work on the existing fire alarm
wirings, heat detectors and fixtures in the Factory Unit as
shall be necessary to suit the factory operation, including
the installation of additional wirings and connections of the
heat detectors and fixtures to the Landlord's common fire
alarm system, to the approval of the Landlord and all at the
Tenant's own expense PROVIDED THAT:
(a) The Tenant shall submit 2 copies of the fire alarm
drawings of the Factory Unit indicating the existing
fixtures, the proposed modifications and the layout
of the Tenant's machinery for the approval of the
Landlord prior to the commencement of the
modification work.
(b) The Tenant shall at the Tenant's own expense ensure
that the existing fire alarm wirings, heat detectors
and fixtures and any additional wirings and fixtures
installed by the Tenant in the Factory Unit are
serviced monthly and in good condition at all times
including the payment of any fee(s) in connection
with servicing and maintenance works.
(c) Any item of replacement required for the effective
maintenance of the fire alarm wirings, heat detectors
and fixtures shall be of a quality and shall have an
operational characteristic similar to the item to be
replaced and shall be subject to the approval of the
Landlord. The Tenant shall at his own cost forthwith
replace any or all items of dissimilar quality and
operational characteristic found in use.
(31) To close the Factory Unit during such hours as the Landlord
may specify by notice in writing to the Tenant for any
maintenance or repair work to be executed by the Landlord.
<PAGE> 45
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(32) At all times during the three calendar months immediately
preceding the determination of the said term to permit
intending tenants and others with written authority from the
Landlord or his agents at reasonable times of the day to view
the Factory Unit.
(33) At the determination of the said term by expiry or otherwise
to yield up the Factory Unit and all the Landlord's fixtures
fittings fastenings or appertaining in such good and
substantial repair fair wear and tear excepted as shall be in
accordance with the covenants of the Tenant herein contained
and with all locks and keys complete.
(34) In addition to the foregoing and immediately prior to the
determination of the said term or the renewal thereof as the
case may be to restore the Factory Unit in all respects to its
original state and condition if so required by the Landlord to
redecorate including painting the interior thereof to the
satisfaction of the Landlord PROVIDED ALWAYS that if the
Tenant shall fail to observe or perform this covenant the
Landlord may in its absolute discretion, and without prejudice
to any other rights and remedies the Landlord may have against
the Tenant, execute such work for the said restoration and
redecoration and shall recover all costs thereof from the
Tenant together with all rent, service charge, tax and other
amounts which the Landlord would have been entitled to receive
from the Tenant had the period within which such restoration
and redecoration are effected by the Landlord been added to
the said term.
(35) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Landlord in
respect of any outstanding amount payable under this Agreement
from the date such amount becomes due until payment in full is
received by the Landlord.
(36) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy
<PAGE> 46
- 10 -
power surge, high frequency voltage and current, air borne
noise, vibration or any electrical or mechanical interference
or disturbance whatsoever which may prevent or prevents in any
way the service or use of any communication system or affects
the operation of other equipment, installations, machinery,
apparatus or plants of other Tenants and in connection
therewith, to allow the Landlord or any authorised person(s)
to inspect at all reasonable times, such installation, machine
or apparatus in the Factory Unit to determine the source of
the interference or disturbance and thereupon, to take
suitable measures, at the Tenant's own expense, to eliminate
or reduce such interference or disturbance to the Landlord's
satisfaction, if it is found by the Landlord or such
authorised person(s) that the Tenant's electrical
installation, machine or apparatus is causing or contributing
to the said interference or disturbance.
(37) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs, demands
which may arise in connection with clause 2(36) above.
(38) To perform and observe all the obligations which the Landlord
of the Factory Unit may be liable to perform or observe during
the said term by any direction or requirement of any
governmental and statutory authority and if the Tenant shall
fail to observe or perform this covenant the Landlord may in
its absolute discretion perform the same and all expenses and
costs incurred thereby shall be recoverable from the Tenant as
a debt PROVIDED ALWAYS that the Landlord shall not be liable
to the Tenant for any loss damage or inconvenience caused
thereby.
(39) Without prejudice to the generality of Clause 2(38) herein,
the rent and service charge and other sums payable by the
Tenant under or in connection with this tenancy shall be
exclusive of the goods and services tax (herein called "tax")
chargeable by any government, statutory or tax authority
calculated by reference to the amount of rent, service charge
and any other sums received or receivable by the Landlord from
the Tenant and which tax is payable by the Tenant.
The Tenant shall pay the tax and the Landlord acting as the
collecting agent for the government, statutory or tax
authority shall collect the tax from the Tenant in the manner
and within the period prescribed in accordance with the
applicable laws and regulations.
(40) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Factory Unit or any part
thereof, to forthwith give the Landlord written notice of
damage.
<PAGE> 47
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(41) To ensure that -
(i) at least 60% of the overall floor area shall be used
for purely industrial activities and
(ii) the remaining 40% shall be used as ancillary stores
and offices, neutral areas and communal facilities
PROVIDED THAT the said ancillary offices shall not
exceed 25% of the overall floor area.
(42) Not to use and occupy the Factory Unit for the purpose of
commercial office and storage unrelated to the Tenant's
approved industrial activity.
(43) (i) Not to install or allowed to be installed any anchors
on top or bottom of the precast hollow core slabs in
or about the Factory Unit without the written
consent of the Landlord having been first obtained,
subject as aforesaid, the maximum embedment depth of
the anchors at the top flange (soffit) shall be
80mm and 30mm respectively.
(ii) Not to hack or allow the hacking of any openings
larger than 250mm x 250mm (the said measurements)
in or about the Factory Unit without the written
consent of the Landlord having been first obtained
and to submit drawings of the openings (together
with such information as the-Landlord may require)
to the Landlord and the relevant authorities for
approval prior to the actual hacking of the openings.
The hacking of openings smaller than the said
measurements is allowed PROVIDED ALWAYS THAT the
spacing of the openings is not less than 1. 2 metre in
any direction. Notwithstanding anything herein, the
cutting of any steel reinforcement bars shall not
be permitted without the prior approval in writing
of the Landlord.
(44) Without prejudice to Clause 2(6) hereof and subject to the
prior written approval of the Landlord, to provide thermal
insulation to the floor, ceiling and the walls of rooms, if
the rooms are used for purposes requiring low temperature air
conditioning or cooling that would result in moisture
condensation on the external, ceiling or floor within or
outside the Factory Unit.
(45) Not to commence operation in the Factory Unit after the
installation(s) of any type of machinery or equipment have
been completed until a final inspection of the installation(s)
has been carried out and approval of the same is given by the
Landlord.
<PAGE> 48
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(46) The Tenant accepts the Factory Unit with full knowledge that
refurbishment and upgrading works (hereinafter referred to
as "the refurbishment") are being or may be carried out in
the Building and the estate in which the Building is
situated. The Tenant shall, if required by the Landlord and
within the time stipulated by the Landlord, at the cost and
expense of the Tenant properly and in accordance with the
obligations of the Tenant under this Agreement remove,
re-locate and/or modify temporarily or permanently as may be
stipulated by the Landlord every installation, fixture,
fittings, device, equipment and article existing at the time
outside the Factory Unit as the Landlord may think fit for
the purpose of permitting the Landlord, his servant, agent,
contractor and subcontractor to properly carry out the
refurbishment or for the purpose of improving the appearance
or aesthetics of the Building. PROVIDED THAT if the Tenant
shall fail to observe or perform this covenant or any part
thereof the Landlord shall have the right (without prejudice
to any other right or remedy the Landlord may have against
the Tenant) to remove, relocate and/or modify any or every
such installation, fixture, fittings, device, equipment and
article, and all costs and expenses incurred thereby shall
forthwith be recoverable from the Tenant as a debt.
PROVIDED ALWAYS and it is hereby agreed that the Landlord
shall not be liable in any way to the Tenant or any other
person for any loss, damage, claim, cost, expense,
disruption, interference and/or inconvenience caused
howsoever or whatsoever by or in connection with the
refurbishment and/or the removal, re-location or modification.
<PAGE> 49
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3 The Landlord hereby covenants with the Tenant as follows:
(1) To pay the property tax payable in respect of the Factory Unit
PROVIDED ALWAYS that if the rate of such property tax shall be
increased whether by way of an increase in the annual value or
an increase in the rate per cent then the Landlord shall not
hereunder be liable to pay the said increase but the Tenant
shall pay such increase as provided under Clause 2(4) hereof.
(2) To keep the exterior and roof of the Building and the lift
entrances corridors passages staircases lavatories water
closets and other conveniences intended for the use of the
Tenant at all times in complete repair and in proper sanitary
and clean condition.
(3) To keep the stairs and passages leading to the Factory Unit
and the lifts and lavatories well and sufficiently lighted and
the lifts in proper working order PROVIDED THAT the Landlord
shall not be responsible for any loss the Tenant may sustain
by reason of any damage or injury or in consequence of any
breakage of or defect in any of the pipes wire or other
apparatus of the Landlord used in or about the Building.
(4) To keep the Building insured against loss or damage by fire
and in the event of such loss or damage (unless resulting from
some act or default of the Tenant) to rebuild and reinstate
the damaged part of the Building PROVIDED THAT it is expressly
agreed and understood that the term "loss or damage by fire"
as used in this clause do not include any loss or damage
caused to the Tenant's fixtures or loss due to the factory
being rendered out of commission and in any such event the
Landlord shall not be held liable for any such loss or damage
sustained by the Tenant.
(5) That the Tenant paying the rent, service charge and tax and
observing and performing the several covenants and
stipulations on the Tenant's part herein contained shall
during the said term quietly enjoy the Factory Unit without
any interruption by the Landlord or any person or persons
lawfully claiming under or in trust for the Landlord.
4 PROVIDED ALWAYS THAT and it is hereby agreed as follows:-
(1) If the rent hereby reserved or service charge or interest, tax
or any other sums payable herein, or any part thereof shall at
any time remain unpaid for fourteen (14) days after becoming
payable (whether formally demanded or not) or if the Tenant
shall neglect to observe or perform any covenant or
stipulation on the Tenant's part herein contained or if the
Tenant shall make any assignment for the benefit of the
Tenant's creditors or enter into any arrangement with its
creditors by composition or otherwise or suffer any distress
or attachment or execution to be levied against the Tenant's
goods or if the Tenant for the time being shall be a company
and shall enter
<PAGE> 50
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into liquidation whether compulsory or voluntary (save for the
purpose of reconstruction or amalgamation) or being an
individual shall have a receiving order or an adjudicating
order made against the Tenant then and in any or such cases it
shall be lawful for the Landlord at any time thereafter to
re-enter upon the Factory Unit or any part thereof in the name
of the whole and thereupon this Tenancy shall absolutely
determine but without prejudice to the rights of action of the
Landlord in respect of any breach of the covenants on the part
of the Tenant herein contained.
(2) Any notice requiring to be served hereunder shall be
sufficiently served on the Tenant if it is left addressed to
the Tenant at the Factory Unit or forwarded to the Tenant by
registered post to the Tenant's last known place of business
and shall be sufficiently served on the Landlord if it is
addressed to the Landlord and sent by registered post to the
Head Office of the Landlord. In the event of any action in
respect of the tenancy created herein (including any action
for the recovery of the rent or service charge herein reserved
or tax and/or any other sums herein payable) the Tenant agrees
and accepts that the originating process shall be sufficiently
served on the Tenant if it is addressed to the Tenant at the
address specified in this Agreement or if it is left posted
upon a conspicuous part of the Factory Unit or forwarded to
the Tenant by post at the Tenant's last known place of
business.
(3) Letters or parcels whether registered or otherwise and
telegrams or keys received by any agent or servant of the
Landlord on behalf of the Tenan0t shall be received solely at
the risk of the Tenant.
(4) No waiver expressed or implied by the Landlord of any breach
of any covenant, condition or duty of the Tenant shall be
construed as a waiver of any other breach of the same or any
other covenant, condition or duty and shall not prejudice in
any way the rights, powers and remedies of the Landlord herein
contained. Any acceptance of rent, service charge, tax and/or
any other sum whatsoever payable under this Agreement shall
not be construed as nor be deemed to operate as a waiver by
the Landlord of any right to proceed against the Tenant for
any of the Tenant's obligations hereunder.
(5) The Landlord shall not be responsible for any loss damage or
inconvenience occasioned by the closing of the lift or lifts
for repairs or any other necessary purpose or for any accident
that may occur to the Tenant or other person using the lift.
<PAGE> 51
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(6) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the Factory
Unit or the Building or any part thereof for any accidents or
injuries sustained or loss or damage to property in the
Factory Unit or the Building or any part thereof.
(7) The Landlord shall not be liable to the Tenant in respect of:
(i) any interruption in the services provided by the
Landlord by reason of necessary repair or maintenance
of any installation or apparatus or damage thereto or
by reason of mechanical or other defect or breakdown
including but not limited to breakdown in electricity
and water supply;
(ii) any act, omission, default, misconduct or negligence
of any servant, agent, contractor, sub-contractor or
employee of the Landlord in or about the performance
or purported performance of any duty relating to the
provision of the said services.
(8) The Landlord shall be entitled to let any other part or parts
of the Building subject to any terms or conditions which the
Landlord may think fit to impose and nothing herein contained
shall be deemed to create a letting scheme for the Building or
any part thereof and neither the Tenant nor the persons
deriving title under the Tenant shall have the benefit of or
the right to enforce or to have enforced or to prevent the
release or modification of and covenant agreement or condition
entered into by any present or future tenant.
(9) The Tenant shall pay all costs disbursements fees and charges
legal or otherwise including stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to this
Agreement.
<PAGE> 52
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(10) The Tenant shall pay all costs and fees legal or otherwise
including costs as between solicitor and clients in connection
with the enforcement of the covenants and conditions of this
Agreement.
(11) The Landlord shall not be liable for any loss or damage that
may be suffered by the Tenant resulting from any subsidence or
cracking of the ground floor slabs and aprons of the Building
PROVIDED that this clause shall apply only to Tenants
occupying the ground floor of the Building.
(12) The Landlord shall on written request of the Tenant made not
less than three (3) months before the expiration of the term
hereby created and if there shall not at the time of such
request be any existing breach or non-observance by the Tenant
of any of the terms, covenants and stipulations contained in
this Agreement, at the cost and expense of the Tenant grant to
the Tenant a tenancy of the Factory Unit for a further term to
be mutually agreed upon by the parties hereto and at a revised
rent to be determined by the Landlord and containing the like
terms, covenants and stipulations as are herein contained, or
such variations or modifications thereof together with such
other terms covenants and stipulations as may be imposed by
the Landlord, with the exception of and without the present
covenant for renewal.
5 In this Agreement where the context so requires or permits, words
importing the singular number or the masculine gender include the plural number
or the feminine gender and words importing persons include corporations and
vice versa, the expression "the Landlord" shall include its successors-in-title
and assigns, the expression "the Tenant" shall include its successors-in-title
and permitted assigns (if any), where there are two or more persons included in
the expression "the Tenant" covenants expressed to be made by "the Tenant"
shall be deemed to be made by such persons jointly and severally.
<PAGE> 53
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IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY:
SEAH KEE POK
DIRECTOR, BUILDINGS DEVELOPMENT
for and on behalf of
JURONG TOWN CORPORATION
in the presence of:
/s/ GRACE ONG SOO HIANG
--------------------------------
Grace Ong Soo Hiang
SIGNED BY:
- ----------------------------
for and on behalf of
ADAPTEC MFG (S) PTE LTD
/s/ K Y LIM
----------------------------------
K Y Lim
Vice President & Managing Director
in the presence of:
ADAPTEC MFG (S) PTE LTD
/s/ ANDREW NG
----------------------------------
Andrew Ng
Director
Finance & Administration
(Signature of Witness)
Name of Witness:
Designation:
<PAGE> 54
[LOGO]
J T C
REGISTRATION NO: FF 22112/94
JTC(L)8339/205 Pt 1/KM/KS
TENANCY OF FLATTED FACTORY NOS. #06-01/10
AND #06-12/20 1002 JALAN BUKIT MERAH
REDHILL INDUSTRIAL ESTATE
BETWEEN
JURONG TOWN CORPORATION
AND
ADAPTEC MFG (S) PTE LTD
DATED: 26th August 1994
<PAGE> 55
TENANCY OF FLATTED FACTORY UNIT
THIS AGREEMENT is made the 26th day of August 1994 Between the JURONG
TOWN CORPORATION incorporated under the Jurong Town Hall Corporation Act,
having its Head Office at Jurong Town Hall, 301 Jurong Town Hall Road,
Singapore 2260 (hereinafter called "the Landlord" of the one part and ADAPTEC
MFG (S) PTE LTD a company incorporated in Singapore and having its registered
office at Block 1003, Bukit Merah Central, #07-09 to #07-12, Singapore 0315.
(hereinafter called "the Tenant" which expression shall where the context so
admits include the Tenant's successors-in-title and permitted assigns) of the
other part.
WITNESSETH as follows:
1 The Landlord hereby lets and the Tenant hereby takes ALL that portion
of the SIXTH (6TH) storey(s) of the Building known as 1002 JALAN BUKIT
MERAH (hereinafter called "the Building") containing an approximate
TOTAL area of 1,796.9 square metres (which said area may be adjusted
on completion of survey, if any) more particularly delineated and
edged red on the plan annexed hereto (which portion is hereinafter
called "the Factory Unit") TOGETHER with the use of the lavatories and
conveniences thereat together also with the use for the Tenant, the
Tenant's servants and visitors of the lifts and the entrances
staircases corridors and passages and accesses to the Building for the
purpose only of ingress and egress to and from the Factory Unit with
or without parcels and packages TO HOLD the same UNTO the Tenant for
the term of TWO (2) YEARS FIVE AND A HALF (5 1/2) MONTHS from the 1ST
day of AUGUST 1994 YIELDING AND PAYING therefor during the said term
the rent of
(1) at the discounted rate of DOLLARS TWELVE AND CENTS THIRTY-FIVE
ONLY ($12.35CTS) per square metre per month for so long as the
Tenant shall occupy under tenancy an aggregate floor area of
5000 square metres in the Building or in the various Flatted
Factories belonging to the Landlord; and
<PAGE> 56
- 2 -
(2) in the event that the said aggregate floor area occupied is at
any time henceforth and for any reason whatever reduced to
below 5000 square metres whence the discount shall be totally
withdrawn from and in respect of the Factory Unit and all
other premises occupied by the Tenant, then and with effect
from the date of the reduction of the said aggregate floor
area, at the normal rate of DOLLARS THIRTEEN ONLY ($13.00) per
square metre per month;
to be paid clear of all deduction and in advance and without demand on
the 1st day of each of the calendar month of the year (i.e., the 1st
day of January, February, March, etc.) the first of such payments to
be made on the 1ST day of AUGUST 1994.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid.
(2) To pay in addition to the said rent during the said term the
sum of DOLLARS ONE AND CENTS SEVENTY ONLY ($1.70CT) per square
metre per month in advance on the same dates and in the same
manner as for the said rent as charges for services to be
undertaken by the Landlord as hereinbefore mentioned
(hereinafter referred to as "the Service Charge") PROVIDED
THAT if the cost of services shall increase, the Landlord may
revise the Service Charge and on serving a notice in writing
to the Tenant to this effect such revised Service Charge shall
be payable as from the date specified in the said notice.
(3) (i) To pay a deposit equivalent to three (3) months' rent
at the discounted rate and service charge on or
before the execution of this Agreement or
commencement of the said term, whichever is the
earlier, as security against breach of any of the
covenants and stipulations herein contained which
cash deposit shall be maintained at this figure
during the said term and shall be repayable without
interest on the termination of this tenancy subject
however to an appropriate deduction as damages in
respect of any such breach.
(ii) In lieu of the aforesaid cash deposit to provide an
acceptable banker's guarantee for the same equivalent
amount, which guarantee shall be valid and
irrevocable for the whole of the said term or the
unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the
said term and in a form approved by the Landlord or
to provide such other form of security as the
Landlord may in the Landlord's absolute discretion
permit or accept.
<PAGE> 57
- 3 -
(iii) If the rent at the discounted rate hereinbefore
mentioned in clause 1(1) shall at any time be
increased to the rent at the normal rate in
accordance with Clause 1(2), or if the Service Charge
has been increased by the Landlord in accordance with
Clause 2(2) hereof, to forthwith pay the amount of
such increase so that the cash deposit stipulated in
sub-clause (i) above shall at all times be equal to
three (3) months' rent and service charge.
(4) During the said term or any renewal thereof to pay any
increase of property tax which may be imposed whether by way
of an increase in the annual value or an increase in the rate
per centum. For the purpose of ascertaining the additional
amount payable under this clause any such increase in property
tax shall be apportioned in the same proportion as the rent
payable under this Agreement bears to the total assessed
annual value of the Building at the date such increase comes
into force.
(5) To pay all charges and outgoings whatsoever in respect of the
supply of electricity and water used by the Tenant at the
Factory Unit as shown by the separate meters belonging thereto
and also pay all charges for the use and maintenance of such
meters PROVIDED ALWAYS that subject to the prior written
consent of the Landlord and to all approvals being obtained by
the Tenant from the relevant governmental and statutory
authorities the water sub-meter will be installed in the
Factory Unit by the Tenant at the Tenant's own cost.
(6) At all times to use and occupy the Factory Unit for the
purpose of THE TESTING OF INTEGRATED CIRCUITS ONLY and for no
other purposes whatever.
(7) Not to place or allow to be placed upon the Factory Unit or
on any of the floors in the Building any article machinery or
load in excess of 7.5 kiloNewtons per square metre and not to
place or allow to be placed in the goods lifts of the Building
any article machinery or load in excess of 1,500 kilograms.
<PAGE> 58
- 4 -
(8) To keep the interior of the Factory Unit (including the doors
and windows thereof and all the Landlord's other fixtures and
fittings therein) clean and in good and substantial repair and
condition (fair wear and tear and damage by fire lightning
riot or tempest alone excepted) and also to clean and keep
clean the exterior of the windows thereof.
(9) Not to make or cause to be made any alteration in or addition
to the Factory Unit without the prior written consent of the
Landlord and the relevant governmental and statutory
authorities PROVIDED THAT on the granting of such consent and
without prejudice to other terms and conditions which may be
imposed the Tenant shall place with the Landlord a deposit
equivalent to such amount as the Landlord may deem sufficient
for the reinstatement of the Factory Unit to its original
condition. Further the Tenant shall not use any flammable
building materials for internal partitioning.
(10) Not to modify any existing electrical wirings or modify or
replace any existing fire alarm fixtures and fittings or affix
or install any further or additional electrical and fire alarm
wiring extension in or about the Factory Unit without the
written consent of the Landlord having been first obtained and
PROVIDED FURTHER THAT all such work shall be carried out by a
licensed electrical contractor or competent person as approved
by the Landlord to be employed and paid by the Tenant who
shall ensure as part of the work that the existing circuits
and equipment are not overloaded or unbalanced. Prior to any
electrical and fire alarm installation or modification work,
the Tenant shall be required to submit the necessary plans as
hereinafter specified under clauses 2(29) and 2(30) to the
Landlord for approval.
(11) To permit the Landlord or the Landlord's agents with or
without workmen or others at all reasonable times to enter the
Factory Unit to take inventories of the Landlord's fixtures
and fittings therein and to view the condition thereof and
examine the state of repair of the Factory Unit and thereupon
the Landlord may serve upon the Tenant notice in writing
specifying any work or repairs necessary to be done which are
within the responsibility of the Tenant under the terms of
this Agreement and require the Tenant forthwith to execute the
same and the Tenant shall pay the Landlord's reasonable costs
of survey attending the preparation of the notice and if the
Tenant shall not within ten days after the service of such
notice proceed diligently and in workman-like manner with the
execution of such work or repairs then to permit the Landlord
(who
<PAGE> 59
- 5 -
shall not be under any obligation so to do) to enter upon the
Factory Unit and execute such work or repairs and the cost
thereof shall be a debt due from the Tenant to the Landlord
and be forthwith recoverable PROVIDED ALWAYS that the Landlord
shall not be liable to the Tenant for any loss damage or
inconvenience caused by such work or repairs.
(12) To be wholly responsible for all damages and to bear the full
cost of repairs and reinstatement of such damaged building
equipment fixtures drains wiring and piping above and below
ground level if the cause or causes of such damages can be
traced directly or indirectly back to the Tenant's activities.
(13) To permit the Landlord, the Landlord's agents or workmen and
others to enter the Factory Unit at reasonable hours to do
structural or external repairs and execute such work as may be
necessary to the Factory Unit or to other portions of the
Building of which the Factory Unit may form a part but which
are not conveniently accessible otherwise than from or through
the Factory Unit.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article to permit the Landlord to execute the
said repairs and works and if the Tenant shall fail to observe
or perform this covenant the Landlord shall remove the same
and all costs and expenses incurred thereby shall be
recoverable from the Tenant as a debt PROVIDED ALWAYS that the
Landlord shall not be liable to the Tenant for any loss damage
or inconvenience caused by such removal.
(15) Subject always to clause 2(27) hereinafter appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
(16) To make good and sufficient provision for and to ensure the
safe and efficient disposal of all waste generated at the
Factory Unit including but not limited to pollutants to the
requirements and satisfaction of the Landlord and the relevant
governmental and statutory authorities PROVIDED THAT in the
event of any default by the Tenant under this covenant the
Landlord may at the discretion of the Landlord and without
prejudice to any other rights and remedies the Landlord may
have in law or under this Agreement, carry out such remedial
measures and works as the Landlord thinks necessary and all
costs and expenses incurred thereby shall forthwith be
recoverable in full from the Tenant as a debt.
<PAGE> 60
- 6 -
(17) To provide and maintain refuse receptacles for all waste and
refuse produced at the Factory Unit in conformity with the
requirements and standards prescribed by the health authority
and to keep the same out of sight of the public during the
hours of business and to transfer such waste and refuse in
suitable receptacles to such area and at such times each day
as may be prescribed by the Landlord.
(18) Not to keep or allow to be kept livestock or other animals at
the Factory Unit.
(19) Not to do or suffer to be done on or in the Factory Unit
anything whereby the insurances of the same or of the Building
or any part thereof may be rendered void or voidable or
whereby the premium thereon may be increased and to repay to
the Landlord on demand all sums paid by the Landlord by way of
increased premium and all expenses incurred by the Landlord in
connection therewith and all loss damages and expenses
resulting from a breach or non-observance of this covenant
without prejudice to any other rights and remedies available
to the Landlord.
(20) Not to do or permit or suffer to be done anything in or upon
the Factory Unit or any part of the Building which in the
opinion of the Landlord is or may be a nuisance or cause
annoyance to or in any way interfere with the business or the
quiet or comfort of the other occupants of the Building
PROVIDED THAT the Landlord shall not be responsible to the
Tenant for any loss, damage or inconvenience as a result of
nuisance, annoyance or any interference whatsoever caused by
the other occupants of the Building.
(21) Not to use the Factory Unit for any illegal or immoral purpose.
(22) Not to cause any obstruction in or on the approaches, private
roads or passage way adjacent to or leading to the Building by
leaving or parking or permitting to be left or parked any
motor vehicle or other carriages belonging to or used by the
Tenant or by any of the Tenant's friends servants or visitors.
And also to observe and ensure observance of all regulations
made by the Landlord relating to the parking of such vehicles
or carriages and to pay such carpark charges as may be imposed
by the Landlord or his agent.
(23) Not to effect any sale by auction in the Building.
<PAGE> 61
- 7 -
(24) Not to affix paint or otherwise exhibit on the exterior of the
Factory Unit or the windows thereof or of the Building or in
any of the passages corridors or stairs of the Building any
name plate placard poster or advertisement or any flag-staff
or other thing whatsoever save only the name of the Tenant in
such places only and not elsewhere and in such manner and
position only as shall be approved in writing by the Landlord.
(25) Not to cause any obstruction to the common stairways
passageways and other common parts of the Building or accesses
to the Building. PROVIDED ALWAYS that the Landlord shall have
the full right and liberty and absolute discretion to remove
and clear any such obstruction and all costs and expenses
incurred thereby shall be recoverable from the Tenant as a
debt. FURTHER PROVIDED THAT the Landlord shall not be liable
to the Tenant or any third party for any loss damage or
inconvenience caused by such removal and the Tenant hereby
indemnifies the Landlord in this respect.
(26) Not to install any machinery or fixture in the Factory Unit
without the permission in writing of the Landlord and to
submit a layout plan of the Tenant's machinery for the
approval of the Landlord and the relevant governmental and
statutory authorities prior to the actual fixing of the
machineries.
(27) Not to assign create a trust sublet grant a licence or part
with or share the possession or occupation of the Factory Unit
or any part thereof or leave the Factory Unit or any part
thereof vacant and unoccupied at any time during the said
term.
(28) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Factory Unit and/or in respect of
the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Landlord against all actions, proceedings, costs, expenses,
claims, fines, losses, penalties and demands in respect of any
act matter or thing done or omitted to be done in
contravention of the said provisions.
(29) To install electrical switch board wirings and equipment to
the Factory Unit including the following electrical protective
devices, all at the Tenant's own expense, subject to the
approval of the Landlord:-
(a) Overcurrent protective devices in the Landlord's
Switch Room;
<PAGE> 62
- 8 -
(b) Overcurrent and earth-leakage protective devices in
the Factory Unit,
PROVIDED THAT-
(i) the Tenant shall submit 3 sets of 'electrical
single-line diagram' of the Factory Unit wirings for
the approval of the Landlord prior to the actual
installation of the wirings; and
(ii) it shall be the responsibility of the Tenant to keep
all or any of the aforesaid switch board wirings,
equipment and devices installed by the Tenant in good
condition at all times.
(30) To carry out such modification work on the existing fire alarm
wirings, heat detectors and fixtures in the Factory Unit as
shall be necessary to suit the factory operation, including
the installation of additional wirings and connections of the
heat detectors and fixtures to the Landlord's common fire
alarm system, to the approval of the Landlord and all at the
Tenant's own expense PROVIDED THAT:
(a) The Tenant shall submit 2 copies of the fire alarm
drawings of the Factory Unit indicating the existing
fixtures, the proposed modifications and the layout
of the Tenant's machinery for the approval of the
Landlord prior to the commencement of the
modification work.
(b) The Tenant shall at the Tenant's own expense ensure
that the existing fire alarm wirings, heat detectors
and fixtures and any additional wirings and fixtures
installed by the Tenant in the Factory Unit are
serviced monthly and in good condition at all times
including the payment of any fee(s) in connection
with servicing and maintenance works.
(c) Any item of replacement required for the effective
maintenance of the fire alarm wirings, heat detectors
and fixtures shall be of a quality and shall have an
operational characteristic similar to the item to be
replaced and shall be subject to the approval of the
Landlord. The Tenant shall at his own cost forthwith
replace any or all items of dissimilar quality and
operational characteristic found in use.
(31) To close the Factory Unit during such hours as the Landlord
may specify by notice in writing to the Tenant for any
maintenance or repair work to be executed by the Landlord.
<PAGE> 63
- 9 -
(32) At all times during the three calendar months immediately
preceding the determination of the said term to permit
intending tenants and others with written authority from the
Landlord or his agents at reasonable times of the day to view
the Factory Unit.
(33) At the determination of the said term by expiry or otherwise
to yield up the Factory Unit and all the Landlord's fixtures
fittings fastenings or appertaining in such good and
substantial repair fair wear and tear excepted as shall be in
accordance with the covenants of the Tenant herein contained
and with all locks and keys complete.
(34) In addition to the foregoing and immediately prior to the
determination of the said term or the renewal thereof as the
case may be to restore the Factory Unit in all respects to its
original state and condition if so required by the Landlord to
redecorate including painting the interior thereof to the
satisfaction of the Landlord PROVIDED ALWAYS that if the
Tenant shall fail to observe or perform this covenant the
Landlord may in its absolute discretion, and without prejudice
to any other rights and remedies the Landlord may have against
the Tenant, execute such work for the said restoration and
redecoration and shall recover all costs thereof from the
Tenant together with all rent, service charge, tax and other
amounts which the Landlord would have been entitled to receive
from the Tenant had the period within which such restoration
and redecoration are effected by the Landlord been added to
the said term.
(35) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Landlord in
respect of any outstanding amount payable under this Agreement
from the date such amount becomes due until payment in full is
received by the Landlord.
(36) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy
<PAGE> 64
- 10 -
power surge, high frequency voltage and current, air borne
noise, vibration or any electrical or mechanical interference
or disturbance whatsoever which may prevent or prevents in any
way the service or use of any communication system or affects
the operation of other equipment, installations, machinery,
apparatus or plants of other Tenants and in connection
therewith, to allow the Landlord or any authorised person(s)
to inspect at all reasonable times, such installation, machine
or apparatus in the Factory Unit to determine the source of
the interference or disturbance and thereupon, to take
suitable measures, at the Tenant's own expense, to eliminate
or reduce such interference or disturbance to the Landlord's
satisfaction, if it is found by the Landlord or such
authorised person(s) that the Tenant's electrical
installation, machine or apparatus is causing or contributing
to the said interference or disturbance.
(37) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs, demands
which may arise in connection with clause 2(36) above.
(38) To perform and observe all the obligations which the Landlord
of the Factory Unit may be liable to perform or observe during
the said term by any direction or requirement of any
governmental and statutory authority and if the Tenant shall
fail to observe or perform this covenant the Landlord may in
its absolute discretion perform the same and all expenses and
costs incurred thereby shall be recoverable from the Tenant as
a debt PROVIDED ALWAYS that the Landlord shall not be liable
to the Tenant for any loss damage or inconvenience caused
thereby.
(39) Without prejudice to the generality of Clause 2(38) herein,
the rent and service charge and other sums payable by the
Tenant under or in connection with this tenancy shall be
exclusive of the goods and services tax (herein called "tax")
chargeable by any government, statutory or tax authority
calculated by reference to the amount of rent, service charge
and any other sums received or receivable by the Landlord from
the Tenant and which tax is payable by the Tenant. The Tenant
shall pay the tax and the Landlord acting as the collecting
agent for the government, statutory or tax authority shall
collect the tax from the Tenant in the manner and within the
period prescribed in accordance with the applicable laws and
regulations.
(40) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Factory Unit or any part
thereof, to forthwith give the Landlord written notice of
damage.
<PAGE> 65
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(41) To ensure that -
(i) at least 60% of the overall floor area shall be used
for purely industrial activities and
(ii) the remaining 40% shall be used as ancillary stores
and offices, neutral areas and communal facilities
PROVIDED THAT the said ancillary offices shall not
exceed 25% of the overall floor area.
(42) Not to use and occupy the Factory Unit for the purpose of
commercial office and storage unrelated to the Tenant's
approved industrial activity.
(43) To permit the Landlord, the Landlord's agents or workmen and
others at any time during the said term to enter the Factory
Unit to replace the louvre/casement windows and timber doors
with such other windows and doors as the Landlord may think
fit and to install or replace service ducts/pipes (hereinafter
referred to as "the said replacement or installation works") .
If so required by the Landlord the Tenant shall remove such
installation, machinery, partition and any article to permit
the Landlord to execute the said replacement or installation
works, and if the Tenant shall fail to observe or perform this
covenant the Landlord shall have the right to (without
prejudice to any other right or remedy the Landlord may have
against the Tenant) remove the same, and all costs and
expenses incurred thereby shall forthwith be recoverable from
the Tenant as a debt PROVIDED ALWAYS that the Landlord shall
not be liable to the Tenant for any loss, damage or
inconvenience caused whatsoever by such removal and the said
replacement or installation works.
(44) Without prejudice to Clause 2(6) hereof and subject to the
prior written approval of the Landlord, to provide thermal
insulation to the floor, ceiling and the walls of rooms, if
the rooms are used for purposes requiring low temperature air
conditioning or cooling that would result in moisture
condensation on the external, ceiling or floor within or
outside the Factory Unit.
(45) Not to commence operation in the Factory Unit after the
installation(s) of any type of machinery or equipment have been
completed until a final inspection of the installation(s) has
been carried out and approval of the same is given by the
Landlord.
<PAGE> 66
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(46) The Tenant accepts the Factory Unit with full knowledge that
refurbishment and upgrading works (hereinafter referred to as
"the refurbishment") are being or may be carried out in the
Building and the estate in which the Building is situated. The
Tenant shall, if required by the Landlord and within the time
stipulated by the Landlord, at the cost and expense of the
Tenant properly and in accordance with the obligations of the
Tenant under this Agreement remove, re-locate and/or modify
temporarily or permanently as may be stipulated by the
Landlord every installation, fixture, fittings, device,
equipment and article existing at the time outside the Factory
Unit as the Landlord may think fit for the purpose of
permitting the Landlord, his servant, agent, contractor and
subcontractor to properly carry out the refurbishment or for
the purpose of improving the appearance or aesthetics of the
Building. PROVIDED THAT if the Tenant shall fail to observe or
perform this covenant or any part thereof the Landlord shall
have the right (without prejudice to any other right or remedy
the Landlord may have against the Tenant) to remove, re-locate
and/or modify any or every such installation, fixture,
fittings, device, equipment and article, and all costs and
expenses incurred thereby shall forthwith be recoverable from
the Tenant as a debt. PROVIDED ALWAYS and it is hereby agreed
that the Landlord shall not be liable in any way to the Tenant
or any other person for any loss, damage, claim, cost,
expense, disruption, interference and/or inconvenience caused
howsoever or whatsoever by or in connection with the
refurbishment and/or the removal, re-location or modification.
<PAGE> 67
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3 The Landlord hereby covenants with the Tenant as follows:
(1) To pay the property tax payable in respect of the Factory Unit
PROVIDED ALWAYS that if the rate of such property tax shall be
increased whether by way of an increase in the annual value or
an increase in the rate per cent then the Landlord shall not
hereunder be liable to pay the said increase but the Tenant
shall pay such increase as provided under Clause 2(4) hereof.
(2) To keep the exterior and roof of the Building and the lift
entrances corridors passages staircases lavatories water
closets and other conveniences intended for the use of the
Tenant at all times in complete repair and in proper sanitary
and clean condition.
(3) To keep the stairs and passages leading to the Factory Unit
and the lifts and lavatories well and sufficiently lighted and
the lifts in proper working order PROVIDED THAT the Landlord
shall not be responsible for any loss the Tenant may sustain
by reason of any damage or injury or in consequence of any
breakage of or defect in any of the pipes wire or other
apparatus of the Landlord used in or about the Building.
(4) To keep the Building insured against loss or damage by fire
and in the event of such loss or damage (unless resulting from
some act or default of the Tenant) to rebuild and reinstate
the damaged part of the Building PROVIDED THAT it is expressly
agreed and understood that the term "loss or damage by fire"
as used in this clause do not include any loss or damage
caused to the Tenant's fixtures or loss due to the factory
being rendered out of commission and in any such event the
Landlord shall not be held liable for any such loss or damage
sustained by the Tenant.
(5) That the Tenant paying the rent, service charge and tax and
observing and performing the several covenants and
stipulations on the Tenant's part herein contained shall
during the said term quietly enjoy the Factory Unit without
any interruption by the Landlord or any person or persons
lawfully claiming under or in trust for the Landlord.
4 PROVIDED ALWAYS THAT and it is hereby agreed as follows:-
(1) If the rent hereby reserved or service charge or interest, tax
or any other sums payable herein, or any part thereof shall at
any time remain unpaid for fourteen (14) days after becoming
payable (whether formally demanded or not) or if the Tenant
shall neglect to observe or perform any covenant or
stipulation on the Tenant's part herein contained or if the
Tenant shall make any assignment for the benefit of the
Tenant's creditors or enter into any arrangement with its
creditors by composition or otherwise or suffer any distress
or attachment or execution to be levied against the Tenant's
goods or if the Tenant for the time being shall be a company
and shall enter
<PAGE> 68
- 14 -
into liquidation whether compulsory or voluntary (save for the
purpose of reconstruction or amalgamation) or being an
individual shall have a receiving order or an adjudicating
order made against the Tenant then and in any or such cases it
shall be lawful for the Landlord at any time thereafter to
re-enter upon the Factory Unit or any part thereof in the name
of the whole and thereupon this Tenancy shall absolutely
determine but without prejudice to the rights of action of the
Landlord in respect of any breach of the covenants on the part
of the Tenant herein contained.
(2) Any notice requiring to be served hereunder shall be
sufficiently served on the Tenant if it is left addressed to
the Tenant at the Factory Unit or forwarded to the Tenant by
registered post to the Tenant's last known place of business
and shall be sufficiently served on the Landlord if it is
addressed to the Landlord and sent by registered post to the
Head Office of the Landlord. In the event of any action in
respect of the tenancy created herein (including any action
for the recovery of the rent or service charge herein reserved
or tax and/or any other sums herein payable) the Tenant agrees
and accepts that the originating process shall be sufficiently
served on the Tenant if it is addressed to the Tenant at the
address specified in this Agreement or if it is left posted
upon a conspicuous part of the Factory Unit or forwarded to
the Tenant by post at the Tenant's last known place of
business.
(3) Letters or parcels whether registered or otherwise and
telegrams or keys received by any agent or servant of the
Landlord on behalf of the Tenant shall be received solely at
the risk of the Tenant.
(4) No waiver expressed or implied by the Landlord of any breach
of any covenant, condition or duty of the Tenant shall be
construed as a waiver of any other breach of the same or any
other covenant, condition or duty and shall not prejudice in
any way the rights, powers and remedies of the Landlord herein
contained. Any acceptance of rent, service charge, tax and/or
any other sum whatsoever payable under this Agreement shall
not be construed as nor be deemed to operate as a waiver by
the Landlord of any right to proceed against the Tenant for
any of the Tenant's obligations hereunder.
(5) The Landlord shall not be responsible for any loss damage or
inconvenience occasioned by the closing of the lift or lifts
for repairs or any other necessary purpose or for any accident
that may occur to the Tenant or other person using the lift.
<PAGE> 69
- 15 -
(6) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the Factory
Unit or the Building or any part thereof for any accident(s) or
injuries sustained or loss or damage to property in the
Factory Unit or the Building or any part thereof.
(7) The Landlord shall not be liable to the Tenant in respect of:
(i) any interruption in the services provided by the
Landlord by reason of necessary repair or maintenance
of any installation or apparatus or damage thereto or
by reason of mechanical or other defect or breakdown
including but not limited to breakdown in electricity
and water supply;
(ii) any act, omission, default, misconduct or negligence
of any servant, agent, contractor, sub-contractor or
employee of the Landlord in or about the performance
or purported performance of any duty relating to the
provision of the said services.
(8) The Landlord shall be entitled to let any other part or parts
of the Building subject to any terms or conditions which the
Landlord may think fit to impose and nothing herein contained
shall be deemed to create a letting scheme for the Building or
any part thereof and neither the Tenant nor the persons
deriving title under the Tenant shall have the benefit of or
the right to enforce or to have enforced or to prevent the
release or modification of any covenant agreement or condition
entered into by any present or future tenant.
(9) The Tenant shall pay all costs disbursements fees and charges
legal or otherwise including stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to this
Agreement.
<PAGE> 70
- 16 -
(10) The Tenant shall pay all costs and fees legal or otherwise
including costs as between solicitor and clients in connection
with the enforcement of the covenants and conditions of this
Agreement.
(11) The Landlord shall not be liable for any loss or damage that
may be suffered by the Tenant resulting from any subsidence or
cracking of the ground floor slabs and aprons of the Building
PROVIDED that this clause shall apply only to Tenants
occupying the ground floor of the Building.
(12) The Landlord shall on written request of the Tenant made not
less than three (3) months before the expiration of the term
hereby created and if there shall not at the time of such
request be any existing breach or non-observance by the Tenant
of any of the terms, covenants and stipulations contained in
this Agreement, at the cost and expense of the Tenant grant to
the Tenant a tenancy of the Factory Unit for a further term to
be mutually agreed upon by the parties hereto and at a revised
rent to be determined by the Landlord and containing the like
terms, covenants and stipulations as are herein contained, or
such variations or modifications thereof together with such
other terms covenants and stipulations as may be imposed by
the Landlord, with the exception of and without the present
covenant for renewal.
5 In this Agreement where the context so requires or permits, words
importing the singular number or the masculine gender include the plural number
or the feminine gender and words importing persons include corporations and
vice versa, the expression "the Landlord" shall include its successors-in-title
and assigns, the expression "the Tenant" shall include its successors-in-title
and permitted assigns (if any), where there are two or more persons included in
the expression "the Tenant" covenants expressed to be made by "the Tenant"
shall be deemed to be made by such persons jointly and severally.
<PAGE> 71
- 17 -
IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY:
CHUA TIN WEE
HEAD (FLATTED FACTORIES)
LEASE MANAGEMENT DEPARTMENT
BUILDINGS DEVELOPMENT GROUP
for and on behalf of
JURONG TOWN CORPORATION
in the presence of:
/s/ KANNAN MALINI
------------------------------
Kannan Malini
SIGNED BY:
for and on behalf of
ADAPTEC MFG (S) PTE LTD
/s/ K Y LIM
------------------------------
Vice President & Managing
Director
in the presence of:
/s/ ANDREW NG
------------------------------
Andrew Ng
Director
Finance & Administration
Name of Witness:
Designation :
<PAGE> 72
[LOGO]
J T C
REGISTRATION NO: FF 22250/94
JTC(L)3729/1210 Pt 1 Vol 2/KM/KS
TENANCY OF FLATTED FACTORY NOS. #06-09 TO #06-11
1003 BUKIT MERAH CENTRAL
REDHILL INDUSTRIAL ESTATE
BETWEEN
JURONG TOWN CORPORATION
AND
ADAPTEC MFG (S) PTE LTD
DATED: 11th October 1994
<PAGE> 73
TENANCY OF FLATTED FACTORY UNIT
This Tenancy is made the 11th day of October 1994 Between the JURONG
TOWN CORPORATION incorporated under the Jurong Town Hall Corporation Act,
having its Head Office at Jurong Town Hall, 301 Jurong Town Hall Road,
Singapore 2260 (hereinafter called "the Landlord" of the one part and ADAPTEC
MFG (S) PTE LTD a company incorporated in Singapore and having its registered
office at
1003 BUKIT MERAH CENTRAL
#07-09 TO #07-12
SINGAPORE 0315
(hereinafter called "the Tenant" which expression shall where the context so
admits include the Tenant's successors-in-title and permitted assigns) of the
other part.
WITNESSETH as follows:-
1 The Landlord hereby lets and the Tenant hereby takes ALL that portion
of the SIXTH (6TH) storey(s) of the Building known as 1003 BUKIT MERAH
CENTRAL (hereinafter called "the Building") containing an approximate
area of 513.6 square metres (which said area may be adjusted on
completion of survey, if any) more particularly delineated and edged
red on the plan annexed hereto (which portion is hereinafter called
"the Factory Unit") TOGETHER with the use of the lavatories and
conveniences thereat together also with the use for the Tenant, the
Tenant's servants and visitors of the lifts and the entrances
staircases corridors and passages and accesses to the Building for the
purpose only of ingress and egress to and from the Factory Unit with
or without parcels and packages TO HOLD the same UNTO the Tenant for
the term of THREE (3) YEARS from the 1ST DAY OF OCTOBER 1994 YIELDING
AND PAYING therefor during the said term the rent:-
(1) at the discounted rate of DOLLARS TWELVE AND CENTS
THIRTY-FIVE ONLY ($12.35CTS) per square metre per month for
so long as the Tenant shall occupy tenancy an aggregate floor
area of 5,000 square metres in the Building or in the various
Flatted Factories belonging to the Landlord; and
<PAGE> 74
- 2 -
(2) in the event that the said aggregate floor area is occupied at
any time henceforth and for any reason whatever reduced to
below 5,000 square metres whence the discount shall be totally
withdrawn from and in respect of the Factory Unit and all
other premises occupied by the Tenant, then and with effect
from the date of the reduction of the said aggregate floor
area, at the normal rate of DOLLARS THIRTEEN ONLY ($13.00) per
square metre per month to be paid clear of all deduction and
in advance and without demand on the 1st day of each of the
calendar month of the year (i.e., the 1st day of January,
February, March, etc.) the first OF such payments to be made
on the 1ST DAY OF OCTOBER 1994.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid.
(2) To pay in addition to the said rent during the said term the
sum of DOLLARS ONE AND CENTS SEVENTY ONLY ($1.70CTS) per
square metre per month in advance on the same dates and in the
same manner as for the said rent as charges for services to be
undertaken by the Landlord as hereinbefore mentioned
(hereinafter referred to as "the Service Charge") PROVIDED
THAT if the cost of services shall increase, the Landlord may
revise the Service Charge and on serving a notice in writing
to the Tenant to this effect such revised Service Charge shall
be payable as from the date specified in the said notice.
(3) (i) To pay a deposit equivalent to three (3) months' rent
at the discounted rate and service charge on or
before the execution of this Agreement or
commencement of the said term, whichever is the
earlier, as security against breach of any of the
covenants herein contained which cash deposit shall
be maintained at this figure during the said term and
shall be repayable without interest on the
termination of this tenancy subject however to an
appropriate deduction as damages in respect of any
such breach.
(ii) In lieu of the aforesaid cash deposit to provide an
acceptable banker's guarantee for the same equivalent
amount, which guarantee shall be valid and
irrevocable for the whole of the said term or the
unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the
said term and in a form approved by the Landlord or
to provide such other form of security as the
Landlord may in the Landlord's absolute discretion
permit or accept.
<PAGE> 75
- 3 -
(iii) If the rent at the discounted rate hereinbefore
mentioned in clause 1(1) shall at any time be
increased to the rent at the normal rate in
accordance with Clause 1(2), or if the Service Charge
has been increased by the Landlord in accordance with
Clause 2(2) hereof, to pay the amount of such
increase so that the cash deposit stipulated in sub-
clause (i) above shall at all times be equal to three
(3) months' rent and service charge.
(4) During the said term or any renewal thereof to pay any
increase of property tax which may be imposed whether by way
of an increase in the annual value or an increase in the rate
per centum. For the purpose of ascertaining the additional
amount payable under this clause any such increase in property
tax shall be apportioned in the same, proportion as the rent
payable under this Agreement bears to the total assessed
annual value of the Building at the date such increase comes
into force.
(5) To pay all charges and outgoings whatsoever in respect of the
supply of electricity and water used by the Tenant at the
Factory Unit as shown by the separate meters belonging thereto
and also pay all charges for the use and maintenance of such
meters PROVIDED ALWAYS that subject to the prior written
consent of the Landlord and to all approvals being obtained by
the Tenant from the relevant governmental and statutory
authorities the water sub-meter will be installed in the
Factory Unit by the Tenant at the Tenant's own cost.
(6) At all times to use and occupy the Factory Unit for the
purpose of THE TESTING OF INTEGRATED CIRCUITS ONLY and for no
other purposes whatever.
(7) Not to place or allow to be placed upon the Factory Unit or on
any of the floors in the Building any article machinery or
load in excess of 10 kiloNewtons per square metre and not to
place or allow to be placed in the goods lifts of the Building
any article machinery or load in excess of 2,000 kilograms.
<PAGE> 76
- 4 -
(8) To keep the interior of the Factory Unit (including the doors
and windows thereof and all the Landlord's other fixtures and
fittings therein) clean and in good and substantial repair and
condition (fair wear and tear and damage by fire lightning
riot or tempest alone excepted) and also to clean and keep
clean the exterior of the windows thereof.
(9) Not to make or cause to be made any alteration in or addition
to the Factory Unit without the prior written consent of the
Landlord and the relevant governmental and statutory
authorities PROVIDED THAT on the granting of such consent and
without prejudice to other terms and conditions which may be
imposed the Tenant shall place with the Landlord a deposit
equivalent to such amount as the Landlord may deem sufficient
for the reinstatement of the Factory Unit to its original
condition. Further the Tenant shall not use any flammable
building materials for internal partitioning.
(10) Not to modify any existing electrical wirings or modify or
replace any existing fire alarm fixtures and fittings or affix
or install any further or additional electrical and fire alarm
wiring extension in or about the Factory Unit without the
written consent of the Landlord having been first obtained and
PROVIDED FURTHER THAT all such work shall be carried out by a
licensed electrical contractor or competent person as approved
by the Landlord to be employed and paid by the Tenant who
shall ensure as part of the work that the existing circuits
and equipment are not overloaded or unbalanced. Prior to any
electrical and fire alarm installation or modification work,
the Tenant shall be required to submit the necessary plans as
hereinafter specified under clauses 2(29) and 2(30) to the
Landlord for approval.
(11) To permit the Landlord or the Landlord's agents with or
without workmen or others at all reasonable times to enter the
Factory Unit to take inventories of the Landlord's fixtures
and fittings therein and to view the condition thereof and
examine the state of repair of the Factory Unit and thereupon
the Landlord may serve upon the Tenant notice in writing
specifying any work or repairs necessary to be done which are
within the responsibility of the Tenant under the terms of
this Agreement and require the Tenant forthwith to execute the
same and the Tenant shall pay the Landlord's reasonable costs
of survey attending the preparation of the notice and if the
Tenant shall not within ten days after the service of such
notice proceed diligently and in workman-like manner with the
execution of such work or repairs then to permit the Landlord
(who
<PAGE> 77
- 5 -
shall not be under any obligation so to do) to enter upon the
Factory Unit and execute such work or repairs and the cost
thereof shall be a debt due from the Tenant to the Landlord
and be forthwith recoverable PROVIDED ALWAYS that the Landlord
shall not be liable to the Tenant for any loss damage or
inconvenience caused by such work or repairs.
(12) To be wholly responsible for all damages and to bear the full
cost of repairs and reinstatement of such damaged building
equipment fixtures drains wiring and piping above and below
ground level if the cause or causes of such damages can be
traced directly or indirectly back to the Tenant's activities.
(13) To permit the Landlord, the Landlord's agents or workmen and
others to enter the Factory Unit at reasonable hours to do
structural or external repairs and execute such work as may be
necessary to the Factory Unit or to other portions of the
Building of which the Factory Unit may form a part but which
are not conveniently accessible otherwise than from or through
the Factory Unit.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article to permit the Landlord to execute the
said repairs and works and if the Tenant shall fail to observe
or perform this covenant the Landlord shall remove the same
and all costs and expenses incurred thereby shall be
recoverable from the Tenant as a debt PROVIDED ALWAYS that the
Landlord shall not be liable to the Tenant for any loss damage
or inconvenience caused by such removal.
(15) Subject always to clause 2(27) hereinafter appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
(16) To make good and sufficient provision for and to ensure the
safe and efficient disposal of all waste generated at the
Factory Unit including but not limited to pollutants to the
requirements and satisfaction of the Landlord and the relevant
governmental and statutory authorities PROVIDED THAT in the
event of any default by the Tenant under this covenant the
Landlord may at the discretion of the Landlord and without
prejudice to any other rights and remedies the Landlord may
have in law or under this Agreement, carry out such remedial
measures and works as the Landlord thinks necessary and all
costs and expenses incurred thereby shall forthwith be
recoverable in full from the Tenant as a debt.
<PAGE> 78
- 6 -
(17) To provide and maintain refuse receptacles for all waste and
refuse produced at the Factory Unit in conformity with the
requirements and standards prescribed by the health authority
and to keep the same out of sight of the public during the
hours of business and to transfer such waste and refuse in
suitable receptacles to such area and at such times each day
as may be prescribed by the Landlord.
(18) Not to keep or allow to be kept livestock or other animals at
the Factory Unit.
(19) Not to do or suffer to be done on or in the Factory Unit
anything whereby the insurances of the same or of the Building
or any part thereof may be rendered void or voidable or
whereby the premium thereon may be increased and to repay to
the Landlord on demand all sums paid by the Landlord by way of
increased premium and all expenses incurred by the Landlord in
connection therewith and all loss damages and expenses
resulting from a breach or non-observance of this covenant
without prejudice to any other rights and remedies available
to the Landlord.
(20) Not to do or permit or suffer to be done anything in or upon
the Factory Unit or any part of the Building which in the
opinion of the Landlord is or may be a nuisance or cause
annoyance to or in any way interfere with the business or the
quiet or comfort of the other occupants of the Building
PROVIDED THAT the Landlord shall not be responsible to the
Tenant for any loss, damage or inconvenience as a result of
nuisance, annoyance or any interference whatsoever caused by
the other occupants of the Building.
(21) Not to use the Factory Unit for any illegal or immoral purpose.
(22) Not to cause any obstruction in or on the approaches, private
roads or passage way adjacent to or leading to the Building by
leaving or parking or permitting to be left or parked any
motor vehicle or other carriages belonging to or used by the
Tenant or by any of the Tenant's friends servants or visitors.
And also to observe and ensure observance of all regulations
made by the Landlord relating to the parking of such vehicles
or carriages and to pay such carpark charges as may be imposed
by the Landlord or his agent.
(23) Not to effect any sale by auction in the Building.
<PAGE> 79
- 7 -
(24) Not to affix paint or otherwise exhibit on the exterior of the
Factory Unit or the windows thereof or of the Building or in
any of the passages corridors or stairs of the Building any
name plate placard poster or advertisement or any flag-staff
or other thing whatsoever save only the name of the Tenant in
such places only and not elsewhere and in such manner and
position only as shall be approved in writing by the Landlord.
(25) Not to cause any obstruction to the common stairways
passageways and other common parts of the Building or accesses
to the Building. PROVIDED ALWAYS that the Landlord shall have
the full right and liberty and absolute discretion to remove
and clear any such obstruction and all costs and expenses
incurred thereby shall be recoverable from the Tenant as a
debt. FURTHER PROVIDED THAT the Landlord shall not be liable
to the Tenant or any third party for any loss damage or
inconvenience caused by such removal and the Tenant hereby
indemnifies the Landlord in this respect.
(26) Not to install any machinery or fixture in the Factory Unit
without the permission in writing of the Landlord and to
submit a layout plan of the Tenant's machinery for the
approval of the Landlord and the relevant governmental and
statutory authorities prior to the actual fixing of the
machineries.
(27) Not to assign create a trust sublet grant a licence or part
with or share the possession or occupation of the Factory Unit
or any part thereof or leave the Factory Unit or any part
thereof vacant and unoccupied at any time during the said
term.
(28) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Factory Unit and/or in respect of
the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Landlord against all actions, proceedings, costs, expenses,
claims, fines, losses, penalties and demands in respect of any
act matter or thing done or omitted to be done in
contravention of the said provisions.
(29) To install electrical switch board wirings and equipment to
the Factory Unit including the following electrical protective
devices, all at the Tenant's own expense, subject to the
approval of the Landlord:-
(a) Overcurrent protective devices in the Landlord's
Switch Room;
<PAGE> 80
- 8 -
(b) Overcurrent and earth-leakage protective devices in
the Factory Unit,
PROVIDED THAT-
(i) the Tenant shall submit 3 sets of 'electrical
single-line diagram' of the Factory Unit wirings for
the approval of the Landlord prior to the actual
installation of the wirings; and
(ii) it shall be the responsibility of the Tenant to keep
all or any of the aforesaid switch board wirings,
equipment and devices installed by the Tenant in good
condition at all times.
(30) To carry out such modification work on the existing fire
alarm wirings, heat detectors and fixtures in the Factory Unit
as shall be necessary to suit the factory operation, including
the installation of additional wirings and connections of the
heat detectors and fixtures to the Landlord's common fire
alarm system, to the approval of the Landlord and all at the
Tenant's own expense PROVIDED THAT:
(a) The Tenant shall submit 2 copies of the fire alarm
drawings of the Factory Unit indicating the existing
fixtures, the proposed modifications and the layout
of the Tenant's machinery for the approval of the
Landlord prior to the commencement of the
modification work.
(b) The Tenant shall at the Tenant's, own expense ensure
that the existing fire alarm wirings, heat detectors
and fixtures and any additional wirings and fixtures
installed by the Tenant in the Factory Unit are
serviced monthly and in good condition at all times
including the payment of any fee(s) in connection
with servicing and maintenance works.
(c) Any item of replacement required for the effective
maintenance of the fire alarm wirings, heat detectors
and fixtures shall be of a quality and shall have an
operational characteristic similar to the item to be
replaced and shall be subject to the approval of the
Landlord. The Tenant shall at his own cost forthwith
replace any or all items of dissimilar quality and
operational characteristic found in use.
(31) To close the Factory Unit during such hours as the Landlord
may specify by notice in writing to the Tenant for any
maintenance or repair work to be executed by the Landlord.
<PAGE> 81
- 9 -
(32) At all times during the three calendar months immediately
preceding the determination of the said term to permit
intending tenants and others with written authority from the
Landlord or his agents at reasonable times of the day to view
the Factory Unit.
(33) At the determination of the said term by expiry or otherwise
to yield up the Factory Unit and all the Landlord's fixtures
fittings fastenings or appertaining in such good and
substantial repair fair wear and tear excepted as shall be in
accordance with the covenants of the Tenant herein contained
and with all locks and keys complete.
(34) In addition to the foregoing and immediately prior to the
determination of the said term or the renewal thereof as the
case may be to restore the Factory Unit in all respects to its
original state and condition including but not limited to the
removal of all the fixtures and fittings installed by the
previous tenant of the Factory Unit and if so required by the
Landlord to redecorate including painting the interior thereof
to the satisfaction of the Landlord PROVIDED ALWAYS that if
the Tenant shall fail to observe or perform this covenant the
Landlord may in its absolute discretion, and without prejudice
to any other rights and remedies the Landlord may have against
the Tenant, execute such work for the said restoration and
redecoration and shall recover all costs thereof from the
Tenant together with all rent, service charge, tax and other
amounts which the Landlord would have been entitled to receive
from the Tenant had the period within which such restoration
and redecoration are effected by the Landlord been added to
the said term.
(35) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Landlord in
respect of any outstanding amount payable under this Agreement
from the date such amount becomes due until payment in full is
received by the Landlord.
(36) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy
<PAGE> 82
- 10 -
power surge, high frequency voltage and current, air borne
noise, vibration or any electrical or mechanical interference
or disturbance whatsoever which may prevent or prevents in any
way the service or use of any communication system or affects
the operation of other equipment, installations, machinery,
apparatus or plants of other Tenants and in connection
therewith, to allow the Landlord or any authorised person(s)
to inspect at all reasonable times, such installation, machine
or apparatus in the Factory Unit to determine the source of
the interference or disturbance and thereupon, to take
suitable measures, at the Tenant's own expense, to eliminate
or reduce such interference or disturbance to the Landlord's
satisfaction, if it is found by the Landlord or such
authorised person(s) that the Tenant's electrical
installation, machine or apparatus is causing or contributing
to the said interference or disturbance.
(37) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs, demands
which may arise in connection with clause 2(36) above.
(38) To perform and observe all the obligations which the Landlord
of the Factory Unit may be liable to perform or observe during
the said term by any direction or requirement of any
governmental and statutory authority and if the Tenant shall
fail to observe or perform this covenant the Landlord may in
its absolute discretion perform the same and all expenses and
costs incurred thereby shall be recoverable from the Tenant as
a debt PROVIDED ALWAYS that the Landlord shall not be liable
to the Tenant for any loss damage or inconvenience caused
thereby.
(39) Without prejudice to the generality of Clause 2(38) herein,
the rent and service charge and other taxable sums payable by
the Tenant under or in connection with this tenancy shall be
exclusive of the goods and services tax (herein called "tax")
chargeable by any government, statutory or tax authority
calculated by reference to the amount of rent, service charge
and any other taxable sums received or receivable by the
Landlord from the Tenant and which tax is payable by the
Tenant. The Tenant shall pay the tax and the Landlord acting
as the collecting agent for the government, statutory or tax
authority shall collect the tax from the Tenant together with
the rent and service charge hereinbefore reserved without any
deduction and in advance without demand on the 1st day of each
of the calender months of the year and in the manner and
within the period prescribed in accordance with the applicable
laws and regulations.
(40) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Factory Unit or any part
thereof, to forthwith give the Landlord written notice of
damage.
<PAGE> 83
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(41) To ensure that -
(i) at least 60% of the overall floor area shall be used
for purely industrial activities and
(ii) the remaining 40% shall be used as ancillary stores
and offices, neutral areas and communal facilities
PROVIDED THAT the said ancillary offices shall not
exceed 25% of the overall floor area.
(42) Not to use and occupy the Factory Unit for the purpose of
commercial office and storage unrelated to the Tenant's
approved industrial activity.
(43) To permit the Landlord, the Landlord's agents or workmen and
others at any time during the said term to enter the Factory
Unit to replace the louvre/casement windows and timber doors
with such other windows and doors as the Landlord may think
fit and to install or replace service ducts/pipes (hereinafter
referred to as "the said replacement or installation works").
If so required by the Landlord the Tenant shall remove such
installation, machinery, partition and any article to permit
the Landlord to execute the said replacement or installation
works, and if the Tenant shall fail to observe or perform this
covenant the Landlord shall have the right to (without
prejudice to any other right or remedy the Landlord may have
against the Tenant) remove the same, and all costs and
expenses incurred thereby shall forthwith be recoverable from
the Tenant as a debt PROVIDED ALWAYS that the Landlord shall
not be liable to the Tenant for any loss, damage or
inconvenience caused whatsoever by such removal and the said
replacement or installation works.
(44) Without prejudice to Clause 2(6) hereof and subject to the
prior written approval of the Landlord, to provide thermal
insulation to the floor, ceiling and the walls of rooms, if
the rooms are used for purposes requiring low temperature air
conditioning or cooling that would result in moisture
condensation on the external, ceiling or floor within or
outside the Factory Unit.
(45) Not to commence operation in the Factory Unit after the
installation(s) of any type of machinery or equipment have been
completed until a final inspection of the installation(s) has
been carried out and approval of the same is given by the
Landlord.
<PAGE> 84
- 12 -
(46) The Tenant accepts the Factory Unit with full knowledge that
refurbishment and upgrading works (hereinafter referred to as
"the refurbishment") are being or may be carried out in the
Building and the estate in which the Building is situated. The
Tenant shall, if required by the Landlord and within the time
stipulated by the Landlord, at the cost and expense of the
Tenant properly and in accordance with the obligations of the
Tenant under this Agreement remove, re-locate and/or modify
temporarily or permanently as may be stipulated by the
Landlord every installation, fixture, fittings, device,
equipment and article existing at the time outside the Factory
Unit as the Landlord may think fit for the purpose of
permitting the Landlord, his servant, agent, contractor and
subcontractor to properly carry out the refurbishment or for
the purpose of improving the appearance or aesthetics of the
Building. PROVIDED THAT if the Tenant shall fail to observe or
perform this covenant or any part thereof the Landlord shall
have the right (without prejudice to any other right or remedy
the Landlord may have against the Tenant) to remove, re-locate
and/or modify any or every such installation, fixture,
fittings, device, equipment and article, and all costs and
expenses incurred thereby shall forthwith be recoverable from
the Tenant as a debt. PROVIDED ALWAYS and it is hereby agreed
that the Landlord shall not be liable in any way to the Tenant
or any other person for any loss, damage, claim, cost,
expense, disruption, interference and/or inconvenience caused
howsoever or whatsoever by or in connection with the
refurbishment and/or the removal, re-location or modification.
(47) Subject to clause 2(34) and without prejudice to the
generality of clauses 2(9), 2(26) and 2(36) hereinbefore
appearing, the Tenant shall accept the said premises
(including all additions and alterations) in its condition
existing at the commencement of the said term or the earlier
acceptance of the keys to the said premises by the Tenant,
whichever is the earlier (hereinafter referred to as "the
control date") , and the Tenant shall at his own cost and
expense forthwith or within such period as may be stipulated
in writing by the Landlord:
(a) ensure and take all necessary steps to ensure that
all fixtures, fittings and other alterations,
installations and additions (hereinafter referred to
as "the said installations") have been approved in
writing by the Landlord, and that plans concerning
the said installations have been submitted to and
approved in writing by the Landlord;
(b) ensure and take every step to ensure that the said
installations comply fully with all building
guidelines of the Building Control Division and the
requirements of all relevant governmental and
statutory authorities, prevailing at the control
date; and
(c) demolish and remove such or all of the said
installations as may not have been approved under
subparagraph (a) or which have failed to comply with
subparagraph (b) hereinbefore appearing.
<PAGE> 85
- 13 -
3 The Landlord hereby covenants with the Tenant as follows:
(1) To pay the property tax payable in respect of the Factory Unit
PROVIDED ALWAYS that if the rate of such property tax shall be
increased whether by way of an increase in the annual value or
an increase in the rate per cent then the Landlord shall not
hereunder be liable to pay the said increase but the Tenant
shall pay such increase as provided under Clause 2(4) hereof.
(2) To keep the exterior and roof of the Building and the lift
entrances corridors passages staircases lavatories water
closets and other conveniences intended for the use of the
Tenant at all times in complete repair and in proper sanitary
and clean condition.
(3) To keep the stairs and passages leading to the Factory Unit
and the lifts and lavatories well and sufficiently lighted and
the lifts in proper working order PROVIDED THAT the Landlord
shall not be responsible for any loss the Tenant may sustain
by reason of any damage or injury or in consequence of any
breakage of or defect in any of the pipes wire or other
apparatus of the Landlord used in or about the Building.
(4) To keep the Building insured against loss or damage by fire
and in the event of such loss or damage (unless resulting from
some act or default of the Tenant) to rebuild and reinstate
the damaged part of the Building PROVIDED THAT it is expressly
agreed and understood that the term "loss or damage by fire"
as used in this clause do not include any loss or damage
caused to the Tenant's fixtures or loss due to the factory
being rendered out of commission and in any such event the
Landlord shall not be held liable for any such loss or damage
sustained by the Tenant.
(5) That the Tenant paying the rent, service charge and tax and
observing and performing the several covenants and
stipulations on the Tenant's part herein contained shall
during the said term quietly enjoy the Factory Unit without
any interruption by the Landlord or any person or persons
lawfully claiming under or in trust for the Landlord.
4 PROVIDED ALWAYS THAT and it is hereby agreed as follows:-
(1) If the rent hereby reserved or service charge or interest, tax
or any other sums payable herein, or any part thereof shall at
any time remain unpaid for fourteen (14) days after becoming
payable (whether formally demanded or not) or if the Tenant
shall neglect to observe or perform any covenant or
stipulation on the Tenant's part herein contained or if the
Tenant shall make any assignment for the benefit of the
Tenant's creditors or enter into any arrangement with its
creditors by composition or otherwise or suffer any distress
or attachment or execution to be levied against the Tenant's
goods or if the Tenant for the time being shall be a company
and shall enter
<PAGE> 86
- 14 -
into liquidation whether compulsory or voluntary (save for the
purpose of reconstruction or amalgamation) or being an
individual shall have a receiving order or an adjudicating
order made against the Tenant then and in any or such cases it
shall be lawful for the Landlord at any time thereafter to
re-enter upon the Factory Unit or any part thereof in the name
of the whole and thereupon this Tenancy shall absolutely
determine but without prejudice to the rights of action of the
Landlord in respect of any breach of the covenants on the part
of the Tenant herein contained.
(2) Any notice requiring to be served hereunder shall be
sufficiently served on the Tenant if it is left addressed to
the Tenant at the Factory Unit or forwarded to the Tenant by
registered post to the Tenant's last known place of business
and shall be sufficiently served on the Landlord if it is
addressed to the Landlord and sent by registered post to the
Head Office of the Landlord. In the event of any action in
respect of the tenancy created herein (including any action
for the recovery of the rent or service charge herein reserved
or tax and/or any other sums herein payable) the Tenant agrees
and accepts that the originating process shall be sufficiently
served on the Tenant if it is addressed to the Tenant at the
address specified in this Agreement or if it is left posted
upon a conspicuous part of the Factory Unit or forwarded to
the Tenant by post at the Tenant's last known place of
business.
(3) Letters or parcels whether registered or otherwise and
telegrams or keys received by any agent or servant of the
Landlord on behalf of the Tenant shall be received solely at
the risk of the Tenant.
(4) No waiver expressed or implied by the Landlord of any breach
of any covenant, condition or duty of the Tenant shall be
construed as a waiver of any other breach of the same or any
other covenant, condition or duty and shall not prejudice in
any way the rights, powers and remedies of the Landlord herein
contained. Any acceptance of rent, service charge, tax and/or
any other sum whatsoever payable under this Agreement shall
not be construed as nor be deemed to operate as a waiver by
the Landlord of any right to proceed against the Tenant for
any of the Tenant's obligations hereunder.
(5) The Landlord shall not be responsible for any loss damage or
inconvenience occasioned by the closing of the lift or lifts
for repairs or any other necessary purpose or for any accident
that may occur to the Tenant or other person using the lift.
<PAGE> 87
- 15 -
(6) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the Factory
Unit or the Building or any part thereof for any accident(s) or
injuries sustained or loss or damage to property in the
Factory Unit or the Building or any part thereof.
(7) The Landlord shall not be liable to the Tenant in respect of:
(i) any interruption in the services provided by the
Landlord by reason of necessary repair or maintenance
of any installation or apparatus or damage thereto or
by reason of mechanical or other defect or breakdown
including but not limited to breakdown in electricity
and water supply;
(ii) any act, omission, default, misconduct or negligence
of any servant, agent, contractor, sub-contractor or
employee of the Landlord in or about the performance
or purported performance of any duty relating to the
provision of the said services.
(8) The Landlord shall be entitled to let any other part or parts
of the Building subject to any terms or conditions which the
Landlord may think fit to impose and nothing herein contained
shall be deemed to create a letting scheme for the Building or
any part thereof and neither the Tenant nor the persons
deriving title under the Tenant shall have the benefit of or
the right to enforce or to have enforced or to prevent the
release or modification of any covenant agreement or condition
entered into by any present or future tenant.
(9) The Tenant shall pay all costs disbursements fees and charges
legal or otherwise including stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to this
Agreement.
<PAGE> 88
- 16 -
(10) The Tenant shall pay all costs and fees legal or otherwise
including costs as between solicitor and clients in connection
with the enforcement of the covenants and conditions of this
Agreement.
(11) The Landlord shall not be liable for any loss or damage that
may be suffered by the Tenant resulting from any subsidence or
cracking of the ground floor slabs and aprons of the Building
PROVIDED that this clause shall apply only to Tenants
occupying the ground floor of the Building.
(12) The Landlord shall on written request of the Tenant made not
less than three (3) months before the expiration of the term
hereby created and if there shall not at the time of such
request be any existing breach or non-observance by the Tenant
of any of the terms, covenants and stipulations contained in
this Agreement, at the cost and expense of the Tenant grant to
the Tenant a tenancy of the Factory Unit for a further term to
be mutually agreed upon by the parties hereto and at a revised
rent to be determined by the Landlord and containing the like
terms, covenants and stipulations as are herein contained, or
such variations or modifications thereof together with such
other terms covenants and stipulations as may be imposed by
the Landlord with the exception of and without the present
covenant for renewal.
5 In this Agreement where the context so requires or permits, words
importing the singular number or the masculine gender include the plural number
or the feminine gender and words importing persons include corporations and
vice versa, the expression "the Landlord" shall include its successors-in-title
and assigns, the expression "the Tenant" shall include its successors-in-title
and permitted assigns (if any), where there are two or more persons included in
the expression "the Tenant" covenants expressed to be made by "the Tenant"
shall be deemed to be made by such persons jointly and severally.
<PAGE> 89
- 17 -
IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY:
CHUA TIN WEE
HEAD (FLATTED FACTORIES)
LEASE MANAGEMENT DEPARTMENT
BUILDINGS DEVELOPMENT GROUP
for and on behalf of
JURONG TOWN CORPORATION
in the presence of:
/s/ KANNAN MALINI
- -----------------------------------
Kannan Malini
SIGNED BY:
/s/ K Y LIM
- ------------------------------------
Vice President & Managing Director
for and on behalf of
ADAPTEC MFG (S) PTE LTD
in the presence of:
/s/ ANDREW NG
- ------------------------------------
Director Finance & Administration
(Signature of Witness)
Name of Witness:
Designation
<PAGE> 1
[Drawing 1]
<PAGE> 2
[Drawing 2]
<PAGE> 3
Company Profile. Adaptec, Inc. designs, manufactures and markets a comprehensive
family of hardware and software solutions, collectively called IOware(R)
products, which eliminate performance bottlenecks between computers, peripherals
and networks. Solutions range from simple connectivity products for single-user
and small-office desktops, to intelligent subsystem, high-performance SCSI, RAID
and ATM products for enterprise-wide computing and networked environments.
<PAGE> 4
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended March 31 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenues $466,194 $372,245 $311,339 $150,315 $128,865
Income from operations 117,784 77,135 62,743 16,397 13,388
Net income 93,402 58,950 49,390 14,614 12,204
Net income per share 1.75 1.10 .96 .35 .30
Working capital 294,058 243,451 191,693 105,671 86,074
Total assets 435,708 358,475 282,896 138,615 109,142
Long-term debt, net of current portion 7,650 11,050 14,450 423 996
Shareholders' equity 371,644 297,616 225,155 117,742 94,558
</TABLE>
Net Revenues
[GRAPH]
Income From Operations
[GRAPH]
Net Income Per Share
[GRAPH]
Working Capital
[GRAPH]
<PAGE> 5
To Our Shareholders: Fiscal 1995 was an outstanding year for Adaptec. We posted
record revenues as we continued our worldwide leadership in the critical
input/output (I/O) market. We expanded our portfolio of innovative IOware
solutions. We made significant progress in applying our core competencies to
take advantage of the worldwide growth of the PC market. We made significant
investments to ensure Adaptec's participation in new markets that will grow
rapidly in the next few years.
<PAGE> 6
For the year ended March 31, 1995, net revenues grew to $466,194,000, a
25 percent increase compared with fiscal 1994. Net income for fiscal 1995 was
$93,402,000, and net income per share was $1.75, representing a 58 percent
increase over the prior year.
Our results reflect strong market demand and preference for our IOware
products. Host adapter revenue for the year grew by nearly 45 percent, as the
need for high-performance I/O solutions continued to increase. In the fourth
quarter, our annualized revenues exceeded half a billion dollars, a figure that
underscores Adaptec's standing as the industry leader in I/O solutions.
As we broadened our portfolio of solutions for an evolving I/O market,
we both increased our market share, and helped to enlarge the overall market in
which we participate. We accomplished this in part by developing new products
that enhance our established I/O technologies, such as our industry leading
offerings in Small Computer System Interface (SCSI) products.
For fiscal 1995 we set the objective to be the leader in
high-performance I/O solutions for Pentium-based systems. We achieved that goal
with the AHA(R)-2940 family of SCSI host adapter boards. This product delivers
SCSI solutions to PCs, network servers, and personal workstations using the new
high-performance system bus,
4
<PAGE> 7
Peripheral Component Interconnect, or PCI. After going through the fastest
production ramp-up in Adaptec's history, our PCI-to-SCSI product continues to
win a phenomenal reception with OEMs, system integrators and individual
consumers.
A major new initiative that is driving our expansion into the
enterprise computing market is our Build a Better Server program. This program
introduces a family of new SCSI host adapters for the PCI bus, which enables
servers to connect as many as 21 peripherals per host adapter. Among these
solutions is Adaptec's first low-cost PCI Redundant Array of Inexpensive Disks
(RAID) adapter. Significantly, Build a Better Server also showcases Adaptec's
established software strengths with Adaptec CI/O(R) software, a suite of
powerful remote management and diagnostic tools that enable network
administrators to monitor SCSI subsystems on networks.
Adaptec's market penetration and strong brand image are a winning
combination in the growing global marketplace. In Japan and Europe, demand for
all of Adaptec's host adapter products was strong across all performance ranges
and system architectures. Our strategy to forge a broader set of solutions is
also extending the Adaptec brand to reach an expanding network of distribution
channels throughout the world. Total SCSI unit volume grew significantly
5
<PAGE> 8
as our easy-to-use host adapters with menu-driven software utilities, increased
their penetration in desktop systems. This recognition is resulting in valuable
awareness and preference for our products at all distribution levels -- from
system integrators to corporate customers as well as computer retailers.
In fiscal 1995 we continued to invest in furthering SCSI's position as
the microcomputer I/O solution that provides performance, data integrity and the
broadest choice of peripherals. Along with other industry leaders we announced
support for UltraSCSI, which doubles the available I/O bandwidth to 40 megabytes
per second.
To expand our future opportunities for growth, we apply our core
competencies to new high-growth markets. For instance, we introduced network
interface cards (NICs), based on asynchronous transfer mode (ATM) technology.
ATM, widely believed to be the future in LAN and WAN networking, provides a
pathway for delivering emerging video and data-intensive applications. With
these and other products to relieve networking bottlenecks for desktop computers
and servers running bandwidth-intensive applications such as CAD/CAM,
distributed databases, and videoconferencing, Adaptec is strategically
positioned as a major force in the expanding high-speed networking market.
6
<PAGE> 9
As part of our ongoing strategy to bring promising new technologies to
market, we continued to invest in several emerging serial I/O technologies:
1394, Fibre Channel, and Serial Storage Architecture (SSA). To accelerate our
SSA product development, we entered into an agreement with IBM to license its
SSA technology. A licensing agreement with Apple Computer will enable us to use
Apple's FireWire technology as a basis for future 1394 products. We are jointly
developing Fibre Channel technology with Hewlett-Packard and others for very
high performance storage subsystems. This year, we also delivered wireless
infrared products for data transfer between portable and desktop PCs in order to
serve the needs of mobile office professionals.
Meeting product demand with cost-effective, high-volume manufacturing
is key to Adaptec's long-term growth. We continue to invest in our Singapore
manufacturing facility to improve cycle times and expand our manufacturing
capabilities. To ensure capacity for future growth, we moved our ASIC production
test facility to Singapore and by fiscal year's end we installed our fifth and
sixth surface mount technology lines for board-level manufacturing.
Regarding the fiscal 1996 outlook, we anticipate the industry
requirements for intelligent I/O to both support demand for our
7
<PAGE> 10
IOware solutions and create strong new market opportunities. We are committed to
being the lowest cost provider through focus on cost management and leveraging
our resources. Because our human resources are the source of our competitive
advantage, we will continue to significantly invest in employee training and
development. This has long been part of our corporate culture, and is an
important part of the reason that Adaptec continues to attract and retain such
outstanding and productive employees.
As the PC industry produces more powerful platforms and demanding
applications, we expect I/O needs and solutions to evolve and grow. Adaptec has
the expertise in silicon design and software engineering and the industry
relationships to support current I/O requirements, and simultaneously prepare
for emerging solutions. As this year's annual report discusses in the following
sections, I/O is a dynamic, multi-faceted market. Adaptec has the technology,
the products, and the employee talent to provide for the I/O needs of today and
the future.
/s/ John G. Adler
- ------------------------
John G. Adler
Chairman and
Chief Executive Officer
/s/ F. Grant Saviers
- ------------------------
F. Grant Saviers
President and
Chief Operating Officer
8
<PAGE> 11
[PHOTO]
JOHN G. ADLER
Chairman and Chief Executive Officer
[PHOTO]
F. GRANT SAVIERS
President and Chief Operating Officer
<PAGE> 12
The Adaptec Story. Both the PC industry and its strong associated markets
confirm that I/O represents a defining factor for high-performance systems and
networks. Adaptec's relationships with virtually all major operating system
vendors, personal computer makers, and peripheral manufacturers have made it the
leading industry supplier of the best in I/O hardware and software solutions.
Adaptec's leadership is based on unrivaled competitive strengths -- long
experience, price-performance leadership, innovative strategic products, and
unmatched compatibility and interoperability -- which is demonstrated by the
Company's sustained growth.
<PAGE> 13
[Drawing 3]
<PAGE> 14
[Drawing 4]
<PAGE> 15
BROADEST INDUSTRY EXPERIENCE.
There is no substitute for experience, and Adaptec's industry
leadership is founded on a comprehensive background in I/O technology, putting
it in a class by itself as the leading industry supplier of I/O solutions.
When the first desktop PCs emerged early in the last decade, Adaptec
was already pioneering I/O solutions to improve system performance. From the
beginning, Adaptec took a total system approach, addressing I/O challenges on
both sides of the interface in peripherals and hosts. As PC technology evolved
with more powerful CPUs, multiple architectures and operating systems, and more
sophisticated software applications, Adaptec refined and improved its
technology. From its earliest innovations, such as the first multitasking disk
controllers more than a decade ago, to pioneering ASPI software standards as a
common interface for operating systems and peripherals, to the recent
breakthroughs such as the first affordable ATM network interface cards, Adaptec
continues to build on its heritage of innovation. By continuously broadening its
expertise, expanding its strategic relationships with major software and systems
companies, growing its distribution channel, and strengthening its brand
franchise, Adaptec helps ensure its ability to attain long-term business
success.
13
<PAGE> 16
Today, input/output not only remains a critical issue for system
performance, but has also grown into a complex, multi-faceted market. Adaptec's
experience supports a growing family of IOware products, comprised of host
adapter cards, custom ASICs, and software that improve overall system
performance by speeding data transfer rates between systems, peripherals, and
networks.
Because of its broad perspective and expertise, Adaptec is not limited
to any single I/O technology. Consequently, Adaptec is able to lead the
important and expanding SCSI market, yet still have the resources to address
other significant I/O solutions. By staying involved with every new generation
of microcomputer technology, architectures, and bus standards, Adaptec develops
IOware products that span all industry standards -- from SCSI, EIDE and PCMCIA,
to ATM, infrared, and serial technology.
Experience with multiple technologies also gives Adaptec the capability
to enhance performance and connectivity within a variety of environments. The
market has embraced the Company's IOware solutions for high-performance
workstations, for client/server throughput and redundancy, for enterprise-wide
networking, for the mobile computing market, down to the small business and
single user on desktop PCs running the latest games or graphics-intensive
applications.
14
<PAGE> 17
[Drawing 5]
[Drawing 6]
[Drawing 7]
[Drawing 8]
<PAGE> 18
[Drawing 9]
[Drawing 10]
[Drawing 11]
<PAGE> 19
LEADING EDGE PRODUCTS.
Adaptec sustains its leadership with a constant stream of innovative
new products for multiple market segments, covering a full spectrum of I/O
needs. For instance, the host adapter and software solutions in the Build a
Better Server initiative address high-end intelligent server requirements.
MiniSCSI(TM), SlimSCSI(TM) and infrared products serve the mobile computing
market. The Plug and Play compliant AHA-1540CP host adapter and the AHA-2940
family of SCSI host adapters for the PCI bus target the business desktop user
that utilizes CAD, video or graphics-intensive applications. In addition,
Adaptec's price-performance breadth continues to expand upwards in performance
and to lower price points with easier-to-use products.
The core competencies behind Adaptec's products begin with the
Company's system level expertise and the operating system alliances it forges.
Major operating system developers -- such as IBM, Microsoft, Novell, and SCO --
incorporate Adaptec software into their products. Because such software is
designed, tested, and optimized for performance in parallel with these operating
system suppliers, it provides customers with solutions guaranteeing
compatibility, interoperability, and reliability with enhanced ease of use.
17
<PAGE> 20
[Drawing 12]
Design engineering and manufacturing innovations play another key role
in Adaptec's core competencies. Using the latest application specific integrated
circuit (ASIC) software and hardware tools, the Company is integrating multiple
capabilities onto single chips for lower costs and higher performance. Several
major disk drive manufacturers have selected our highly integrated DSP-based
disk management chip for their advanced product families. In addition, Adaptec
has invested in concurrent engineering, manufacturing, and marketing methods.
This approach ensures products are simultaneously developed to offer the best
technology and most efficient manufacturability, which accelerates Adaptec's
time to customer volume and maintains its advantages as the industry's
lowest-cost solutions provider.
Additionally, in support of its commitment to quality, Adaptec's
board-level manufacturing facility has earned ISO-9002 certification. This
international quality standard, established by the International Organization
for Standardization (ISO), ensures a high level of product quality, testing and
service.
18
<PAGE> 21
[Drawing 13]
<PAGE> 22
[Drawing 14]
[Drawing 15]
[Drawing 16]
<PAGE> 23
SUSTAINABLE GROWTH.
Adaptec is positioned to take increasing advantage of the role I/O
plays in every key development and trend that is driving the PC industry
forward. Constantly improved CPUs, multitasking operating systems, mobile
computing platforms, games and entertainment, client/server computing,
collaborative computing and intelligent peripherals are all enlarging the
opportunities for I/O, allowing Adaptec to increase its market share in a
growing mainstream market.
One factor supporting Adaptec's record of growth is products serving
the Small Computer System Interface (SCSI) market. Demand for the Pentium CPU
and its faster system performance benefits SCSI demand. The new PCI interface,
which introduces higher performance to a variety of system platforms, also helps
create a larger market for Adaptec's SCSI solutions.
A new generation of peripherals keyed to specialized applications also
stimulates demand for SCSI connectivity. These include digital audio tape (DAT)
drives for data archiving, CD-ROMs for multimedia products, scanners for
publishing applications, optical and recordable CD drives for archiving data,
and removable disks for data interchange. Adaptec IOware adapters support more
of these diverse peripherals than any other I/O supplier.
21
<PAGE> 24
[Drawing 17]
The increased corporate use of groupware and distributed computing with
its client/server demands offers Adaptec another growth arena to extend its I/O
leadership. The Company's Build a Better Server program features a family of new
multichannel SCSI host adapters for the PCI bus, which enables servers to
connect as many as 21 peripherals per host adapter. Among these products is the
first low-cost Redundant Array of Inexpensive Disks (RAID) adapter.
Besides SCSI, Adaptec's first efforts in a long-term strategy to
relieve bottlenecks in the high-speed networking market have resulted in the
development and shipment of a new family of hardware and software solutions
based on asynchronous transfer mode -- or ATM -- technology. Adaptec has
developed highly integrated proprietary ASICs for its ATM NICs and is verifying
its extensive ATM software applications for full interoperability with major ATM
switch and ATM network component providers.
Finally, IOware solutions with new value-added software content
continue to make I/O technology easier to use and attract a broader user base.
The Company offers numerous such packages -- from Adaptec EZ-SCSI(R) software
for installing and optimizing SCSI peripherals, to its breakthrough CI/O
software for remote management and monitoring of SCSI subsystems on networks.
22
<PAGE> 25
[Drawing 18]
[Drawing 19]
<PAGE> 26
[DRAWING 21]
<PAGE> 27
DEVELOPING THE FUTURE.
Adaptec's heritage of technology innovations is a direct result of its
constant efforts to anticipate market trends to respond to customer requirements
and to innovatively create future I/O technologies.
The Company maintains a close collaborative involvement with other
technology leaders as an elected member of the industry's main standard-setting
committees that help map the future of I/O. Adaptec's membership on standards
committees and similar industry associations helps it to evaluate and prepare
for all dominant I/O standards. These interfaces extend from the widely popular
Small Computer System Interface (SCSI), to newly emerging serial technologies
such as the 1394 serial bus for connecting computers and home entertainment
systems, and both Serial Storage Architecture (SSA) and Fibre Channel --
interfaces for computer systems and peripherals that provide mainframe-like I/O
capabilities.
Making future I/O solutions a reality for all kinds of platforms --
even for non-PC-based ones -- is also a function of Adaptec's investment in
research and development. The Company invests significantly in R&D in order to
provide a steady stream of future products -- which enhance and expand present
product technology, and which create the emerging I/O standards for tomorrow.
25
<PAGE> 28
To enhance current SCSI solutions, Adaptec pioneered with industry
leaders such as Conner, Quantum, Seagate and others to announce support for
UltraSCSI, a performance-doubling compatible extension to present SCSI
technology.
Adaptec's future portfolio of solutions will also include several
serial I/O technology initiatives: 1394, SSA, and Fibre Channel. Adaptec has
already demonstrated a prototype 1394-based video camera subsystem with Sony,
plans SSA host adapters and chips based on technology licensed from IBM, has
licensed Apple's FireWire technology as a basis for future 1394 products, and is
investigating Fibre Channel to support performance in high-end workstations and
video servers. In addition, Adaptec is investing in infrared technology for
wireless file transfer between portable and desktop PCs, ATM for networks, and
solutions for the PowerPC and Power Macintosh and other high-performance
RISC-based platforms.
Backed by its promising strategic initiatives, as well as its long
experience, product innovation, and technical leadership, Adaptec is well
positioned to be the industry's leading input/output solution provider for the
long term.
26
<PAGE> 29
[DRAWING 22] [DRAWING 23]
[DRAWING 24] [DRAWING 25]
[DRAWING 26]
<PAGE> 30
[DRAWING 27]
<PAGE> 31
TABLE OF CONTENTS.
<TABLE>
<S> <C>
Results of Operations..................................................... 30
Management's Discussion and Analysis of
Financial Condition and Results of Operations............................. 31
Consolidated Statements of Operations..................................... 35
Consolidated Balance Sheets............................................... 36
Consolidated Statements of Cash Flows..................................... 37
Consolidated Statements of Shareholders' Equity........................... 38
Notes to Consolidated Financial Statements................................ 39
Report of Management...................................................... 47
Report of Independent Accountants......................................... 47
Selected Financial Data................................................... 48
</TABLE>
<PAGE> 32
RESULTS OF OPERATIONS
The following table sets forth the items in the consolidated statements of
operations as a percentage of net revenues:
<TABLE>
<CAPTION>
Year Ended March 31 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net revenues 100% 100% 100%
Cost of revenues 44 51 56
---- ---- ----
Gross margin 56 49 44
---- ---- ----
Operating expenses
Research and development 13 11 9
Sales and marketing 13 12 10
General and administrative 5 5 5
---- ---- ----
31 28 24
---- ---- ----
Income from operations 25 21 20
Shareholder settlement -- (1) --
Interest income, net 2 1 1
---- ---- ----
Income before income taxes 27 21 21
Provision for income taxes 7 5 5
---- ---- ----
Net income 20% 16% 16%
==== ==== ====
</TABLE>
30
<PAGE> 33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Net revenues increased 25% to $466.2 million in fiscal 1995 from $372.2 million
in fiscal 1994. The continued adoption of SCSI in personal computers (PCs)
resulted in increased sales of the Company's SCSI host adapter products across
all performance ranges. Additionally, demand for the Company's host adapters was
driven by the growing use of file servers where SCSI usage approaches 100%.
During fiscal 1995, the Company introduced several new IOware solutions ranging
from connectivity products for the single-user and small-office markets, to
high-performance products for enterprise-wide computing and networked
environments. The market acceptance of the Company's high-performance host
adapters for the PCI local bus market resulted in the fastest product ramp in
the Company's history. The Company's fiscal 1995 revenue from mass storage
integrated circuits (ICs) was comparable to the prior year. The Company believes
this was due to the timing of design win cycles at Original Equipment
Manufacturers (OEMs) coupled with significant fluctuations in demand experienced
in the disk drive market. During fiscal 1995 the Company won key designs for
next generation products at major OEMs in the Pacific Rim.
Gross margin of 56% in fiscal 1995 increased from 49% in fiscal 1994. Gross
margin was favorably affected by the increased revenues from the Company's
higher margin SCSI host adapters. The Company also continued to experience
component cost reductions and manufacturing efficiencies, including the move
of the IC production test facility to Singapore where costs are lower. This has
also allowed the Company to shorten the manufacturing cycle time and better
serve its customers. The Company's ability to maintain current gross margins
will be significantly affected by factors such as mix of products shipped,
competitive price pressures, the timeliness of volume deliveries of new
products, and the Company's ability to continue achieving manufacturing
efficiencies and component cost reductions.
Research and development expenditures in fiscal 1995 were $60.8 million, an
increase of 52% over fiscal 1994. As a percentage of net revenues, research and
development expenses increased to 13% in fiscal 1995 compared to 11% in fiscal
1994. This was primarily due to increased staffing levels. The Company continued
to invest in its SCSI products, where it has captured a leadership position by
improving system performance as the computer industry has become more I/O
intensive with more powerful CPUs, multitasking operating systems, and a new
generation of intelligent peripherals. While SCSI solutions remain the core of
the Company's business, fiscal 1995 saw the Company broaden its portfolio of
solutions to include ATM, RAID, serial I/O and infrared technology. The Company
believes technical leadership and product innovation are its primary competitive
advantages and thus will continue to increase research and development
expenditures in fiscal 1996 to supply IOware products that deliver higher
performance in personal and enterprise-wide computing, and networked
environments.
Sales and marketing expenses increased to $58.7 million in fiscal 1995, an
increase of 27% over fiscal 1994. As a percentage of net revenues, fiscal 1995
sales and marketing expenses were 13% compared to 12% in fiscal 1994. The
increase in actual spending was a result of increased staffing levels to support
the continued growth of the Company, including expansion of the Company's
international sales and marketing infrastructure. Additionally, increases in
advertising and promotional expenses were aimed at strategies to further
accelerate and expand SCSI acceptance in the marketplace and drive demand for
the Company's products. The Company believes that sales and marketing
expenditures will increase in fiscal 1996 as a result of continued increases in
staffing levels and through increased advertising and promotional activities
aimed at increasing demand for the Company's products.
31
<PAGE> 34
General and administrative expenses as a percentage of net revenues in
fiscal 1995 were consistent with fiscal 1994 at 5%. Actual spending increased
from fiscal 1994, primarily due to increased staffing to support the continued
growth of the Company. The Company believes that expenses will increase in
fiscal 1996, and will vary as a percentage of net revenues.
Interest income, net of interest expense, was $6.8 million in fiscal 1995,
an increase of $2.9 million over fiscal 1994. The increase was primarily due to
the increase in cash and cash equivalents and marketable securities coupled with
slightly higher average yields on cash and investment balances.
The Company's effective tax rate for fiscal 1995 was 25%, the same as
fiscal 1994. The Company's manufacturing subsidiary currently operates under a
tax holiday it has received from the Singapore government which expires in
September 1995. The Company is currently negotiating for an extension of this
tax holiday.
The Company's results of operations may be affected in the future by a
variety of factors, including changes in product mix, competitive pricing
pressures, fluctuations in manufacturing yields, availability of components,
changes in product costs, timing of new product introductions and market demand
for these products, and cancellation or rescheduling of orders by its customers.
In addition, the Company's results from operations could be affected by
international and domestic economic conditions and technology changes in the
markets in which it competes.
FISCAL 1994 COMPARED TO FISCAL 1993
Net revenues increased 20% to $372.2 million in fiscal 1994 from $311.3
million in fiscal 1993. The majority of the growth was from increased shipments
of the Company's SCSI host adapters, where adoption of SCSI in PCs and file
servers increased significantly. To meet the I/O intensive demands of file
server applications, the Company introduced and shipped several new
high-performance products during fiscal 1994 including products for local bus
architectures. The Company also experienced growth in shipments of its
proprietary single-chip SCSI host adapters, primarily to PC system and
peripheral manufactures. This expansion was due primarily to the increased use
of multitasking operating environments such as Novell NetWare and Microsoft
Windows, increased demand for multimedia PCs and increased shipments of SCSI
peripherals, especially CD-ROM drives. The Company also experienced increased
shipments of its mass storage ICs in fiscal 1994. The Company believes this
increase was primarily due to increased market share in high-capacity disk
drives that require an AT interface. Also during fiscal 1994, the Company
experienced a significant reduction in sales of laser printer controllers,
shipments of which the Company discontinued in September 1993.
Gross margin of 49% in fiscal 1994 increased from 44% in fiscal 1993. Gross
margin was favorably affected by the mix of products shipped, primarily from
increased net revenues in the Company's SCSI host adapters and lower shipments
of the discontinued laser printer controllers. The Company also experienced
component cost reductions and increased manufacturing efficiencies that
contributed to the increased gross margin.
Expenditures for research and development in fiscal 1994 were $40.0
million, an increase of 52% over fiscal 1993. As a percentage of net revenues,
research and development expenses increased to 11% in fiscal 1994 as compared to
9% in fiscal 1993. This was primarily due to increased staffing as the Company
continued to invest in its leadership position in the microcomputer I/O
industry. During fiscal 1994, the Company introduced new SCSI host adapters and
new mass storage ICs for the industry-standard AT (or ISA) bus and the emerging
PCI and VESA local bus architectures.
Sales and marketing expenses increased to $46.2 million in fiscal 1994.
This represented a 42% increase from fiscal 1993 and an increase as a
32
<PAGE> 35
percentage of net revenues to 12% from 10%. Contributing to the increase was
additional staffing to support a more complex business environment including the
establishment of a sales subsidiary in Japan. An additional factor was increased
advertising and promotional expenses aimed at increasing demand for the
Company's products in the distribution channel.
General and administrative expenses as a percentage of net revenues in
fiscal 1994 were essentially the same as fiscal 1993 at 5%. Actual spending
increased 25% from fiscal 1993, primarily due to increased staffing to support a
higher level of activity in fiscal 1994.
During the second quarter of fiscal 1994, the Company entered into a letter
agreement to settle a shareholder class action lawsuit. As a result, the Company
recorded an other expense of $2.4 million for settlement payments and costs
associated with this litigation.
Interest income, net of interest expense was $3.9 million in fiscal 1994, a
25% increase from fiscal 1993. This was primarily due to a commensurate increase
in cash and cash equivalents and marketable securities from fiscal 1993 to
fiscal 1994. The Company's effective tax rate for fiscal 1994 was 25%, the same
as fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES Net cash generated from operating activities during fiscal
1995 was $118.1 million as compared to $43.1 million in fiscal 1994. During
fiscal 1995, the majority of funds generated from operations resulted from $93.4
million of net income adjusted by non-cash items including depreciation and
amortization of $15.7 million. Also contributing to favorable operating cash
flows was a decrease in net inventories of $7.2 million, and an increase in
accrued liabilities and accounts payable totaling $6.6 million. The decrease in
inventory is a result of improved marketing forecasts, coupled with continued
cost reductions and reduced manufacturing cycle times. The increase in accounts
payable and accrued liabilities is attributable to activities associated with
the year-to-year increases in net revenues. Other assets increased $4.1 million,
mostly related to an additional advance on a deposit and supply agreement the
Company signed during fiscal 1994 to support the Company's silicon wafer
requirements.
During fiscal 1994, the majority of funds generated from operations
resulted from $59.0 million of net income adjusted by non-cash items including
depreciation and amortization of $11.5 million. Also contributing to the
positive results was an increase of $8.9 million in accrued liabilities.
Offsetting these were increases in net inventory of $5.6 million and accounts
receivable of $13.0 million. These increases were primarily the result of
activities associated with the year-to-year increase in net revenues. Other
assets also increased $11.5 million from fiscal 1993 to 1994. The most
significant portion of this increase was related to a deposit and supply
agreement the Company signed to support the Company's silicon wafer
requirements.
In fiscal 1993, the Company's net cash generated from operating activities
was $42.6 million of which net income and non-cash items including depreciation
and amortization contributed $49.4 million and $7.0 million, respectively. Other
sources of cash were from an increase in accounts payable of $12.8 million to
support net revenues that more than doubled from the prior year and an increase
in accrued liabilities of $9.4 million. Uses of funds were for increased
accounts receivables and net inventories of $18.2 million and $11.8 million,
respectively, as a result of the year-to-year increase in net revenues.
INVESTING ACTIVITIES During fiscal 1995, the Company continued to invest in
equipment for product development and manufacturing testing, including the
addition of a fifth and sixth surface mount manufacturing line to support the
increased demand for board-level products. Additionally, during fiscal 1995,
33
<PAGE> 36
the Company purchased land and buildings for $8.0 million to support staffing
requirements in engineering, sales and marketing. The Company also increased its
investment in marketable securities during the past year.
During fiscal 1994, the principal investing activities for property and
equipment were for the addition of a surface mount manufacturing line,
manufacturing test equipment, engineering design tools and information systems
hardware and software. The Company also increased its investment in marketable
securities.
During fiscal 1993, the Company completed the purchase of its Milpitas
headquarters, an additional building and land for $17.4 million. The Company
also made investments to increase its manufacturing capacity.
FINANCING ACTIVITIES During fiscal 1995, 1994 and 1993 the Company received
proceeds from common stock issued under the Company's Employee Stock Option and
Employee Stock Purchase Plans totaling $17.2 million, $13.5 million and $9.2
million, respectively. In fiscal 1995, the Company's Board of Directors approved
the repurchase of up to four million shares of the Company's common stock to be
used for issuance upon exercise of employee stock options previously granted or
to be granted in the future and for issuance under the Company's 1990 Stock
Plan. The Company repurchased two million shares for $36.5 million during fiscal
1995. In fiscal 1993, the Company also generated funds from a public offering of
common stock of $48.9 million and long-term debt financing of its building and
land purchases under a $17.0 million six year term loan.
The Company anticipates capital expenditures in fiscal 1996 for equipment
for product development, manufacturing testing and information systems hardware
and software of approximately $30 million. The sources for these expenditures
are expected to be funds generated from operations as well as working capital
presently on hand. The Company may also require additional funds for increased
manufacturing capacity, technology investments, or acquisitions of complementary
businesses, products or technologies.
The Company has an unsecured $17.0 million revolving line of credit under
which there were no outstanding borrowings as of March 31, 1995. The Company
believes that existing working capital, together with expected cash flows from
operations and available sources of bank and equipment financing, will be
sufficient to support the Company's anticipated operations at least through
fiscal 1996.
34
<PAGE> 37
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
----------------------------------------
Year Ended March 31 1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
Net revenues $ 466,194 $ 372,245 $ 311,339
Cost of revenues 205,596 189,526 174,179
----------------------------------------
Gross profit 260,598 182,719 137,160
----------------------------------------
Operating expenses
Research and development 60,848 39,993 26,324
Sales and marketing 58,737 46,192 32,525
General and administrative 23,229 19,399 15,568
----------------------------------------
142,814 105,584 74,417
----------------------------------------
Income from operations 117,784 77,135 62,743
----------------------------------------
Shareholder settlement -- (2,409) --
Interest income 7,932 5,183 4,078
Interest expense (1,179) (1,306) (967)
----------------------------------------
6,753 1,468 3,111
----------------------------------------
Income before income taxes 124,537 78,603 65,854
Provision for income taxes 31,135 19,653 16,464
----------------------------------------
Net income $ 93,402 $ 58,950 $ 49,390
========================================
Net income per share $ 1.75 $ 1.10 $ .96
========================================
Weighted average number of common and common
equivalent shares outstanding 53,357 53,602 51,652
========================================
</TABLE>
See accompanying notes.
35
<PAGE> 38
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands)
---------------------
As of March 31 1995 1994
---------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 66,835 $ 35,387
Marketable securities 179,911 147,620
Accounts receivable, net of allowance for doubtful accounts of
$4,431 in 1995 and $4,390 in 1994 56,495 55,334
Inventories 31,712 38,940
Prepaid expenses and other 15,519 15,979
---------------------
Total current assets 350,472 293,260
---------------------
Property and equipment, net 67,863 51,522
---------------------
Other assets 17,373 13,693
---------------------
$435,708 $358,475
=====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 3,400 $ 3,400
Accounts payable 22,008 19,654
Accrued liabilities 31,006 26,755
---------------------
Total current liabilities 56,414 49,809
---------------------
Long-term debt, net of current portion 7,650 11,050
---------------------
Commitments (Note 7)
Shareholders' equity
Preferred stock
Authorized shares, 1,000
Outstanding shares, none -- --
Common stock
Authorized shares, 200,000
Outstanding shares, 51,677 in 1995 and 52,291 in 1994 140,191 138,317
Retained earnings 231,453 159,299
---------------------
Total shareholders' equity 371,644 297,616
---------------------
$435,708 $358,475
=====================
</TABLE>
See accompanying notes.
36
<PAGE> 39
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands)
----------------------------------
Year Ended March 31 1995 1994 1993
----------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 93,402 $ 58,950 $ 49,390
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,662 11,489 6,983
Provision for doubtful accounts 150 2,069 1,867
Increase in accounts receivable (1,311) (13,020) (18,228)
Decrease (increase) in inventories 7,228 (5,563) (11,833)
Decrease (increase) in prepaid expenses 460 (5,470) (6,054)
Increase in other assets (4,107) (11,478) (1,674)
Increase (decrease) in accounts payable 2,354 (2,781) 12,830
Increase in accrued liabilities 4,251 8,867 9,361
----------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 118,089 43,063 42,642
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (31,576) (17,314) (37,196)
Investments in marketable securities, net (32,291) (20,250) (72,215)
----------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (63,867) (37,564) (109,411)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 17,174 13,511 58,023
Repurchase of common stock (36,548) -- --
Proceeds from long-term debt -- -- 17,000
Principal payments on debt (3,400) (2,968) (578)
----------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (22,774) 10,543 74,445
----------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 31,448 16,042 7,676
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 35,387 19,345 11,669
----------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 66,835 $ 35,387 $ 19,345
==================================
</TABLE>
See accompanying notes.
37
<PAGE> 40
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
---------------------------------------------
Common Stock
------------------- Retained
Shares Amount Earnings Total
---------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1992 42,134 $ 66,783 $ 50,959 $ 117,742
Sale of common stock at $7.50 per share,
pursuant to public offering, net of expenses 6,900 48,865 -- 48,865
Sale of common stock under employee
purchase and option plans 1,680 5,338 -- 5,338
Income tax benefit of employees'
stock transactions -- 3,820 -- 3,820
Net income -- -- 49,390 49,390
---------------------------------------------
BALANCE, MARCH 31, 1993 50,714 124,806 100,349 225,155
Sale of common stock under employee
purchase and option plans 1,577 7,728 -- 7,728
Income tax benefit of employees'
stock transactions -- 5,783 -- 5,783
Net income -- -- 58,950 58,950
---------------------------------------------
BALANCE, MARCH 31, 1994 52,291 138,317 159,299 297,616
Sale of common stock under employee
purchase and option plans 1,426 11,245 -- 11,245
Income tax benefit of employees'
stock transactions -- 5,929 -- 5,929
Repurchases of common stock (2,040) (15,300) (21,248) (36,548)
Net income -- -- 93,402 93,402
---------------------------------------------
BALANCE, MARCH 31, 1995 51,677 $ 140,191 $ 231,453 $ 371,644
=============================================
</TABLE>
See accompanying notes.
38
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND TRANSLATION The consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries
after elimination of intercompany transactions and balances. Foreign currency
transaction gains and losses are included in income as they occur.
REVENUE RECOGNITION The Company recognizes revenue generally at the time of
shipment or upon satisfaction of contractual obligations. The Company records
provisions for estimated returns at the time of sale.
FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its financial assets
and liabilities in accordance with generally accepted accounting principles. For
certain of the Company's financial instruments, including cash and cash
equivalents, marketable securities, accounts receivable, accounts payable and
accrued expenses, the carrying amounts approximate fair value due to their short
maturities. The amounts shown for long-term debt also approximate fair value
because current interest rates offered to the Company for debt of similar
maturities are substantially the same.
MARKETABLE SECURITIES Effective April 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). This statement requires investments in
debt and equity securities to be classified as "held-to-maturity," "trading" or
"available-for-sale." As of March 31, 1995, the Company's marketable securities
are classified as available-for-sale and reported at fair value which
approximates amortized cost. Management determines the appropriate
classification of marketable securities at the time of purchase and reassesses
the classification at each reporting date. Marketable securities as of March 31,
1995 with maturities due after one year through three years totaled $71,905,000
with all remaining marketable securities maturing less than one year. Realized
gains and losses are based on the book value of specific securities sold and
were immaterial during fiscal 1995, 1994 and 1993. The cumulative effect of
adopting SFAS 115 was not material.
CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the
Company to significant concentrations of credit risk consist principally of cash
and cash equivalents, marketable securities and trade accounts receivable. The
Company places its marketable securities in a variety of financial instruments
such as municipal securities and U.S. Government securities. The Company, by
policy, limits the amount of credit exposure through diversification and highly
rated securities. Sales to customers are primarily denominated in U.S. dollars.
As a result, the Company believes its foreign currency risk is minimal.
The Company sells its products to original equipment manufacturers and
distributors throughout the world. The Company performs ongoing credit
evaluations of its customers' financial condition and, generally, requires no
collateral from its customers. The Company maintains an allowance for
uncollectible accounts receivable based upon the expected collectibility of all
accounts receivable. There were no significant amounts charged to this allowance
during the current year.
INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or
market.
PROPERTY AND EQUIPMENT Property and equipment are stated at cost and depreciated
or amortized using the straight-line method over the estimated useful lives of
the assets.
INCOME TAXES Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109)
39
<PAGE> 42
on a prospective basis. This adoption had no material effect on the Company's
financial statements.
Under the asset and liability method of SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts and the
tax basis of existing assets and liabilities measured using enacted tax rates
expected to apply to taxable income in the years in which the temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
the income of the period that includes the enactment date. Previously, the
Company deferred the past tax effects of timing differences between financial
reporting and taxable income under Accounting Principles Board Opinion No. 11
"Accounting for Income Taxes," (APB 11).
NET INCOME PER SHARE Net income per share is computed under the treasury stock
method using the weighted average number of common and common equivalent shares
from dilutive options outstanding during the respective periods.
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of funds in checking
accounts, money market funds and marketable securities with original maturities
of three months or less.
RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform
to the current year presentation.
NOTE 2. SUPPLEMENTAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MARKETABLE SECURITIES
(In thousands)
-------------------
1995 1994
-------------------
<S> <C> <C>
Municipal securities $169,972 $139,894
U.S. Government securities 6,064 5,764
Discount notes 3,875 1,962
-------------------
$179,911 $147,620
===================
</TABLE>
<TABLE>
<CAPTION>
INVENTORIES
(In thousands)
------------------
1995 1994
<S> <C> <C>
Raw materials $12,230 $14,674
Work-in-process 5,839 12,486
Finished goods 13,643 11,780
------------------
$31,712 $38,940
==================
</TABLE>
<TABLE>
<CAPTION>
PROPERTY AND EQUIPMENT
(In thousands)
------------------------------------
Life 1995 1994
------------------------------------
<S> <C> <C> <C>
Land -- $ 13,240 $ 9,537
Buildings and
improvements 5-40 years 18,088 11,855
Machinery and
equipment 3-5 years 42,810 32,812
Furniture and fixtures 3-8 years 17,005 15,292
Leasehold
improvements Life of lease 3,968 2,618
------------------------------------
95,111 72,114
Accumulated
depreciation and
amortization (27,248) (20,592)
-------------------
$(67,863 $(51,522
===================
</TABLE>
<TABLE>
<CAPTION>
ACCRUED LIABILITIES
(In thousands)
------------------
1995 1994
------------------
<S> <C> <C>
Accrued compensation and
related taxes $15,740 $ 7,772
Sales and marketing related 4,877 4,104
Tax related 5,746 11,670
Other 4,643 3,209
------------------
$31,006 $26,755
==================
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
(In thousands)
------------------------------
1995 1994 1993
------------------------------
<S> <C> <C> <C>
Interest paid $ 1,125 $ 1,300 $ 1,120
Income taxes paid $29,411 $14,927 $11,146
</TABLE>
40
<PAGE> 43
NOTE 3. LINE OF CREDIT
The Company has available an unsecured $17,000,000 revolving line of credit
which expires on December 31, 1996. Of the total line of credit available,
$7,000,000 has been issued as an irrevocable standby letter of credit to
guarantee component purchases from a supplier (see Note 7) at a fee of 3/4% per
annum. As of March 31, 1995, no borrowings were outstanding under this line of
credit. The Company may select its own method of interest payment on borrowings
based upon the bank's CD rate plus one percent, Eurodollar rate plus one percent
or prime lending rate. A commitment fee of 1/4% per annum is payable on the
unused line of credit. In addition, the arrangement requires the Company to
comply with certain financial covenants. The Company was in compliance with all
such covenants as of March 31, 1995.
NOTE 4. LONG-TERM DEBT
The Company entered into a $17,000,000 term loan agreement in June 1992 bearing
interest at 7.65%, with principal and interest payable in quarterly installments
of $850,000. All outstanding principal and accrued but unpaid interest is due
and payable in June 1998. The arrangement requires the Company to comply with
certain financial covenants. The Company was in compliance with all such
covenants as of March 31, 1995. Principal payments due through the maturity on
the term loan are as follows:
<TABLE>
<CAPTION>
Fiscal Year (In thousands)
- ------------------------------------------------------
<S> <C>
1996 $ 3,400
1997 3,400
1998 3,400
1999 850
-------
11,050
Current portion (3,400)
-------
Long-term portion $ 7,650
=======
</TABLE>
NOTE 5. ACQUISITION
In February 1993, the Company acquired all of the outstanding shares of common
stock of Trantor Systems Limited (Trantor) in exchange for approximately 798,000
shares of the Company's common stock. Trantor developed and manufactured SCSI
host adapters and related software. The merger was accounted for as a pooling of
interests.
Trantor's retained earnings and results of operations were not material to
the Company's consolidated financial statements. Consequently, the Company's
retained earnings at March 31, 1992 were restated to include the retained
earnings of Trantor without restating prior-period statements of operations. The
results of operations for Trantor for fiscal 1993 and thereafter have been
included in the Company's statements of operations.
NOTE 6. STOCK PLANS
1986 EMPLOYEE STOCK PURCHASE PLAN The Company has authorized 2,800,000 shares of
common stock for issuance under the 1986 Employee Stock Purchase Plan (1986
Plan). Qualified employees who have completed at least one quarter of continuous
service may elect to have a certain percentage (not to exceed 10%) of their
salary withheld pursuant to the 1986 Plan. The salary withheld is then used to
purchase shares of the Company's common stock at a price equal to 85% of the
market value of the stock at the beginning or ending of a three-month offering
period, whichever is lower. Under this Plan, 188,976 shares were issued during
fiscal 1995, representing approximately $3,104,000 in employee contributions.
1982 INCENTIVE STOCK OPTION PLAN This Plan was terminated by the Board of
Directors on May 1, 1990 and expired on January 1, 1992. However, the
termination and the expiration of this Plan has no effect on the vesting and
exercise rights of options already outstanding under the Plan. At March 31,
1995, there
41
<PAGE> 44
were 6,000 exercisable options under this Plan at a price of $3.125 per share.
1990 STOCK PLAN The Company's 1990 Stock Plan allows the Board of Directors to
grant to employees, officers and consultants, options to purchase common stock
or other stock rights at exercise prices not less than 50% of the fair market
value on date of grant. The expiration of options or other stock rights is not
to exceed ten years after the date of grant. To date, the Company has issued
substantially all incentive and non-statutory stock options under this Plan at
exercise prices of 100% of fair market value on the respective dates of grant.
In general, options vest and become exercisable over a four year period.
Option activity under the 1990 Stock Plan is as follows:
<TABLE>
<CAPTION>
Options Outstanding
Options --------------------------------
Available Shares Price
--------------------------------------------------
<S> <C> <C> <C>
Balance,
March 31, 1992 705,759 3,008,049 $ 2.47 to $ 6.66
Authorized 3,000,000 -- --
Granted (1,701,000) 1,701,000 $ 6.32 to $13.88
Exercised -- (682,344) $ 2.47 to $12.82
Terminated 275,653 (275,653) $ 2.85 to $12.82
--------------------------------------------------
Balance,
March 31, 1993 2,280,412 3,751,052 $ 2.47 to $13.88
Authorized 2,000,000 -- --
Granted (1,837,500) 1,837,500 $11.31 to $21.38
Exercised -- (859,513) $ 2.47 to $15.44
Terminated 330,662 (330,662) $ 2.85 to $16.50
--------------------------------------------------
Balance,
March 31, 1994 2,773,574 4,398,377 $ 2.47 to $21.38
Authorized 2,500,000 -- --
Granted (1,914,500) 1,914,500 $15.63 to $35.88
Exercised -- (930,574) $ 2.47 to $21.38
Terminated 599,053 (599,053) $ 2.84 to $27.63
--------------------------------------------------
Balance,
March 31, 1995 3,958,127 4,783,250 $ 2.47 to $35.88
==================================================
</TABLE>
At March 31, 1995, there were 1,558,886 exercisable options under this Plan
at prices ranging from $2.47 to $21.50 per share.
In August 1993, stock options issued by Trantor were exercised for 2,112
shares of common stock of the Company. These shares became issuable upon
exercise of certain stock options assumed by the Company in connection with the
acquisition of Trantor.
1990 DIRECTORS' OPTION PLAN The 1990 Directors' Option Plan provides for the
automatic grant to non-employee directors of non-statutory stock options to
purchase common stock at the fair market value on the date of grant, which is
generally the last day of each fiscal year except for the first grant to any
newly elected director. Each current director receives an option at the end of
each fiscal year for 10,000 shares, which vests and becomes exercisable over a
four year period. Each newly elected director receives an initial option on the
date of his or her appointment or election for 40,000 shares, which also vests
and becomes exercisable over a four year period. The options expire five years
after the date of grant.
Option activity under the 1990 Directors' Option Plan is as follows:
<TABLE>
<CAPTION>
Options Outstanding
Options ---------------------------
Available Shares Price
-------------------------------------------
<S> <C> <C> <C>
Balance,
March 31, 1992 120,000 80,000 $ 2.91 to $ 7.69
Granted (80,000) 80,000 $12.50 to $13.88
Exercised -- (2,500) $ 2.91
-------------------------------------------
Balance,
March 31, 1993 40,000 157,500 $ 2.91 to $13.88
Authorized 500,000 -- --
Granted (50,000) 50,000 $18.38
Exercised -- (5,000) $ 2.91
-------------------------------------------
Balance,
March 31, 1994 490,000 202,500 $ 2.91 to $18.38
Granted (50,000) 50,000 $33.00
Exercised -- (21,250) $ 2.91 to $13.88
-------------------------------------------
Balance,
March 31, 1995 440,000 231,250 $ 2.91 to $33.00
===========================================
</TABLE>
At March 31, 1995 there were 93,750 exercisable options under this Plan at
prices ranging from $2.91 to $18.38 per share.
42
<PAGE> 45
RIGHTS PLAN The Company has reserved 120,000,000 shares of common stock for
issuance under the Rights Plan which was amended and restated as of June 30,
1992. Under this plan, shareholders will receive one Common Share Purchase Right
("Right") for each outstanding share of the Company's common stock. Each Right
will entitle shareholders to buy one share of common stock at an exercise price
of $50.00 per share. The Rights will trade automatically with shares of the
Company's common stock. The Rights are not exercisable until ten days after a
person or group announces acquisition of 20% or more of the Company's
outstanding common stock or the commencement of a tender offer which would
result in ownership by a person or group of 20% or more of the then outstanding
common stock.
The Company is entitled to redeem the Rights at $.005 per Right anytime
on or before the tenth day following such an acquisition or tender offer. This
redemption period may be extended by the Company in some cases. If, prior to
such redemption, the Company is acquired in a merger or other business
combination, a party acquires 20% or more of the Company's common stock, a 20%
shareholder engages in certain self-dealing transactions, or the Company sells
50% or more of its assets, each right will entitle the holder to purchase from
the surviving corporation, for $50.00 per share, common stock having a then
current market value of $100.00 per share.
At March 31, 1995, the Company has reserved the following shares of
authorized but unissued common stock:
<TABLE>
<S> <C>
1982 Incentive Stock Option Plan
(Expired January 1, 1992) 6,000
1986 Employee Stock Purchase Plan 1,008,462
1990 Stock Plan 8,741,377
1990 Directors' Option Plan 671,250
Rights Plan 120,000,000
-----------
130,427,089
===========
</TABLE>
NOTE 7. COMMITMENTS
The Company leases certain office facilities, vehicles and certain equipment
under operating lease agreements that expire at various dates through fiscal
2000. As of March 31, 1995, the minimum future payments on existing leases are
as follows:
<TABLE>
<CAPTION>
Fiscal Year (In thousands)
- -------------------------------------------------------
<S> <C>
1996 $2,045
1997 846
1998 311
1999 225
2000 226
------
$3,653
======
</TABLE>
Rent expense was approximately $2,377,000, $1,640,000 and $1,454,000 during
fiscal 1995, 1994 and 1993, respectively.
To provide the Company with an increased supply of silicon wafers, an
agreement was entered into with one of the Company's suppliers to purchase
integrated circuits fabricated by the supplier's foundry. The agreement expires
in June 1997. Under the agreement, the Company is committed to the following
minimum purchases:
<TABLE>
Fiscal Year (In thousands)
- -------------------------------------------------------
<S> <C>
1996 $19,800
1997 19,800
1998 4,950
-------
$44,550
=======
</TABLE>
The Company has made a deposit aggregating $14,650,000 to secure the supply
of silicon wafers pursuant to this agreement. The advances are repayable at the
expiration of the deposit and supply agreement in June 1997 and are classified
as other assets in the accompanying consolidated balance sheets. The supplier
has provided an irrevocable standby letter of credit to the Company in an equal
amount to guarantee the repayment of amounts made available by the Company.
43
<PAGE> 46
NOTE 8. INCOME TAXES
Effective April 1, 1993, the Company adopted SFAS 109 on a prospective basis.
Prior years were accounted for under APB 11 and have not been restated. The
adoption of SFAS 109 had no material effect on the Company's financial
statements.
The components of income before income taxes for the years ended March 31
are as follows:
<TABLE>
<CAPTION>
(In thousands)
--------------------------------
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Domestic $ 74,397 $54,972 $35,881
Foreign 50,140 23,631 29,973
--------------------------------
Income before
income taxes $124,537 $78,603 $65,854
================================
</TABLE>
The components of the provision for income taxes for the years ended March
31 are as follows:
<TABLE>
<CAPTION>
(In thousands)
------------------------------
1995 1994 1993
------------------------------
<S> <C> <C> <C>
Federal
Current $26,455 $13,899 $13,687
Deferred (311) 2,658 (770)
------------------------------
26,144 16,557 12,917
------------------------------
Foreign
Current 1,106 317 132
Deferred -- -- 208
------------------------------
1,106 317 340
------------------------------
State
Current 3,177 3,474 3,632
Deferred 708 (695) (425)
------------------------------
3,885 2,779 3,207
------------------------------
Provision for
income taxes $31,135 $19,653 $16,464
==============================
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets for financial reporting purposes and the
amounts used for income tax purposes. Significant components of the Company's
deferred tax assets, included in prepaid expenses and other in the accompanying
consolidated balance sheets for the years ended March 31, are as follows:
<TABLE>
<CAPTION>
(In thousands)
------------------
1995 1994
------------------
<S> <C> <C>
Inventory reserves $ 1,048 $ 2,955
State taxes 990 2,895
Bad debt reserve 1,829 2,060
Compensatory accruals 4,355 1,851
Various expense accruals 3,725 1,525
Other, net 2 1,060
------------------
Net deferred tax assets $11,949 $12,346
==================
</TABLE>
The provision for income taxes differs from the amount computed by applying
the federal statutory tax rate to income before income taxes for the years ended
March 31 as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 34.0%
State taxes, net of
federal benefit 2.2 2.9 3.1
Foreign subsidiary income
at other than the
U.S. tax rate (9.9) (10.5) (13.1)
Other (2.3) (2.4) 1.0
---------------------------
Effective income tax rate 25.0% 25.0% 25.0%
===========================
</TABLE>
The Company's Singapore subsidiary has been granted pioneer status from the
Singapore government whereby all profits derived from the facility are tax
exempt for a period of eight years, subject to certain conditions. The pioneer
status will expire during fiscal 1996 and the Company will continue to benefit
from a reduced rate of 15% instead of the normal 27% for an additional three
year period. The Company is currently pursuing an extension of its pioneer
status with the Singapore government. As of March 31, 1995, the Company had not
accrued income taxes on $116,177,000 of accumulated undistributed earnings of
its Singapore subsidiary, as these earnings will be reinvested indefinitely.
44
<PAGE> 47
NOTE 9. SEGMENT INFORMATION
Adaptec operates strictly in the microcomputer input/output industry and is a
leading supplier of high-performance intelligent subsystems and associated
software and very large-scale integrated circuits used to control the flow of
data between a microcomputer's CPU and its peripherals. The Company focuses its
worldwide marketing efforts on major OEM customers through its direct sales
force located in the United States, Europe and Far East and also sells through
distributors and sales representatives in each of these geographic areas.
Income from operations consists of net revenues less cost of revenues and
operating expenses incurred in supporting the revenues of each geographic area.
All of the Company's identifiable assets are used to support the operations in
each geographic area. Corporate assets include cash and cash equivalents,
marketable securities, deferred tax assets and certain other assets.
Intercompany sales are made at arms-length prices, and revenues for the European
subsidiaries consist mainly of commissions earned in connection with obtaining
foreign orders.
<TABLE>
<CAPTION>
(In thousands)
-------------------------------------------------------------------------------
Singapore, Adjustments
United Far East, and
States Other Europe Corporate Eliminations Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL 1995
Revenues
Sales to customers $464,707 $ 1,487 $ -- $ -- $ -- $466,194
Intercompany sales between
geographic areas 10,401 191,360 3,905 -- (205,666) --
-------------------------------------------------------------------------------
Net revenues $475,108 $192,847 $3,905 $ -- $(205,666) $466,194
===============================================================================
Income from operations 68,594 48,847 343 -- -- 117,784
Identifiable assets 122,097 123,044 1,070 262,383 (72,886) 435,708
FISCAL 1994
Revenues
Sales to customers $371,863 $ 382 $ -- $ -- $ -- $372,245
Intercompany sales between
geographic areas 10,344 119,305 2,375 -- (132,024) --
-------------------------------------------------------------------------------
Net revenues $382,207 $119,687 $2,375 $ -- $(132,024) $372,245
===============================================================================
Income from operations 53,945 23,074 116 -- -- 77,135
Identifiable assets 153,340 74,512 347 207,591 (77,315) 358,475
FISCAL 1993
Revenues
Sales to customers $311,339 $ -- $ -- $ -- $ -- $311,339
Intercompany sales between
geographic areas 9,350 136,000 2,273 -- (147,623) --
-------------------------------------------------------------------------------
Net revenues $320,689 $136,000 $2,273 $ -- $(147,623) $311,339
===============================================================================
Income from operations 32,816 29,746 181 -- -- 62,743
Identifiable assets 119,365 63,314 378 157,843 (58,004) 282,896
</TABLE>
45
<PAGE> 48
EXPORT REVENUES The following table represents export revenues by geographic
region as a percentage of total revenues:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------
<S> <C> <C> <C>
Singapore, Far East, Other 37% 38% 27%
Europe 25 20 23
-------------------------
62% 58% 50%
=========================
</TABLE>
MAJOR CUSTOMERS In fiscal 1995 and 1994, no customer accounted for more than 10%
of net revenues. In fiscal 1993, two different customers accounted for 16% and
10% of net revenues.
NOTE 10. LEGAL MATTERS
A class action lawsuit alleging federal securities law violations and negligent
misrepresentation was filed against the Company, its directors, and certain of
its officers in February, 1991. That action was settled by letter agreement on
July 29, 1993. The Company has made all payments required under the terms of the
letter agreement. On March 7, 1995, the Court issued an order preliminarily
approving the class-action settlement. Notice of the settlement has been given
to class members. Final approval of the class-action settlement is pending final
order from the Court.
NOTE 11. COMPARATIVE QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data is as follows:
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
-------------------------------------------------------------------------
Quarters
First Second Third Fourth Year
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FISCAL 1995
Net revenues $106,061 $106,574 $123,367 $130,192 $466,194
Gross profit 54,888 57,413 71,563 76,734 260,598
Net income 17,592 18,458 27,403 29,949 93,402
Net income per share $ .33 $ .35 $ .52 $ .56 $ 1.75
Weighted average shares outstanding 53,944 53,182 52,958 53,802 53,357
FISCAL 1994
Net revenues $ 86,505 $ 87,915 $ 96,071 $101,754 $372,245
Gross profit 39,228 43,245 48,690 51,556 182,719
Net income 13,623 12,239 15,820 17,268 58,950
Net income per share $ .26 $ .23 $ .29 $ .32 $ 1.10
Weighted average shares outstanding 52,816 53,326 53,928 54,352 53,602
</TABLE>
46
<PAGE> 49
REPORT OF MANAGEMENT
Management is responsible for the preparation and integrity of the consolidated
financial statements and other financial information presented in the annual
report. The accompanying financial statements were prepared in conformity with
generally accepted accounting principles and as such, include some amounts based
on management's best judgments and estimates. Financial information in the
annual report is consistent with that in the financial statements.
Management is responsible for maintaining a system of internal business
controls and procedures to provide reasonable assurance that assets are
safeguarded and that transactions are authorized, recorded and reported
properly. The internal control system is continuously monitored by management
review, written policies and guidelines, and careful selection and training of
qualified people who are provided with and expected to adhere to the Company's
standards of business conduct. Management believes the Company's internal
controls provide reasonable assurance that assets are safeguarded against
material loss from unauthorized use or disposition and the financial records are
reliable for preparing financial statements and other data and maintaining
accountability for assets.
The audit committee of the Board of Directors meets periodically with the
independent accountants and management to discuss internal business controls,
auditing and financial reporting matters. The committee also reviews with the
independent accountants the scope and results of the audit effort.
The independent accountants, Price Waterhouse LLP, are engaged to examine
the consolidated financial statements of the Company and conduct such tests and
related procedures as they deem necessary in accordance with generally accepted
auditing standards. The opinion of the independent accountants, based upon their
audit of the consolidated financial statements, is contained in this annual
report.
/s/ John G. Adler /s/ Paul G. Hansen
- --------------------------- ---------------------------
John G. Adler Paul G. Hansen
Chairman and Chief Vice President, Finance
Executive Officer and Chief Financial Officer
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Adaptec, Inc.:
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statement of operations, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Adaptec,
Inc. and its subsidiaries at March 31, 1995, and the results of their operations
and their cash flows for the year in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. The financial statements of
Adaptec, Inc. as of and for the two years ended March 31, 1994 were audited by
other independent accountants whose report dated April 25, 1994 expressed an
unqualified opinion on those statements.
/s/ Price Waterhouse LLP
San Jose, California
April 20, 1995
47
<PAGE> 50
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
YEAR ENDED MARCH 31
Net revenues $466,194 $372,245 $311,339 $150,315 $128,865
Cost of revenues 205,596 189,526 174,179 84,549 74,745
-------------------------------------------------------------------------
Gross profit 260,598 182,719 137,160 65,766 54,120
-------------------------------------------------------------------------
Operating expenses
Research and development 60,848 39,993 26,324 17,514 14,005
Sales and marketing 58,737 46,192 32,525 21,338 18,447
General and administrative 23,229 19,399 15,568 10,517 8,280
-------------------------------------------------------------------------
142,814 105,584 74,417 49,369 40,732
-------------------------------------------------------------------------
Net income $ 93,402 $ 58,950 $ 49,390 $ 14,614 $ 12,204
=========================================================================
NET INCOME PER SHARE
Net income per share $ 1.75 $ 1.10 $ .96 $ .35 $ .30
Weighted average shares
outstanding 53,357 53,602 51,652 41,664 41,148
-------------------------------------------------------------------------
BALANCE SHEET DATA
AS OF MARCH 31
Working capital $294,058 $243,451 $191,693 $105,671 $ 86,074
Total assets 435,708 358,475 282,896 138,615 109,142
Long-term debt, net of
current portion 7,650 11,050 14,450 423 996
Shareholders' equity 371,644 297,616 225,155 117,742 94,558
</TABLE>
COMMON STOCK PRICES AND DIVIDENDS The Company's common stock is traded in the
over-the-counter market under the NASDAQ symbol ADPT. The following table sets
forth the range of the high and low prices by quarter as reported by the NASDAQ
National Market System.
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------------------------------
High Low High Low
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
First quarter $19-1/2 $14 $12-13/16 $ 9- 1/4
Second quarter 21-1/4 16-1/4 16-5/8 10-9/16
Third quarter 24-3/4 17-1/4 19-15/16 13-1/16
Fourth quarter 37 21-3/4 22-1/2 17- 3/4
</TABLE>
In March 1992 and January 1994, the Company's Board of Directors approved a
two-for-one-split of its common stock. The above sale prices have been adjusted
to reflect the stock splits.
At March 31, 1995, there were 722 holders of record of the Company's common
stock. The Company has not paid cash dividends on its common stock and does not
currently plan to pay cash dividends to its shareholders in the near future.
48
<PAGE> 51
DIRECTORS AND OFFICERS
DIRECTORS
John G. Adler
Chairman of the Board and
Chief Executive Officer
Laurence B. Boucher
President and Chief Executive Officer,
Auspex Systems, Inc.
Robert J. Loarie
General Partner,
Morgan Stanley Venture Partners, L.P.
B.J. Moore
Independent Management Consultant
W. Ferrell Sanders
General Partner,
Asset Management Co.
F. Grant Saviers
President and Chief Operating Officer
Phillip E. White
Chairman of the Board and
Chief Executive Officer,
Informix Software, Inc.
OFFICERS
John G. Adler
Chairman of the Board and
Chief Executive Officer
Daniel W. Bowman
Vice President, Administration
Martin W. Brauns
Vice President, Sales
Andrew J. Brown
Corporate Controller
John D. Hamm
Vice President and General Manager
Paul G. Hansen
Vice President, Finance and
Chief Financial Officer
(Assistant Secretary)
Sam Kazarian
Vice President, Operations
Christopher G. O'Meara
Vice President and Treasurer
F. Grant Saviers
President and Chief Operating Officer
S. Sundaresh
Vice President and General Manager
Henry P. Massey, Jr.
Secretary
CORPORATE INFORMATION
HEADQUARTERS
691 S. Milpitas Blvd.
Milpitas, CA 95035
(408) 945-8600
SUBSIDIARIES
Adaptec Mfg. (S) Pte. Ltd.
Block 1003
Bukit Merah Central #07-09
Singapore 0315
(011-65) 278-7300
Adaptec GmbH
Munchner Strasse 17
85540 Haar
Germany
(011-49) 89-456-4060
Adaptec Europe, S.A.
Dreve Richelle 161
Building A, 2nd Floor
B-1410 Waterloo
Belgium
(011-32) 2-352-3411
Adaptec Japan Ltd.
Kioicho Hills, 4F
3-32 Kioicho
Chiyoda-ku, Tokyo 102
Japan
(011-81) 35-276-9882
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
San Jose, California
LEGAL COUNSEL
Wilson, Sonsini,
Goodrich & Rosati
Palo Alto, California
SHAREHOLDER INFORMATION
TRANSFER AGENT
Chemical Mellon
Shareholder Services
San Francisco, California
(800) 356-2017
COMMON STOCK
The Company's stock is traded on the National Market System under the NASDAQ
symbol ADPT.
ANNUAL MEETING OF SHAREHOLDERS
The annual meeting will be held Thursday, August 24, 1995 at 9:30 a.m. PDT at
Adaptec's Milpitas site, located at 500 Yosemite Drive, Milpitas, California.
FORM 10-K
A copy of the Company's Form 10-K, as filed with the Securities and Exchange
Commission, is available on request without charge by calling (800) 934-2766.
QUARTERLY SHAREHOLDER INFORMATION
Commencing with fiscal 1996, the Company will replace its traditional quarterly
shareholder reports with expanded quarterly financial press releases. These
financial press releases will be available on request without charge by calling
(800) 934-2766 or by accessing Adaptec's World Wide Web Home Page at
http://www.adaptec.com
FINANCIAL LITERATURE
(800) 934-2766
Copyright (C) 1995 Adaptec, Inc.
All rights reserved. Adaptec, the Adaptec logo, IOware, AHA, CI/O, MiniSCSI,
SlimSCSI, and EZ-SCSI are trademarks of Adaptec, Inc. which may be registered in
some jurisdictions. All other trademarks used are owned by their respective
owners.
Created by: Cahan & Associates, San Francisco
<PAGE> 52
[ADAPTEC LOGO]
Adaptec, Inc.
691 South Milpitas Blvd.
Milpitas, California 95035
835000-011
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 66,835
<SECURITIES> 179,911
<RECEIVABLES> 60,926
<ALLOWANCES> 4,431
<INVENTORY> 31,712
<CURRENT-ASSETS> 350,472
<PP&E> 95,111
<DEPRECIATION> 27,248
<TOTAL-ASSETS> 435,708
<CURRENT-LIABILITIES> 56,414
<BONDS> 7,650
<COMMON> 140,191
0
0
<OTHER-SE> 231,453
<TOTAL-LIABILITY-AND-EQUITY> 435,708
<SALES> 466,194
<TOTAL-REVENUES> 466,194
<CGS> 205,596
<TOTAL-COSTS> 205,596
<OTHER-EXPENSES> 142,664
<LOSS-PROVISION> 150
<INTEREST-EXPENSE> 1,179
<INCOME-PRETAX> 124,537
<INCOME-TAX> 31,135
<INCOME-CONTINUING> 93,402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,402
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
</TABLE>
