Adaptec 2007 Annual Report Download - page 55

Table of Contents
The notes rank equal in right of payment with our other unsecured senior indebtedness and mature on October 15, 2025 unless earlier redeemed by us at our
option, or converted or put to us at the option of the holders. Interest is payable semi-annually in arrears on April 15 and October 15 of each year, commencing
on April 15, 2006. We may redeem all or a portion of the notes at par on and after October 20, 2012. The holders may require that we repurchase notes on
October 15, 2012, 2015 and 2020 respectively.
Holders may convert the notes into the right to receive the conversion value (i) when our stock price exceeds 120% of the approximately $8.80 per share initial
conversion price for a specified period, (ii) in certain change in control transactions, and (iii) when the trading price of the notes does not exceed a minimum
price level. For each $1,000 principal amount of notes, the conversion value represents the amount equal to 113.6687 shares multiplied by the per share price of
our common stock at the time of conversion. If the conversion value exceeds $1,000 per $1,000 in principal of notes, we will pay $1,000 in cash and may pay the
amount exceeding $1,000 in cash, stock or a combination of cash and stock, at our election.
We entered into a Registration Rights Agreement with the holders of the Notes, under which we are required to keep the shelf registration statement effective
until the earlier of (i) the sale pursuant to the shelf registration statement of all of the Notes and/or shares of common stock issuable upon conversion of the
Notes, and (ii) the expiration of the holding period applicable to such securities held by non-affiliates under Rule 144(k) under the Securities Act, or any
successor provision, subject to certain permitted exceptions.
We will be required to pay liquidated damages, subject to some limitations, to the holders of the Notes if we fail to comply with our obligations to register the
notes and the common stock issuable upon conversion of the notes or the registration statement does not become effective within the specified time periods. In no
event will liquidated damages accrue after the second anniversary of the date of issuance of the notes or at a rate exceeding 0.50% of the issue price of the notes.
We will have no other liabilities or monetary damages with respect to any registration default. If the holder has converted some or all of its notes into common
stock, the holder will not be entitled to receive any liquidated damages with respect to such common stock or the principal amount of the notes converted.
Purchase obligations are comprised of commitments to purchase design tools and software for use in product development, which will be spent between 2008
and 2010. We have not included open purchase orders for inventory or other expenses issued in the normal course of business in the purchase obligations shown
above. We estimate these other commitments to be approximately $13.7 million at December 30, 2007 for inventory and other expenses that will be received in
the coming 90 days and that will require settlement 30 days thereafter.
We have a line of credit with a bank that allows us to borrow up to $0.8 million provided we maintain eligible investments with the bank equal to the amount
drawn on the line of credit. At December 30, 2007 we had committed $0.8 million under letters of credit as security for office leases.
We expect to use approximately $22.3 million of cash in 2008 for capital expenditures including purchases of intellectual property. Based on our current
operating prospects, we believe that existing sources of liquidity will be sufficient to satisfy our projected operating, working capital, capital expenditure,
purchase obligations, and remaining restructuring requirements through the end of 2008.
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Source: PMC SIERRA INC, 10-K, February 22, 2008