EXHIBIT 10.4

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective
Date between SILICON VALLEY BANK, a California banking corporation (“Bank”), and
ADEPT TECHNOLOGY, INC., a Delaware corporation (“Borrower”), provides the terms
on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties
agree as follows:

 

  1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. Capitalized
terms not otherwise defined in this Agreement shall have the respective meanings
set forth in Section 13. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meaning provided by the Code to the extent
such terms are defined therein.

 

  2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the
outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.

2.1.1 Revolving Advances.

(a) Availability. Subject to the terms and conditions of this Agreement, Bank
shall make Advances in Dollars in an aggregate Dollar Equivalent amount
outstanding at any time not exceeding the Availability Amount at such time.
Amounts borrowed hereunder may be repaid and, prior to the Revolving Line
Maturity Date, reborrowed, subject to the applicable terms and conditions
precedent herein.

(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest
thereon, and all other Obligations relating to the Revolving Line shall be
immediately due and payable. Borrower shall have the right to terminate the
Revolving Line at any time by delivering written notice to Bank at least 15 days
prior to the effective date of termination specified in such notice (the “Early
Termination Date”), provided that on such Early Termination Date, the principal
amount of all outstanding Advances, all unpaid interest thereon, and all other
Obligations relating to the Revolving Line (including, without limitation, Bank
Expenses, the prorated portion of any Unused Revolving Line Facility Fee for the
quarter in which termination occurs, and any prepayment amounts expressly
provided for in the Loan Documents) shall be immediately due and payable.

2.1.2 Letters of Credit Sublimit.

(a) As part of the Revolving Line, Bank shall issue or have issued Letters of
Credit for Borrower’s account. The aggregate Dollar Equivalent amount utilized
for the issuance of Letters of Credit shall at all times reduce the amount
otherwise available for Advances under the Revolving Line. The aggregate Dollar
Equivalent amount available to be used for the issuance of Letters of Credit at
any time may not exceed the Availability Amount. If, on the Revolving Line
Maturity Date or the Early Termination Date, there are any outstanding Letters
of Credit, then on such date Borrower shall provide to Bank cash collateral in
an amount equal to 105% of the Dollar Equivalent face amount of all such Letters
of Credit plus all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business judgment), to secure
all of the Obligations relating to such Letters of Credit. All Letters of Credit
shall be in form and substance acceptable to Bank in its sole discretion and
shall be subject to the terms and conditions of Bank’s standard Application and
Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees
to execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Borrower further agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letter of Credit issued by Bank for Borrower’s account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.

--------------------------------------------------------------------------------

(b) The obligation of Borrower to immediately reimburse Bank for drawings made
under Letters of Credit shall be absolute, unconditional, and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.

(c) If a demand for payment is made under any Letter of Credit denominated in a
Foreign Currency, then Bank shall treat such demand as an Advance to Borrower of
the Dollar Equivalent of the amount thereof plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges.

(d) To guard against fluctuations in currency exchange rates, upon the issuance
of any Letter of Credit payable in a Foreign Currency, Bank shall create a
reserve (the “Letter of Credit Reserve”) under the Revolving Line in an amount
equal to 10% of the Dollar Equivalent of the face amount of such Letter of
Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from
time to time to account for fluctuations in the exchange rate between the Dollar
and the applicable Foreign Currency in which such Letter of Credit is payable.
The availability of funds under the Revolving Line shall be reduced by the
amount of such Letter of Credit Reserve for as long as such Letter of Credit
remains outstanding.

2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may
enter into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a “FX
Forward Contract”) on a specified date (the “Settlement Date”). FX Forward
Contracts are subject to the following restrictions: (a) each FX Forward
Contract shall have a Settlement Date of at least 1 FX Business Day after the
contract date; (b) the aggregate amount of FX Forward Contracts at any one time
outstanding may not exceed 10 times the amount of the FX Reserve; and (c) the
amount otherwise available for Credit Extensions under the Revolving Line shall
be reduced by an amount equal to 10% of the sum of all outstanding FX Forward
Contracts (the “FX Reduction Amount”). Any amounts needed to fully reimburse
Bank for any amounts not paid by Borrower when due in connection with FX Forward
Contracts will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.

2.1.4 Cash Management Services Sublimit. Borrower may use any amounts available
under the Revolving Line for Bank’s cash management services which may include
merchant services, direct deposit of payroll, business credit card, and check
cashing services identified in Bank’s various cash management services
agreements (collectively, the “Cash Management Services”). Any amounts Bank pays
on behalf of Borrower for any Cash Management Services will be treated as
Advances under the Revolving Line and will accrue interest at the interest rate
applicable to Advances.

2.2 Overadvances. If, at any time, the sum of (a) the Dollar Equivalent of the
aggregate outstanding principal amount of Advances (including any amounts used
for Cash Management Services), plus (b) the Dollar Equivalent value of the
aggregate face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve), plus (c) the
FX Reduction Amount exceeds the lesser of either the Revolving Line or the
Borrowing Base, Borrower shall immediately pay to Bank in cash such excess.

2.2A General Provisions Relating to the Advances. Each Advance shall be in
Dollars and shall be in the form of a Prime Rate Advance.

2.3 Payment of Interest on the Credit Extensions.

(a) Computation of Interest. Interest on the Credit Extensions and all fees
payable hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which such interest accrues.
In computing interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.

 

-2-

--------------------------------------------------------------------------------

(b) Prime Rate Advances; Payments; Float Charge. Each Advance shall bear
interest on the outstanding principal amount thereof from the date when made,
continued or converted until paid in full at a rate per annum equal to the
greater of (1) 7.00% or (2) the Prime Rate plus the applicable Prime Rate
Margin. Pursuant to the terms hereof, interest on each Advance shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of any Advance pursuant to this Agreement for the portion of
any Advance so prepaid and upon payment (including prepayment) in full thereof.
All accrued but unpaid interest on the Advances shall be due and payable on the
Revolving Line Maturity Date. Payments received after 12:00 p.m., Pacific
prevailing time on a Business Day are considered received at the opening of
business on the next Business Day. When a payment shall be due on a day that is
not a Business Day, the payment is due on the next Business Day and additional
fees and interest shall accrue to such date. In addition, so long as any
principal or interest with respect to any Credit Extension remains outstanding,
Bank shall be entitled to charge Borrower a ‘float’ charge in an amount equal to
one Business Day’s interest, at the interest rate applicable to the outstanding
Credit Extensions, on all payments received by Bank. The float charge for each
month shall be payable on the last calendar day of the month. Bank shall not,
however, be required to credit Borrower’s account for the amount of any item of
payment which is unsatisfactory to Bank in its good faith business judgment, and
Bank may charge Borrower’s Designated Deposit Account for the amount of any item
of payment which is returned to Bank unpaid.

(c) Default Interest. Except as otherwise provided in Section 2.3(b), after an
Event of Default, Obligations shall bear interest at a rate 500 basis points
above the rate that would otherwise be applicable thereto (the “Default Rate”).
Payment or acceptance of the increased interest provided in this Section 2.3(c)
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Bank.

(d) Prime Rate Advances. Each change in the interest rate of the Prime Rate
Advances based on changes in the Prime Rate shall be effective on the effective
date of such change and to the extent of such change. Bank shall use its best
efforts to give Borrower prompt notice of any such change in the Prime Rate;
provided, however, that any failure by Bank to provide Borrower with notice
hereunder shall not affect Bank’s right to make changes in the interest rate of
the Prime Rate Advances based on changes in the Prime Rate.

(e) [Reserved.]

(f) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts,
including the Designated Deposit Account, for principal and interest payments
when due, or any other amounts Borrower owes Bank, when due. Bank shall promptly
notify Borrower after it debits Borrower’s accounts. These debits shall not
constitute a set-off.

2.4 Fees. Borrower shall pay to Bank:

(a) Facility Fee. A facility fee of $30,000 (the “Facility Fee”), which fee
shall be fully earned, non-refundable, due, and payable on the Effective Date,
each anniversary thereof, and, if the Revolving Line is terminated prior to the
first anniversary of the Effective Date, upon such termination of the Revolving
Line;

(b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or
renewal of Letters of Credit, including, without limitation, a letter of credit
fee of 1.25% per annum of the Dollar Equivalent of the face amount of each
Letter of Credit issued, which fee shall be due and payable upon the issuance,
each anniversary of the issuance during the term of such Letter of Credit, and
the renewal of such Letter of Credit by Bank;

(c) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line
Facility Fee”), payable quarterly, in arrears, on a calendar year basis, in an
amount equal to 0.50% per annum of the average unused portion of the Revolving
Line, as determined by Bank. The unused portion of the Revolving Line, for the
purposes of this calculation, shall include amounts reserved for products
provided in connection with Cash Management Services and the FX Reduction
Amount. Borrower shall not be entitled to any credit, rebate or repayment of any
Unused Revolving Line Facility Fee previously earned by Bank pursuant to this
Section notwithstanding any termination of the Agreement or the suspension or
termination of Bank’s obligation to make loans and advances hereunder;

 

-3-

--------------------------------------------------------------------------------

(d) Collateral Monitoring Fee. A monthly collateral monitoring fee of $750 per
month (the “Collateral Monitoring Fee”) payable in arrears on the last calendar
day of each month if Borrower was below the Asset Based Threshold during such
month and there was any principal, interest, or Letter of Credit outstanding
under the Revolving Line during the month; and

(e) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses, plus other expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.

 

  3 CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make
the initial Credit Extension is subject to the condition precedent that Borrower
shall consent to or have delivered, in form and substance satisfactory to Bank,
such documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate, including, without limitation:

 

  (a) duly executed original signatures to the Loan Documents to which it is a
party;

 

  (b) duly executed original signatures to the Control Agreement(s);

 

  (c) its Operating Documents and good standing certificates of Borrower and
each Guarantor, certified by the Secretary of State of each entity’s state of
organization (or of such entity’s corporate Secretary in the case of Bylaws or
other Operating Documents not filed with any state) as of a date no earlier than
thirty (30) days prior to the Effective Date;

 

  (d) duly executed original signatures to the completed Borrowing Resolutions
for Borrower;

 

  (e) certified copies, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in connection with
the initial Credit Extension, will be terminated or released;

 

  (f) the Perfection Certificate(s) executed by Borrower and each Guarantor;

 

  (g) a landlord’s consent executed by Borrower’s landlords for the two sites
located in Pleasanton, California, in favor of Bank;

 

  (h) the duly executed original signatures to the Guarantees, together with the
completed Borrowing Resolutions for each Guarantor;

 

  (i) a pledge agreement, in form and substance satisfactory to Bank, executed
by Borrower or a Guarantor and pledging to Lender a security interest in 100% or
66% (where a pledge of greater than 66% would, by itself, result in a deemed
dividend to Borrower or a pledging Guarantor under Section 956 of the Internal
Revenue Code, as amended, or any similar successor section) of the shares of the
outstanding capital stock, of any class, of each Material Subsidiary of Borrower
(each, a “Pledge Agreement”);

 

  (j) evidence satisfactory to Bank that the insurance policies required by
Section 6.5 hereof are in full force and effect, together with appropriate
evidence showing lender loss payable or additional insured clauses or
endorsements in favor of Bank;

 

  (k) the completion of the Initial Audit with results satisfactory to Bank in
its sole and absolute discretion; and

 

  (l) payment of the fees and Bank Expenses then due as specified in
Section 2.4. Bank acknowledges receipt of a good faith deposit in the amount of
$35,000, which deposit is to be applied towards Bank Expenses and, if any amount
remains after such application, to the Facility Fee.

 

-4-

--------------------------------------------------------------------------------

3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the
following:

(a) timely receipt of a Transaction Report;

(b) the representations and warranties in Section 5 shall be true in all
material respects on the date of the Transaction Report, and on the Funding Date
of each Credit Extension; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date,
and no Event of Default shall have occurred and be continuing or result from the
Credit Extension. Each Credit Extension is Borrower’s representation and
warranty on that date that the representations and warranties in Section 5
remain true in all material respects; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date; and

(c) in Bank’s sole discretion, there has not been any material impairment in the
business, results of operation, financial condition or the prospect of repayment
of the Obligations, or there has not been any material adverse deviation by
Borrower from the most recent business plan of Borrower presented to and
accepted by Bank.

3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required
to be delivered to Bank under this Agreement as a condition to any Credit
Extension. Borrower expressly agrees that a Credit Extension made prior to the
receipt by Bank of any such item shall not constitute a waiver by Bank of
Borrower’s obligation to deliver such item, and any such Credit Extension in the
absence of a required item shall be made in Bank’s sole discretion.

3.4 Procedures for Borrowing of Advances.

(a) Subject to the prior satisfaction of all other applicable conditions to the
making of an Advance set forth in this Agreement, each Advance shall be made
(i) upon Borrower’s irrevocable written notice requesting an Advance delivered
to Bank in the form of a Signed Transaction Report that includes a loan request
or (ii) without instructions if the Advances are necessary to meet Obligations
which have become due. Bank may rely on any e-mail, fax, or telephone notice
given by a person whom Bank believes is a Responsible Officer or designee.
Borrower will indemnify Bank for any loss Bank suffers due to such reliance.
Such Transaction Report must be received by Bank prior to 12:00 p.m. Pacific
time on a Business Day for funding to occur on the same date.

(b) The proceeds of all such Advances will then be made available to Borrower on
the Funding Date by Bank by transfer to the Designated Deposit Account. No
Advances shall be deemed made to Borrower, and no interest shall accrue on any
such Advance, until the related funds have been deposited in the Designated
Deposit Account.

 

  4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may
have superior priority to Bank’s Lien under this Agreement). If Borrower shall
acquire a commercial tort claim, Borrower shall promptly notify Bank in a
writing signed by Borrower of the general details thereof and grant to Bank in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Bank.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash. Upon payment in full in cash of the Obligations and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower.

 

-5-

--------------------------------------------------------------------------------

4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank
to file financing statements, without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Bank’s interest or rights hereunder,
including a notice that any disposition of the Collateral, by either Borrower or
any other Person, shall be deemed to violate the rights of Bank under the Code.
Such financing statements may indicate the Collateral as “all assets of the
Debtor” or words of similar effect, or as being of an equal or lesser scope, or
with greater detail, all in Bank’s discretion.

 

  5 REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority. Borrower is duly
existing and in good standing as a Registered Organization in its jurisdiction
of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on
Borrower’s business. In connection with this Agreement, Borrower has delivered
to Bank completed certificates each signed by Borrower and the Guarantors,
respectively, each entitled a “Perfection Certificate.” Unless otherwise
expressly indicated, references in this Agreement singularly to the Perfection
Certificate are to the Perfection Certificate signed by the Borrower, and
references to plural Perfection Certificates are to the Perfection Certificates
signed by the Borrower and each Guarantor. Borrower represents and warrants to
Bank that (a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an organization of
the type and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) Borrower is a Registered Organization and the Perfection
Certificate accurately sets forth Borrower’s organizational identification
number; (d) the Perfection Certificate accurately sets forth Borrower’s place of
business, or, if more than one, its chief executive office as well as Borrower’s
mailing address (if different than its chief executive office); (e) except as
set forth in the Perfection Certificate, Borrower (and each of its predecessors)
has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its
jurisdiction; and (f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries is accurate and
complete in all material respects (it being understood and agreed that Borrower
may from time to time update certain information in the Perfection Certificate
after the Effective Date to the extent permitted by one or more specific
provisions in this Agreement).

The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict with or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect and except for the filing of certain of the Loan Documents
with the Securities and Exchange Commission upon execution or any amendment
thereof) or (v) constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to which
it is a party or by which it is bound in which the default could have a material
adverse effect on Borrower’s business.

5.2 Collateral.

(a) Borrower has good title to, has rights in, and the power to transfer each
item of the Collateral upon which it purports to grant a Lien hereunder, free
and clear of any and all Liens except Permitted Liens. Borrower has no deposit
accounts other than the deposit accounts with Bank, the deposit accounts, if
any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as
are necessary to give Bank a perfected security interest therein.

(b) The Accounts are bona fide, existing obligations of the Account Debtors.

 

-6-

--------------------------------------------------------------------------------

(c) Except as reflected in any reserve for obsolete, not sellable, damaged or
defective inventory included in the Borrower’s most recent consolidated balance
sheet provided to Bank, all Inventory is in all material respects of good and
marketable quality, free from material defects.

(d) The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate or as
approved by the Bank in writing. None of the components of the Collateral shall
be maintained at locations other than as provided in the Perfection Certificate
or as permitted pursuant to Section 7.2. In the event that Borrower, after the
date hereof, intends to store or otherwise deliver any portion of the Collateral
to a bailee, then Borrower will first receive the written consent of Bank and
such bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion.

(e) Borrower and Guarantors are each the sole equitable and beneficial owner of
their respective intellectual property, except for licenses permitted pursuant
to Section 7.1(e). Each patent is valid and enforceable, and no part of the
intellectual property has been judged invalid or unenforceable, in whole or in
part, and to the best of Borrower’s knowledge, no claim has been made that any
part of the intellectual property violates the rights of any third party except
to the extent such claim could not reasonably be expected to have a material
adverse effect on Borrower’s business.

(f) Except as noted on the Perfection Certificate, Borrower is not a party to,
nor is Borrower bound by, any material license or other agreement with respect
to which Borrower is the licensee (i) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (ii) for which a default
thereunder or termination thereof could interfere with the Bank’s right to sell
any Collateral. Borrower shall provide written notice to Bank within 10 days of
entering into or becoming bound by any such license or agreement (other than
over-the-counter software that is commercially available to the public).
Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for (x) all such
licenses or agreements to be deemed “Collateral” and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement, whether now existing or entered into in
the future, and (y) Bank to have the ability in the event of a liquidation of
any Collateral to dispose of such Collateral in accordance with Bank’s rights
and remedies under this Agreement and the other Loan Documents.

5.3 Accounts Receivable. For any Eligible Account in any Transaction Report, all
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing such Eligible Accounts are and shall be true and
correct and all such invoices, instruments and other documents, and all of
Borrower’s Books are genuine and in all respects what they purport to be.
Whether or not an Event of Default has occurred and is continuing, Bank may
notify any Account Debtor owing Borrower money of Bank’s security interest in
such funds and verify the amount of such Eligible Account. All sales and other
transactions underlying or giving rise to each Eligible Account shall comply in
all material respects with all applicable laws and governmental rules and
regulations. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any Account Debtor whose accounts are Eligible Accounts in any
Transaction Report. To the best of Borrower’s knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Eligible Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.

5.4 Litigation. There are no actions or proceedings pending or, to the knowledge
of the Responsible Officers, threatened in writing by or against Borrower or any
of its Subsidiaries involving more than $250,000.

5.5 No Material Deviation in Financial Statements. All consolidated financial
statements for Borrower and any of its Subsidiaries delivered to Bank fairly
present, as of the date thereof, in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations. There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

 

-7-

--------------------------------------------------------------------------------

5.7 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Neither Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably be expected
to have a material adverse effect on its business. None of Borrower’s or any of
its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each of its Subsidiaries have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Government Authorities that are necessary to
continue their respective businesses as currently conducted.

5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.

5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower. Borrower may defer payment of any contested taxes, provided that
Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted,
(b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, (c) posts bonds or takes any other steps
required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”. Borrower is unaware of any claims or adjustments proposed for any of
Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the occurrence of
any other event with respect to, any such plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.

5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions
solely as working capital, to fund mergers and acquisitions permissible under
Section 7.3, repurchases of Borrower’s issued securities, and Borrower’s other
general business requirements and not for personal, family, household or
agricultural purposes.

5.11 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Bank, as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to Bank, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

5.12 Definition of “Knowledge.” For purposes of the Loan Documents, whenever a
representation or warranty is made to the Borrower’s knowledge or awareness, to
the “best of” Borrower’s knowledge, or with a similar qualification, knowledge
or awareness means the actual knowledge, after reasonable investigation, of the
Responsible Officers.

 

-8-

--------------------------------------------------------------------------------

  6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance.

(a) Except for the Anticipated Liquidations, maintain Borrower’s and all its
Subsidiaries’ legal existence and good standing in their respective
jurisdictions of formation and maintain qualification in each jurisdiction in
which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower’s business.

(b) Obtain all of the Governmental Approvals necessary for the performance by
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Bank in all of its property. Borrower shall
promptly provide copies of any such obtained Governmental Approvals to Bank.

6.2 Financial Statements, Reports, Certificates. Deliver to Bank:

(a) Monthly, within 30 days after the last day of each month, a duly completed
Transaction Report Signed by a Responsible Officer, with aged listings of
accounts receivable and accounts payable (by invoice date), provided that such
Transaction Report shall be due weekly if (x) Borrower is below the Asset Based
Threshold and (y) there is any principal or interest outstanding under the
Revolving Line;

(b) monthly, within 30 days after the last day of each month, company-prepared,
unaudited financial statements;

(c) monthly, within 30 days after the last day of each month, together with the
monthly financial statements required pursuant to Section 6.2(b), a duly
completed Compliance Certificate signed by a Responsible Officer;

(d) annually, as soon as available, but in any case within 120 days after the
last day of Borrower’s fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
acceptable to Bank in its reasonable discretion;

(e) as soon as available, but no later than 5 days after filing with the
Securities Exchange Commission, Borrower’s 10K, 10Q, and 8K reports (or a link
thereto on Borrower’s or another website on the Internet);

(f) upon approval by Borrower’s board of directors, annual financial projections
for the following fiscal year (on a quarterly basis) as approved by Borrower’s
board of directors, together with any related business forecasts used in the
preparation of such annual financial projections;

(g) a prompt report of any legal actions pending or threatened against Borrower
or any Subsidiary that could result in damages or costs to Borrower or any
Subsidiary of $250,000 or more; and

(h) such budgets, sales projections, operating plans or other financial
information as Bank reasonably requests.

6.3 Accounts Receivable.

(a) Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank
transaction reports and schedules of collections, as provided in Section 6.2, on
Bank’s standard forms; provided, however, that Borrower’s failure to execute and
deliver the same shall not affect or limit Bank’s Lien and other rights in all
of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a
specific Account affect or limit Bank’s Lien and other rights therein. If
requested by Bank, Borrower shall furnish Bank with copies (or, at

 

-9-

--------------------------------------------------------------------------------

Bank’s request, originals) of all contracts, orders, invoices, and other similar
documents, and all shipping instructions, delivery receipts, bills of lading,
and other evidence of delivery, for any goods the sale or disposition of which
gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its
request, the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any Accounts,
in the same form as received, with all necessary indorsements, and copies of all
credit memos.

(b) Disputes. Borrower shall promptly notify Bank of all disputes or claims
relating to Accounts. Borrower may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do
any of the foregoing so long as (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, in
arm’s-length transactions, and reports the same to Bank in the regular reports
provided to Bank; (ii) no Default or Event of Default has occurred and is
continuing; and (iii) after taking into account all such discounts, settlements
and forgiveness, the Availability Amount is not less than $0.

(c) Collection of Accounts; Application of Proceeds.

(i) Collection of Accounts. Borrower shall have the right to collect all
Accounts unless and until a Default or an Event of Default has occurred and is
continuing, provided that Borrower shall cause each domestic Account Debtor to
remit payments with respect to Accounts to a lockbox account established with
Bank or to wire transfer payments to the Cash Collateral Account that Bank
controls (collectively, the “Lockbox”). Bank may, in its good faith business
judgment, require that all proceeds of Accounts be deposited by Borrower into a
different lockbox account, or such other “blocked account” as Bank may specify,
pursuant to a blocked account agreement in such form as Bank may specify in its
good faith business judgment.

(ii) Application of Payments. Subject to Section 9.4, (A) whenever Borrower is
below the Asset Based Threshold, Bank will apply proceeds of Borrower’s Accounts
received by Bank (the “Collections”) towards the Obligations and will turn over
any excess amounts to the Borrower and (B), whenever Borrower is at or above the
Asset Based Threshold and no Default or Event of Default has occurred and is
continuing, Bank will transfer Collections from the Lockbox into the Designated
Deposit Account on a nightly basis.

(iii) Payments Received by Borrower. Whether or not an Event of Default has
occurred and is continuing, Borrower shall hold all payments on, and proceeds
of, Accounts in trust for Bank, and Borrower shall immediately deliver all such
payments and proceeds to Bank in their original form, duly endorsed, to be
applied to the Obligations pursuant to the terms of Section 6.3(c)(ii) and
Section 9.4 hereof.

(d) Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly
(i) determine the reason for such return, (ii) issue a credit memorandum to the
Account Debtor in the appropriate amount, and (iii) provide a copy of such
credit memorandum to Bank, upon request from Bank. In the event any attempted
return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for Bank, and
immediately notify Bank of the return of the Inventory.

(e) Verification. Bank may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Accounts, either in the name of Borrower or Bank or such other name as Bank
may choose.

(f) No Liability. Bank shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gives rise to an Account, or for any error, act,
omission, or delay of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account, or for settling any Account in
good faith for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve Bank from
liability for its own gross negligence or willful misconduct.

6.4 Inventory. Keep all Inventory in good and marketable condition, free from
material defects (except for reserves for obsolete, not sellable, damaged or
defective inventory taken in accordance with GAAP).

 

-10-

--------------------------------------------------------------------------------

6.5 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely
file, all required tax returns and reports and timely pay, and require each of
its Subsidiaries to timely pay, all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.

6.6 Insurance. Keep its business and the Collateral insured for risks and in
amounts standard for companies in Borrower’s industry and location and as Bank
may reasonably request. Insurance policies shall be in a form, with companies,
and in amounts that are satisfactory to Bank. All property policies shall have a
lender’s loss payable endorsement showing Bank as lender loss payee and waive
subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured. All policies (or the loss
payable and additional insured endorsements) shall provide that the insurer
shall endeavor to give Bank at least 20 days notice before canceling, amending,
or declining to renew its policy. At Bank’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. If Borrower
fails to obtain insurance as required under this Section 6.5 or to pay any
amount or furnish any required proof of payment to third persons and Bank, Bank
may make all or part of such payment or obtain such insurance policies required
in this Section 6.5, and take any action under the policies Bank deems prudent.

6.7 Operating Accounts.

(a) Maintain its and its Subsidiaries’ primary domestic operating and other
deposit accounts and securities accounts with Bank and Bank’s Affiliates.

(b) Provide Bank five (5) days prior written notice before establishing any
Collateral Account at or with any bank or financial institution other than Bank
or Bank’s Affiliates. For each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution
(other than Bank) at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with
respect to such Collateral Account to perfect Bank’s Lien in such Collateral
Account in accordance with the terms hereunder. The provisions of the previous
sentence shall not apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of Borrower’s employees and identified to Bank by Borrower as such.

6.8 Financial Covenants.

Borrower shall maintain at all times, to be tested as noted, on a consolidated
basis with respect to Borrower and its Subsidiaries:

(a) Minimum Adjusted Quick Ratio. Tested as of the last day of each month, an
Adjusted Quick Ratio of not less than 1.4 to 1.0.

(b) Minimum Quarterly EBITDA. Measured as of the end of each fiscal quarter
during the following periods, quarterly EBITDA of not less than the following:

 

Period (Quarter Ending)

   Minimum EBITDA  

March 31, 2009

   $ (2,300,000 )

June 30, 2009

   $ (2,400,000 )

September 30, 2009

   $ (2,500,000 )

December 31, 2009

   $ (1,750,000 )

March 31, 2010

   $ (1,800,000 )

June 30, 2010

   $ (1,100,000 )

September 30, 2010 and thereafter

    
 
  To be determined by Bank based
on fiscal year 2011 plan approved
by Borrower’s Board of Directors  
 
 

 

-11-

--------------------------------------------------------------------------------

6.9 Protection and Registration of Intellectual Property Rights. Borrower shall:
(a) use commercially reasonable efforts to protect, defend and maintain the
validity and enforceability of its intellectual property; (b) promptly advise
Bank in writing of material infringements of its intellectual property; and
(c) not allow any intellectual property material to Borrower’s business to be
abandoned, forfeited or dedicated to the public without Bank’s written consent.
If Borrower (i) obtains any patent, registered trademark or servicemark,
registered copyright, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for
any patent or the registration of any trademark or servicemark, then Borrower
shall immediately provide written notice thereof to Bank and shall execute such
intellectual property security agreements and other documents and take such
other actions as Bank shall request in its good faith business judgment to
perfect and maintain a first priority perfected security interest in favor of
Bank in such property. If Borrower decides to register any copyrights or mask
works in the United States Copyright Office, Borrower shall: (x) provide Bank
with at least fifteen (15) days prior written notice of Borrower’s intent to
register such copyrights or mask works together with a copy of the application
it intends to file with the United States Copyright Office (excluding exhibits
thereto); (y) execute an intellectual property security agreement and such other
documents and take such other actions as Bank may request in its good faith
business judgment to perfect and maintain a first priority perfected security
interest in favor of Bank in the copyrights or mask works intended to be
registered with the United States Copyright Office; and (z) record such
intellectual property security agreement with the United States Copyright Office
contemporaneously with filing the copyright or mask work application(s) with the
United States Copyright Office. Borrower shall promptly provide to Bank copies
of all applications that it files for patents or for the registration of
trademarks, servicemarks, copyrights or mask works, together with evidence of
the recording of the intellectual property security agreement necessary for Bank
to perfect and maintain a first priority perfected security interest in such
property.

6.10 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank,
Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.

6.11 Access to Collateral; Books and Records. Allow Bank, or its agents, to
inspect the Collateral and audit and copy Borrower’s Books upon reasonable
advance notice and during Borrower’s or any permitted bailee’s business hours,
provided that if an Event of Default has occurred and is continuing, Bank need
not provide any notice and may conduct such inspections and audits at any time.
The foregoing inspections and audits shall be at Borrower’s expense.

6.12 Further Assurances. Execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral
or to effect the purposes of this Agreement. Deliver to Bank, within five
(5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its
Subsidiaries.

 

  7 NEGATIVE COVENANTS

Borrower shall not do any of the following without Bank’s prior written consent:

7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; (b) of worn-out or obsolete Equipment or
obsolete Inventory; (c) in connection with Permitted Liens and Permitted
Investments; (d) between Borrower and any Guarantor or among Guarantors; and
(e) of non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business and licenses that could not
result in a legal transfer of title of the licensed property but that may be
exclusive in respects other than territory and that may be exclusive as to
territory only as to discreet geographical areas outside of the United States.

7.2 Changes in Business; Change in Control; Jurisdiction of Formation. Engage in
any material line of business other than those lines of business conducted by
Borrower and its Subsidiaries on the date hereof and any businesses reasonably
related, complementary or incidental thereto or reasonable extensions thereof;
permit or suffer any Change in Control. Borrower will not, without prior written
notice, change its jurisdiction of formation.

 

-12-

--------------------------------------------------------------------------------

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any Person other than with Borrower
or any Subsidiary, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of a Person other than
Borrower or any Subsidiary, except where no Event of Default or breach of any
financial covenant has occurred and is continuing or would result from such
action during the longer of the remaining term of this Agreement or 12 months,
and (a) (i) Borrower or a Guarantor is the surviving entity and (ii) the entity
to be acquired is substantially in the same line of business (or closely
related, complementary or incidental thereto or any reasonable extension
thereof) as Borrower or a Guarantor (as applicable) or (b) such merger or
consolidation is a Transfer otherwise permitted pursuant to Section 7.1 hereof.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s
intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Lien” herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6 hereof.

7.7 Distributions; Investments. (a) Pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock other than Permitted
Distributions; or (b) directly or indirectly acquire or own any Person (except
for acquisitions permitted in Section 7.3), or make any Investment in any
Person, other than Permitted Investments, or permit any of its Subsidiaries to
do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Bank.

7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

 

-13-

--------------------------------------------------------------------------------

  8 EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligation within 3 Business Days after such Obligation is due and payable
(which 3 day grace period shall not apply to payments due on the Revolving Line
Maturity Date). During any such 3 day cure period under Section 8.1(b), the
failure to cure the applicable payment default shall not be an Event of Default
(but no Credit Extension will be made during such cure period);

8.2 Covenant Default.

(a) Borrower fails or neglects to perform any obligation under Section 6.2, 6.3,
6.5, 6.6, 6.7, 6.8, 6.11, or 6.12 or violates any covenant in Section 7; or

(b) Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in subsection (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of Borrower or of
any entity under the control of Borrower (including a Subsidiary) on deposit
with Bank or any Bank Affiliate, or (ii) a notice of lien, levy, or assessment
is filed against any of Borrower’s assets by any government agency, and the same
under subclauses (i) and (ii) hereof are not, within 10 days after the
occurrence thereof, discharged or stayed (whether through the posting of a bond
or otherwise); provided, however, no Credit Extensions shall be made during any
cure period; and (b) (i) any material portion of Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or
(ii) any court order enjoins, restrains, or prevents Borrower from conducting
any part of its business;

8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within 30 days (but no Credit Extensions shall be
made while any of the conditions described in clause (a) exist and/or until any
Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is, under any Agreement to which Borrower or any
Guarantor is a party with a third party, (a) a payment default by Borrower or a
Guarantor, (b) any other default resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of $100,000 or (c) any default that could
have a material adverse effect on Borrower’s or any Guarantor’s business;

8.7 Judgments. One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least $100,000 (not
covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower and shall
remain unsatisfied, unvacated, or unstayed for a period of 10 days after the
entry thereof (provided that no Credit Extensions will be made prior to the
satisfaction, vacation, or stay of such judgment, order, or decree);

8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any
Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;

 

-14-

--------------------------------------------------------------------------------

8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement; or

8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any
reason to be in full force and effect (other than as a result of the Anticipated
Liquidations); (b) any Guarantor does not perform any obligation or covenant
under any guaranty of the Obligations; (c) any circumstance described in
Sections 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor, (d) the
liquidation, winding up, or termination of existence of any Guarantor (other
than as part of the Anticipated Liquidations); or (e) (i) a material impairment
in the perfection or priority of Bank’s Lien in the collateral provided by
Guarantor or in the value of such collateral or (ii) a material adverse change
in the business, operation, condition (financial or otherwise), or the prospect
of repayment of the Obligations occurs with respect to any Guarantor.

8.11 Governmental Approvals. Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.

 

  9 BANK’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. While an Event of Default occurs and continues Bank
may, without notice or demand, do any or all of the following:

(a) declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);

(b) stop advancing money or extending credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and Bank;

(c) demand that Borrower (i) deposit cash with Bank in an amount equal to 105%
of the Dollar Equivalent of the aggregate face amount of all Letters of Credit
remaining undrawn (plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business
judgment)), to secure all of the Obligations relating to such Letters of Credit,
as collateral security for the repayment of any future drawings under such
Letters of Credit, and Borrower shall forthwith deposit and pay such amounts,
and (ii) pay in advance all letter of credit fees scheduled to be paid or
payable over the remaining term of any Letters of Credit;

(d) terminate any FX Forward Contracts;

(e) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;

(f) make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral. Borrower
shall assemble the Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank’s rights
or remedies;

(g) apply to the Obligations any (i) balances and deposits of Borrower it holds,
or (ii) any amount held by Bank owing to or for the credit or the account of
Borrower;

 

-15-

--------------------------------------------------------------------------------

(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;

(i) place a “hold” on any account maintained with Bank and/or deliver a notice
of exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of any
Collateral;

(j) demand and receive possession of Borrower’s Books; and

(k) exercise all rights and remedies available to Bank under the Loan Documents
or at law or equity, including all remedies provided under the Code (including
disposal of the Collateral pursuant to the terms thereof).

9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of
an Event of Default, to: (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms Bank determines reasonable; (d) make, settle, and adjust
all claims under Borrower’s insurance policies; (e) pay, contest or settle any
Lien, charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Bank or a third party as the Code permits. Borrower hereby appoints Bank as
its lawful attorney-in-fact to sign Borrower’s name on any documents necessary
to perfect or continue the perfection of Bank’s security interest in the
Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s
attorney in fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank’s obligation to provide Credit Extensions terminates.

9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Bank are deemed an agreement to make similar payments
in the future or Bank’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds. Borrower shall have no right to
specify the order or the accounts to which Bank shall allocate or apply any
payments required to be made by Borrower to Bank or otherwise received by Bank
under this Agreement when any such allocation or application is not specified
elsewhere in this Agreement. If an Event of Default has occurred and is
continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency. If Bank, in its good
faith business judgment, directly or indirectly enters into a deferred payment
or other credit transaction with any purchaser at any sale of Collateral, Bank
shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable
banking practices regarding the safekeeping of the Collateral in the possession
or under the control of Bank, Bank shall not be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of
loss, damage or destruction of the Collateral.

 

-16-

--------------------------------------------------------------------------------

9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any
other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by the party granting the
waiver and then is only effective for the specific instance and purpose for
which it is given. Bank’s rights and remedies under this Agreement and the other
Loan Documents are cumulative. Bank has all rights and remedies provided under
the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an
election and shall not preclude Bank from exercising any other remedy under this
Agreement or other remedy available at law or in equity, and Bank’s waiver of
any Event of Default is not a continuing waiver. Bank’s delay in exercising any
remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, and notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

 

  10 NOTICES

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and 3 Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) 1 Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

 

If to Borrower:

   Adept Technology, Inc.    5960 Inglewood Drive    Pleasanton, CA 94588   
Attn: Lisa M. Cummins    Fax: (925) 245-3510    Email: lisa.cummins@adept.com

If to Bank:

   Silicon Valley Bank    185 Berry Street    Lobby 1, Suite 3000    San
Francisco, CA 94107    Attn: Rick Freeman    Fax: (415) 856-0810   
Email: rfreeman@svb.com

 

  11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE

California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in, or subsequently provided by Borrower in accordance with, Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.

 

-17-

--------------------------------------------------------------------------------

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and orders applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against Collateral, or obtain provisional remedies. The
private judge shall also determine all issues relating to the applicability,
interpretation, and enforceability of this paragraph.

 

  12 GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its
directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
(including Bank Expenses) in any way suffered, incurred or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Bank and Borrower (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such
Indemnified Person’s gross negligence or willful misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

 

-18-

--------------------------------------------------------------------------------

12.5 Correction of Loan Documents. Bank may correct obvious errors and fill in
any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.

12.6 Amendments in Writing; Integration. All amendments to this Agreement must
be in writing and signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement and the Loan Documents merge into this
Agreement and the other Loan Documents.

12.7 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

12.9 Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise
required in connection with Bank’s examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and (f) to
third-party service providers of Bank so long as such service providers have
executed a confidentiality agreement with Bank with terms no less restrictive
than those contained herein. Confidential information does not include
information that either: (i) is in the public domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.

Bank may use confidential information for any purpose, including, without
limitation, for the development of client databases, reporting purposes, and
market analysis, so long as Bank does not disclose Borrower’s identity or the
identity of any person associated with Borrower unless otherwise expressly
permitted by this Agreement. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.

12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between
Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

 

  13 DEFINITIONS

13.1 As used in the Loan Documents, the word “shall” is mandatory, the word
“may” is permissive, the word “or” is not exclusive, the words “includes” and
“including” are not limiting, the singular includes the plural, and numbers
denoting amounts that are set off in brackets are negative.

13.2 Definitions. As used in this Agreement, the following capitalized terms
have the following meanings:

“Adjusted Quick Ratio” means, on a consolidated basis with respect to Borrower
and it Subsidiaries, a ratio of (i) Quick Assets plus Accounts to (ii) Current
Liabilities plus (without duplication) Consolidated Debt.

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

 

-19-

--------------------------------------------------------------------------------

“Advance” or “Advances” means an advance (or advances) under the Revolving Line.

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Anticipated Liquidations” are the liquidation, dissolution or other termination
of the existence of Adept Technology Holdings, Inc., a Delaware corporation,
Adept Technology Canada Holding Co., a Nova Scotia unlimited liability company,
Adept Technology Canada Co., a Nova Scotia unlimited liability company, IRSI
Acquisition, Inc., a California corporation, Adept Orange Corporation, a
California corporation, and Adept Global Technologies, a Cayman company, each if
completed within nine months of the Effective Date.

“Asset Based Threshold” shall mean an Adjusted Quick Ratio of 1.75 to 1.0. If
Borrower’s Adjusted Quick Ratio is less than 1.75 to 1.0, Borrower is “below”
the Asset Based Threshold. If Borrower’s Adjusted Quick Ratio is not less than
1.75 to 1.0, Borrower is “at or above” the Asset Based Threshold.

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
amount available under the Borrowing Base, in either case minus (b) the sum of
(i) the Dollar Equivalent amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), (ii) an amount equal to the Letter of
Credit Reserve, (iii) an amount equal to the FX Reduction Amount, (iv) any
amounts used for Cash Management Services, and (v) the Dollar Equivalent of the
outstanding principal balance of any Advances.

“Bank” is defined in the preamble hereof.

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower.

“Borrower” is defined in the preamble hereof

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Base” is 80% of Eligible Accounts, as determined by Bank from
Borrower’s most recent Transaction Report; provided, however, that Bank may
decrease the foregoing percentage in its good faith business judgment based on
events, conditions, contingencies, or risks which, as determined by Bank, may
adversely affect Collateral.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s board of directors and delivered by such Person to Bank
approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and until
such Person shall have delivered to Bank a further certificate canceling or
amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or other day on which
banking institutions in the State of California are authorized or required by
law or other governmental action to close, except that if any determination of a
“Business Day” shall relate to a FX Forward Contract, the term “Business Day”
shall mean a day on which dealings are carried on in the country of settlement
of the Foreign Currency.

 

-20-

--------------------------------------------------------------------------------

“Cash Collateral Account” is Borrower’s account number [omitted], maintained
with and controlled by Bank.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.

“Cash Management Services” is defined in Section 2.1.4.

“Change in Control” means any event, transaction, or occurrence as a result of
which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other
than a trustee or other fiduciary holding securities under an employee benefit
plan of Borrower, is or becomes a beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of securities
of Borrower, representing 30% or more (or, in the case of the Special Situations
Fund Affiliated Group’s beneficial ownership, 40% or more) of the combined
voting power of Borrower’s then outstanding securities; or (b) during any period
of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Borrower (together with any new
directors whose election by the board of directors of Borrower was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason other than death
or disability to constitute a majority of the directors then in office.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the State of California, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Collections” is defined in Section 6.3(c)(ii).

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit C.

“Consolidated Debt” is, as of any date of determination, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (without duplication) the
outstanding principal amount of all Obligations for borrowed money, whether
evidenced by writings such as bonds, debentures, notes, loan agreements, and
other similar documents or not, and including Obligations under Letters of
Credit or guarantees.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the

 

-21-

--------------------------------------------------------------------------------

primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount
utilized for Cash Management Services, or any other extension of credit by Bank
for Borrower’s benefit.

“Current Assets” are amounts that under GAAP should be included on that date as
current assets on Borrower’s consolidated balance sheet.

“Current Liabilities” are all obligations and liabilities of Borrower to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within 1 year.

“Default” is any default or any condition or event which would, with the passing
of time or the giving of notice, constitute a default or an Event of Default.

“Default Rate” is defined in Section 2.3(b).

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is Borrower’s deposit account, account number
[omitted], maintained with Bank.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency

“EBITDA” shall mean, for any period of determination, on a consolidated basis
with respect to Borrower and its Subsidiaries, (a) Net Income for such period,
plus (b) the sum of the following, to the extent deducted in calculating Net
Income for such period: (i) Interest Expense, (ii) provision for Federal, state,
local and foreign income taxes payable in such period, (iii) depreciation and
amortization expenses (including expenses arising from the amortization of
existing warrants for Borrower’s capital stock), (iv) non-cash expenses related
to stock-based compensation, (v) restructuring charges accrued in fiscal year
2009 (not to exceed $3,000,000 in the aggregate), (vi) any losses arising from
or related to foreign currency exposure, and (viii) other non-recurring expenses
of Borrower and its Subsidiaries which do not represent cash items in such
period or any future period, minus (c) the sum of the following, to the extent
included in calculating Net Income for such period: (i) interest income,
(ii) extraordinary or non-recurring non-cash income or gains, (iii) any gains
arising from or related to foreign currency exposure, (iv) Federal, state,
local, and foreign income tax credits, and (v) all other non-cash items.

“Effective Date” is the date Bank executes this Agreement as indicated on the
signature page hereof.

“Eligible Accounts” means Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3. Bank reserves the right at any time after the Effective Date to
adjust any of the criteria set forth below and to establish new criteria in its
good faith business judgment. Eligible Accounts shall not include:

 

  (a) Accounts that the Account Debtor has not paid within 90 days of invoice
date regardless of invoice payment period terms;

 

-22-

--------------------------------------------------------------------------------

  (b) Accounts owing from an Account Debtor, 50% or more of whose Accounts have
not been paid within 90 days of invoice date;

 

  (c) Accounts billed in the United States and owing from an Account Debtor
which does not have its principal place of business in the United States or
Canada unless such Accounts are otherwise Eligible Accounts and (i) covered in
full by credit insurance satisfactory to Bank, less any deductible,
(ii) supported by letter(s) of credit acceptable to Bank, (iii) supported by a
guaranty from the Export-Import Bank of the United States, or (iv) that Bank
otherwise approves of in writing.;

 

  (d) Accounts billed and payable outside of the United States unless the Bank
has a first priority, perfected security interest or other enforceable Lien in
such Accounts;

 

  (e) Accounts owing from an Account Debtor to the extent that Borrower is
indebted or obligated in any manner to the Account Debtor (as creditor, lessor,
supplier or otherwise - sometimes called “contra” accounts, accounts payable,
customer deposits or credit accounts), with the exception of customary credits,
adjustments or discounts given to an Account Debtor by Borrower in the ordinary
course of its business;

 

  (f) Accounts for which the Account Debtor is Borrower’s Affiliate, officer,
employee, or agent;

 

  (g) Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed
that percentage, unless Bank approves in writing;

 

  (h) Accounts owing from an Account Debtor which is a United States government
entity or any department, agency, or instrumentality thereof unless Borrower has
assigned its payment rights to Bank and the assignment has been acknowledged
under the Federal Assignment of Claims Act of 1940, as amended;

 

  (i) Accounts for demonstration or promotional equipment, or in which goods are
consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”,
or other terms if Account Debtor’s payment may be conditional;

 

  (j) Accounts owing from an Account Debtor that has not been invoiced or where
goods or services have not yet been rendered to the Account Debtor (sometimes
called memo billings or pre-billings);

 

  (k) Accounts subject to contractual arrangements between Borrower and an
Account Debtor where payments shall be scheduled or due according to completion
or fulfillment requirements where the Account Debtor has a right of offset for
damages suffered as a result of Borrower’s failure to perform in accordance with
the contract (sometimes called contracts accounts receivable, progress billings,
milestone billings, or fulfillment contracts);

 

  (l) Accounts owing from an Account Debtor the amount of which may be subject
to withholding based on the Account Debtor’s satisfaction of Borrower’s complete
performance (but only to the extent of the amount withheld; sometimes called
retainage billings);

 

  (m) Accounts subject to trust provisions, subrogation rights of a bonding
company, or a statutory trust;

 

  (n) Accounts owing from an Account Debtor that has been invoiced for goods
that have not been shipped to the Account Debtor unless Bank, Borrower, and the
Account Debtor have entered into an agreement acceptable to Bank in its sole
discretion wherein the Account Debtor acknowledges that (i) it has title to and
has ownership of the goods wherever located, (ii) a bona fide sale of the goods
has occurred, and (iii) it owes payment for such goods in accordance with
invoices from Borrower (sometimes called “bill and hold” accounts);

 

  (o) Accounts for which the Account Debtor has not been invoiced;

 

-23-

--------------------------------------------------------------------------------

  (p) Accounts that represent non-trade receivables or that are derived by means
other than in the ordinary course of Borrower’s business;

 

  (q) Accounts for which Borrower has permitted the Account Debtor’s payment to
extend beyond 90 days;

 

  (r) Accounts subject to chargebacks or other payment deductions taken by an
Account Debtor (but only to the extent the chargeback is determined invalid and
subsequently collected by Borrower);

 

  (s) Accounts in which the Account Debtor disputes liability or makes any claim
(but only up to the disputed or claimed amount), or if the Account Debtor is
subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business; and

 

  (t) Accounts for which Bank in its good faith business judgment determines
collection to be doubtful.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

“Event of Default” is defined in Section 8.

“Facility Fee” is defined in Section 2.4(a).

“Foreign Currency” means lawful money of a country other than the United States.

“Funding Date” is any date on which a Credit Extension is made to or for the
account of Borrower which shall be a Business Day.

“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.

“FX Forward Contract” is defined in Section 2.1.3.

“FX Reduction Amount” is defined in Section 2.1.3.

“FX Reserve” is 10% of the Revolving Line.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

 

-24-

--------------------------------------------------------------------------------

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Guarantor” is each of Adept Technology International, Ltd., a California
corporation, Adept Technology Holdings, Inc., a Delaware corporation, Adept
Technology Canada Holding Co., a Nova Scotia unlimited liability company, Adept
Technology Canada Co., a Nova Scotia unlimited liability company and any present
or future guarantor of the Obligations.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.2.

“Initial Audit” is Bank’s inspection of Borrower’s Accounts, Borrower’s Books,
and the other Collateral.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Interest Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with respect to any
Credit Extension and other Indebtedness of Borrower and its Subsidiaries,
including, without limitation or duplication, all commissions, discounts, or
related amortization and other fees and charges with respect to letters of
credit and bankers’ acceptance financing and the net costs associated with
interest rate swap, cap, and similar arrangements, and the interest portion of
any deferred payment obligation (including leases of all types).

“Interest Payment Date” means the last calendar day of each month.

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

“IP Agreement” is that certain Intellectual Property Security Agreement executed
and delivered by Borrower to Bank dated as of even date herewith.

“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank as set forth in Section 2.1.2. A Letter of Credit may be
issued in Dollars or in a Foreign Currency.

“Letter of Credit Application” is defined in Section 2.1.2(a).

“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

 

-25-

--------------------------------------------------------------------------------

“Loan Documents” are, collectively, this Agreement, the Perfection Certificates,
the IP Agreement, any note, or notes or guaranties executed by Borrower or any
Guarantor, any other present or future agreement between Borrower or any
Guarantor (or among any Guarantors) for the benefit of Bank (whether or not in
connection with this Agreement), all as amended, restated, or otherwise
modified.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations; or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6.7 during the next succeeding financial
reporting period.

“Material Subsidiary” is each of (a) Adept Technology, S.A.R.L., a French
corporation, (b) Adept Technology GmbH, a German corporation, (c) Adept Global
Technologies, a Cayman company, (d) Adept Technology Canada Holding Co., a Nova
Scotia unlimited liability company, (e) Adept Technology Canada Co., a Nova
Scotia unlimited liability company (f) Adept Technology Holdings, Inc., a
Delaware corporation, and (g) Adept Technology International, Ltd., a California
corporation.

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.

“Obligations” is Borrower’s obligation to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit (including
reimbursement obligations for drawn and undrawn letters of credit), cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation, and,
(a) if such Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Distributions” means:

(a) purchases of capital stock (i) from former employees, consultants and
directors pursuant to repurchase agreements or other similar agreements in an
aggregate amount not to exceed $500,000 in any fiscal year or (ii) from
stockholders pursuant to a share repurchase program; provided, in each case,
that at the time of such purchase no Default or Event of Default has occurred
and is continuing;

(b) distributions or dividends consisting solely of Borrower’s capital stock;

(c) purchases for value of any rights distributed in connection with any
stockholder rights plan;

(d) purchases of capital stock or options to acquire such capital stock with the
proceeds received from a substantially concurrent issuance of capital stock or
convertible securities;

(e) purchases of capital stock pledged as collateral for loans to employees;

(f) purchases of capital stock in connection with the exercise of stock options
or stock appreciation rights by way of cashless exercise or in connection with
the satisfaction of withholding tax obligations;

(g) purchases of fractional shares of capital stock arising out of stock
dividends, splits or combinations or business combinations; and

 

-26-

--------------------------------------------------------------------------------

(h) the settlement or performance of such Person’s obligations under any equity
derivative transaction, option contract or similar transaction or combination of
transactions.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to Bank under this Agreement and any other Loan
Document;

(b)(i) any Indebtedness that does not exceed $100,000 in principal amount
existing on the Effective Date, and (ii) any Indebtedness in excess of $100,000
in principal amount existing on the Effective Date and shown on the Perfection
Certificates (without duplication);

(c) Subordinated Debt;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

(e) guaranties of Permitted Indebtedness;

(f) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

(g) Indebtedness consisting of interest rate, currency, or commodity swap
agreements, interest rate cap or collar agreements or arrangements designated to
protect Borrower against fluctuations in interest rates, currency exchange
rates, or commodity prices;

(h) Indebtedness between Borrower and any of its Subsidiaries or among any of
Borrower’s Subsidiaries;

(i) Indebtedness with respect to documentary letters of credit;

(j) capitalized leases and purchase money Indebtedness not to exceed $500,000 in
the aggregate in any fiscal year secured by Permitted Liens;

(k) Indebtedness of entities acquired in any permitted merger or acquisition
transaction; and

(l) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness in subsections (a), (b) and (k) above, provided
that the principal amount thereof is not increased or the terms thereof are not
modified to impose more burdensome terms upon Borrower or its Subsidiary, as the
case may be; and

(m) other Indebtedness, if, on the date of incurring any Indebtedness pursuant
to this clause (m), the outstanding aggregate principal amount of all
Indebtedness incurred pursuant to this clause (m) does not exceed $500,000.

“Permitted Investments” are:

(a) Investments existing on the Effective Date;

(b)(i) marketable direct obligations issued or unconditionally guaranteed by the
United States or its agencies or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 2 years after its
creation and having the highest rating from either Standard & Poor’s Corporation
or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit
maturing no more than 2 years after issue;

(c) Investments approved by the Borrower’s Board of Directors or otherwise
pursuant to a Board-approved investment policy;

(d) Investments in or to Borrower or any Guarantors;

 

-27-

--------------------------------------------------------------------------------

(e) Investments consisting of Collateral Accounts in the name of Borrower or any
Subsidiary so long as Bank has a first priority, perfected security interest in
such Collateral Accounts;

(f) Investments consisting of extensions of credit to Borrower’s or its
Subsidiaries’ customers in the nature of accounts receivable, prepaid royalties
or notes receivable arising from the sale or lease of goods, provision of
services or licensing activities of Borrower;

(g) Investments received in satisfaction or partial satisfaction of obligations
owed by financially troubled obligors;

(h) Investments acquired in exchange for any other Investments in connection
with or as a result of a bankruptcy, workout, reorganization or
recapitalization;

(i) Investments acquired as a result of a foreclosure with respect to any
secured Investment;

(j) Investments consisting of interest rate, currency, or commodity swap
agreements, interest rate cap or collar agreements or arrangements designated to
protect a Person against fluctuations in interest rates, currency exchange
rates, or commodity prices;

(k) Investments consisting of loans and advances to employees in an aggregate
amount not to exceed $100,000; and

(l) other Investments, if, on the date of incurring any Investments pursuant to
this clause (l), the outstanding aggregate amount of all Investments incurred
pursuant to this clause (l) does not exceed $500,000.

“Permitted Liens” are:

(a) (i) Liens securing Permitted Indebtedness described under clause (b) of the
definition of “Permitted Indebtedness” or (ii) Liens arising under this
Agreement or other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for which Borrower
maintains adequate reserves on its Books, provided that no notice of any such
Lien has been filed or recorded under the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations adopted thereunder;

(c) Liens (including with respect to capital leases) (i) on property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by Borrower or
its Subsidiaries incurred for financing such property (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto,
and the proceeds thereof) other than Accounts, and Inventory, or (ii) existing
on property (and accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto, and the proceeds thereof) when acquired
other than Accounts, Inventory, and Financed Equipment, if the Lien is confined
to such property (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds thereof);

(d) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness it secures may not increase;

(e) leases or subleases of real property granted in the ordinary course of
business, and leases, subleases, non-exclusive licenses or sublicenses of
property (other than real property or intellectual property) granted in the
ordinary course of Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;

(f) licenses of intellectual property granted to third parties that are
permitted pursuant to Section 7.1(e);

(g) leases or subleases granted in the ordinary course of Borrower’s business,
including in connection with Borrower’s leased premises or leased property;

 

-28-

--------------------------------------------------------------------------------

(h) Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;

(i) Liens in favor of other financial institutions arising in connection with
Borrower’s deposit or securities accounts held at such institutions;

(j) Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to Inventory , securing liabilities in the aggregate amount
not to exceed $500,000 and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;

(k) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA); and

(l) Liens not otherwise permitted, provided that (i) the aggregate value of the
assets encumbered by such Liens is not in excess of $500,000 (with any such Lien
valued as the amount of the obligation secured by such Lien) and (ii) such Liens
are subordinate in priority to Bank’s Lien hereunder.

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate.

“Prime Rate Advance” means an Advance that bears interest based at the Prime
Rate.

“Prime Rate Margin” is 300 basis points.

“Quick Assets” is, on any date, (1) Borrower’s unrestricted cash and Cash
Equivalents maintained with Bank, plus (2) Borrower’s unrestricted cash and Cash
Equivalents maintained with a financial institution other than Bank, but only if
such financial institution has entered into a Control Agreement with Bank and
Bank has perfected its first priority security interest in such cash or Cash
Equivalent.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made

“Remaining Months Liquidity” means Liquidity divided by Cash Burn.

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer, or Controller of Borrower.

“Revolving Line” is the revolving line of credit provided by Bank to Borrower
pursuant to Section 2.1.1(a) in the amount equal to $5,000,000

“Revolving Line Maturity Date” is the second anniversary of the Effective Date.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“Settlement Date” is defined in Section 2.1.3.

 

-29-

--------------------------------------------------------------------------------

“Signed” means executed in tangible form or transmitted electronically. An item
is Signed by Borrower or a Responsible Officer of Borrower (or his or her
designee) if such person (i) places his or her signature on the item in tangible
or electronic form, (ii) transmits an item via e-mail, fax, or other electronic
means, or (iii) indicates via confirming e-mail, fax, or other electronic means
that an item transmitted by another via e-mail, fax, or other electronic means
is approved, correct, or authorized.

“Special Situations Fund Affiliated Group” means Austin W. Marxe, David M.
Greenhouse, Special Situations Cayman Fund, L.P., Special Situations Fund III
QP, L.P., Special Situations Fund III, L.P., Special Situations Private Equity
Fund, L.P., Special Situations Technology Fund, L.P., Special Situations
Technology Fund II, L.P and any other Affiliates of any such persons or entities

“Subordinated Debt” is Indebtedness incurred by Borrower or a Guarantor to
another creditor that is subordinated to all of Borrower’s now or hereafter
existing Indebtedness to Bank (pursuant to a subordination, intercreditor, or
other similar agreement, in form and substance satisfactory to Bank, entered
into between Bank and the other creditor), on terms acceptable to Bank.

“Subsidiary” means, with respect to any Person, any Person of which more than
50.0% of the voting stock or other equity interests (in the case of Persons
other than corporations) is owned or controlled directly or indirectly by such
Person or one or more of the Affiliates (excluding natural persons in their
individual capacity) of such Person.

“Total Liabilities” is on any day, Borrower’s, and its Subsidiaries’,
consolidated obligations that should, under GAAP, be classified as liabilities
on Borrower’s consolidated balance sheet, including all Indebtedness.

“Transaction Report” is a report substantially in the form of the Excel
spreadsheet provided by Bank. The initial form of Transaction Report is attached
hereto as Exhibit B and such form may be updated from time to time by Bank in
its sole discretion.

“Transfer” is defined in Section 7.1.

“Unused Revolving Line Facility Fee” is defined in Section 2.4(c).

[Signature page follows.]

 

-30-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

 

BORROWER: ADEPT TECHNOLOGY, INC. By    /s/ Lisa Cummins Name:   Lisa Cummins
Title:   CFO BANK: SILICON VALLEY BANK By   /s/ Rick Freeman Name:   Rick
Freeman Title:   Relationship Manager

Effective Date: May 1, 2009

--------------------------------------------------------------------------------

EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts, Equipment, Inventory, contract rights or rights to payment
of money, leases, license agreements, franchise agreements, General Intangibles,
commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), securities, financial assets, and all other investment
property, and supporting obligations, whether now owned or hereafter acquired,
wherever located; and all Borrower’s Books relating to the foregoing, and any
and all claims, rights and interests in any of the above and all substitutions
for, additions, attachments, accessories, accessions and improvements to and
replacements, products, and proceeds (including insurance proceeds) of any or
all of the foregoing.

 

1