Exhibit 10.1
 
AMENDMENT NO. 1
 
TO
 
LOAN AND SECURITY AGREEMENT
 
This Amendment No. 1 to Loan and Security Agreement (this “Amendment”) is dated
as of June 15, 2010 (the “Amendment Date”), and is entered into by and between
Adept Technology, Inc., a Delaware corporation (the “Borrower”), and Silicon
Valley Bank (“Bank”).  Capitalized terms used herein without definition shall
have the same meanings given them in the Loan Agreement (as defined below).
 
Recitals
 
A.
Borrower and Bank have entered into that certain Loan and Security Agreement
dated as of May 1, 2009 (as such agreement may be amended, restated or modified
from time to time, the “Loan Agreement”), pursuant to which the Bank has agreed
to extend and make available to Borrower certain advances of money.

 
B.
Borrower has informed Bank that it desires modifications to the Loan Agreement
that (i) allow it to obtain LIBOR Rate Advances, (ii) modify the covenant
structure, (iii) adjust the Borrowing Base, (iv) extend the maturity date,  and
(v) make certain other changes to the Loan Agreement, in each case as more fully
set forth in this Amendment.

 
C.
Subject to the representations and warranties of Borrower and upon the terms and
conditions set forth in this Amendment, Bank is willing to so amend the Loan
Agreement and to make the changes set forth in this Amendment.

 
Agreement
 
Now, therefore, in consideration of the foregoing Recitals and intending to be
legally bound, the parties hereto agree as follows:
 
1.  
Amendments to Loan Agreement.

 
1.1  
Section 2.2A (General Provision Relating to the Advances).  Section 2.2A of the
Loan Agreement is amended in its entirety to read as follows:

 
“2.2A                 General Provisions Relating to the Advances.  Each Advance
shall be in Dollars and, at Borrower’s option in accordance with the terms of
this Agreement, shall be either in the form of a Prime Rate Advance or a LIBOR
Rate Advance; provided, that in no event shall Borrower maintain at any time
LIBOR Rate Advances having more than two different Interest Periods.  Borrower
shall pay interest accrued on the Advances at the rates and in the manner set
forth in Section 2.3(b).”
 
 
 

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1.2  
Section 2.3(b) (Prime Rate Advances; Payments; Float Charge).  Section 2.3(b) of
the Loan Agreement is amended in its entirety to read as follows:

 
“                 (b)           Prime Rate Advances; LIBOR 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 (i) for Prime Rate Advances, the Prime
Rate plus the applicable Prime Rate Margin, and (ii) for LIBOR Rate Advances,
the LIBOR Rate plus the LIBOR Rate Margin. On and after the expiration of any
Interest Period applicable to any LIBOR Rate Advance outstanding on the date of
occurrence of an Event of Default or acceleration of the Obligations, the
Effective Amount of such LIBOR Rate Advance shall, during the continuance of
such Event of Default or after acceleration, bear interest at a rate per annum
equal to the Prime Rate plus 500 basis points.  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.”
 
1.3  
Section 2.3(e) ([Reserved.]).  Section 2.3(e) of the Loan Agreement is amended
in its entirety to read as follows:

 
“                 (e)           LIBOR Rate Advances.  The interest rate
applicable to each LIBOR Rate Advance shall be determined in accordance with
Section 3.6(a) hereunder.  Subject to Sections 3.6 and 3.7, such rate shall
apply during the entire Interest Period applicable to such LIBOR Rate Advance,
and interest calculated thereon shall be payable on the Interest Payment Date
applicable to such LIBOR Rate Advance.”
 
 
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1.4  
Section 2.4 (Fees).  Sections 2.4(a) and (c) of the Loan Agreement are amended
in their entirety to read as follows:

 
“                 (a)           Facility Fee.  A facility fee of $25,000 (the
“Facility Fee”), which fee shall be fully earned, non-refundable, due, and
payable on the Amendment 1 Date, each anniversary thereof, and, if the Revolving
Line is terminated prior to the first anniversary of the Amendment 1 Date, upon
such termination of the Revolving Line;”
 
“                 (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 purposes of this calculation, shall equal the difference
between (x) the Revolving Line amount (as it may be reduced from time to time)
and (y) the average for the period of the daily closing balance of the Revolving
Line outstanding plus the sum of the aggregate, Dollar Equivalent amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve).  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;”
 
1.5  
Section 3.2 (Conditions Precedent to all Credit Extensions).  Sections 3.2(a)
and (b) of the Loan Agreement are amended in their entirety to read as follows:

 
“                 (a)           timely receipt of a Notice of Borrowing;
 
(b)           the representations and warranties in Section 5 shall be true in
all material respects on the date of the Notice of Borrowing, 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”
 
1.6  
Section 3.4 (Procedures for Borrowing Advances).  Section 3.4 of the Loan
Agreement is amended in its entirety to read as follows:

 
 
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“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 upon Borrower’s irrevocable written notice delivered to Bank in
the form of a Notice of Borrowing, each executed by a Responsible Officer of
Borrower or his or her designee or 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 Notice of Borrowing must be received by Bank
prior to 12:00 p.m. Pacific time, (i) at least 3 Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Advances, and (ii) on the
requested Funding Date, in the case of Prime Rate Advances, specifying: (1) the
amount of the Advance; (2) the requested Funding Date; (3) whether the Advance
is to be comprised of LIBOR Rate Advances or Prime Rate Advances; and (4) the
duration of the Interest Period applicable to any such LIBOR Rate Advances
included in such notice; provided that if the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any Advance comprised of LIBOR
Rate Advances, such Interest Period shall be 1 month.
 
(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 and, subsequently, by wire transfer to such other account as Borrower
may instruct in the Notice of Borrowing.  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.”
 
1.7  
Sections 3.5 (Conversion and Continuation Elections).  A new Sections 3.5 is
hereby added to Loan Agreement by inserting Section 3.5 from Schedule 1 in its
entirety into the Loan Agreement.

 
1.8  
Sections 3.6 (Special Provisions Governing LIBOR Rate Advances).  A new Sections
3.6 is hereby added to Loan Agreement by inserting Section 3.6 from Schedule 1
in its entirety into the Loan Agreement.

 
1.9  
Sections 3.7 (Additional Requirements/Provisions Regarding LIBOR Rate
Advances).  A new Sections 3.7 is hereby added to Loan Agreement by inserting
Section 3.7 from Schedule 1 in its entirety into the Loan Agreement.

 
1.10  
Section 5.3 (Accounts Receivable).  Section 5.3 of the Loan Agreement is amended
in its entirety to read as follows:

 
“5.3                 Accounts Receivable; Inventory.
 
(a)           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
 
 
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 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.
 
(b)           For any item of Inventory consisting of “Eligible Inventory” in
any Transaction Report, such Inventory (a) consists of raw materials and
finished goods, in good, new, and salable condition, which is not perishable,
returned, consigned, obsolete, not sellable, damaged, or defective, and is not
comprised of demonstrative or custom inventory, works in progress, packaging or
shipping materials, or supplies; (b) meets all applicable governmental
standards; (c) has been manufactured in compliance with the Fair Labor Standards
Act; (d) is not subject to any Liens, except the first priority Liens granted or
in favor of Bank under this Agreement or any of the other Loan Documents; and
(e) is located at the locations identified by Borrower or a Guarantor in its
respective Perfection Certificate where Borrower or such Guarantor maintains
Inventory (or any location approved by Bank in writing or permitted under
Section 7.2).”
 
1.11  
Section 6.3(c)(iii) (Payments Received by Borrower).  Section 6.3(c)(iii) of the
Loan Agreement is amended in its entirety to read as follows:

 
“                           (iii)           Payments Received by
Borrower.  Whether or not an Event of Default has occurred and is continuing,
Borrower shall immediately deliver all payments on and proceeds of Accounts to
an account maintained with Bank to be applied (i) prior to an Event of Default,
pursuant to the terms of Section 6.3(c)(ii) hereof, and (ii) after the
occurrence and during the continuance of an Event of Default, pursuant to the
terms of Section 9.4 hereof.”
 
1.12  
Section 6.3(d) (Returns).  Section 6.3(d) of the Loan Agreement is amended in
its entirety to read as follows:

 
“                 (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
 
 
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any Event of Default, Borrower shall immediately notify Bank of the return of
the Inventory.”
 
1.13  
Section 6.4 (Inventory; Returns).  Section 6.4 of the Loan Agreement is amended
in its entirety to read as follows:

 
“6.4                 Inventory; Returns.  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).  Subject to Section 6.3(d), returns and allowances between Borrower and
its Account Debtors shall follow Borrower’s customary practices as they exist at
the Effective Date.  Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than $100,000.”
 
1.14  
Section 6.8 (Financial Covenants).  Section 6.8 of the Loan Agreement is amended
in its entirety to read as follows:

 
“6.8                 Financial Covenants.
 
Borrower shall maintain at all times 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 1.25 to 1.00.
 
(b)           Liquidity.  Liquidity of not less than $3,500,000.
 
(c)           Minimum Three Month Rolling EBITDA.  Measured as of the end of
each month during the following period, aggregate EBITDA for the month then
ending and the two preceding months of not less than the following:
 
Period
Minimum
Three Month
EBITDA
June 1, 2010 through August 31, 2010
$1

 
(d)           Minimum Six Month Rolling EBITDA.  Measured as of the end of each
month during the following periods, aggregate EBITDA for the month then ending
and the five preceding months of not less than the following:
 
Period
Minimum
Six Month
EBITDA
September 1, 2010 through February 28, 2011
   $500,000
March 1 and thereafter
$1,000,000

 
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1.15  
Section 6.13 (Formation or Acquisition of Subsidiaries).  A new Section 6.13 is
hereby added to the Loan Agreement by inserting the following in its entirety
into the Loan Agreement:

 
“Formation or Acquisition of Subsidiaries.  At the time that Borrower forms any
material (such materiality to be determined at the discretion of Bank) direct or
indirect Subsidiary or acquires any direct or indirect Subsidiary after the
Effective Date, Borrower shall (a) cause such new Subsidiary to provide to Bank
appropriate documentation to cause such Subsidiary to become a guarantor of the
Obligations, together with such appropriate financing statements and/or Control
Agreements, all in form and substance satisfactory to Bank (including being
sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Bank appropriate certificates and powers and financing statements, pledging all
of the direct or beneficial ownership interest in such new Subsidiary, in form
and substance reasonably satisfactory to Bank, and (c) provide to Bank all other
documentation in form and substance reasonably satisfactory to Bank, including
one or more opinions of counsel reasonably satisfactory to Bank, which in its
opinion is appropriate to make effective the guaranties and/or pledges; provided
that in no event shall any foreign Subsidiary be required to become a Guarantor
hereunder nor shall more than 66% of the total outstanding capital stock, of any
class, of any foreign Subsidiary be required to be pledged hereunder.  Any
document, agreement, or instrument executed or issued pursuant to this Section
6.13 shall be a Loan Document.”
 
1.16  
Section 10 (Notices).  Bank’s address in Section 10 of the Loan Agreement is
hereby amended in its entirety to read as follows:

 
“If to Bank:                            Silicon Valley Bank
555 Mission St., Suite 900
San Francisco, CA 94105
Attn:  Kevin Wallace
Fax:  (415) 615-0214
Email: kwallace@svb.com”
 
1.17  
Section 12.9 (Confidentiality).  Section 12.9 of the Loan Agreement is hereby
amended in its entirety to read as follows:

 
“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 (such Subsidiaries and Affiliates, together
with Bank, collectively, “Bank Entities”); (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain any 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
 
 
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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 is either:
(i) 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) disclosed to
Bank by a third party if Bank does not know that the third party is prohibited
from disclosing the information.
 
Bank Entities may use the confidential information for reporting purposes and
the development and distribution of databases and market analyses so long as
such confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly prohibited by Borrower.  The provisions of the
immediately preceding sentence shall survive the termination of this Agreement.”
 
1.18  
Section 13 (Definitions).  The following definitions are hereby: (a) to the
extent already defined in Section 13.2 of the Loan Agreement, amended in their
entirety to read as follows, and (b) to the extent not already defined in that
Section, added to Section 13.2 of the Loan Agreement:

 
““Adjusted Quick Ratio” means, on a consolidated basis with respect to Borrower
and its Subsidiaries, a ratio of (i) Quick Assets to (ii) Current Liabilities.”
 
“Advance” or “Advances” means an advance (or advances) under the Revolving Line,
including, without limitation, a LIBOR Rate Advance and a Prime Rate Advance.
 
““Amendment 1 Date” is June 15, 2010.”
 
“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, and
Adept Global Technologies, a Cayman company, each if completed within twelve
months  of the Amendment 1 Date and provided that each of the foregoing entities
is dormant at the time of such liquidation, dissolution or other termination of
existence.
 
““Asset Based Threshold” shall mean an Adjusted Quick Ratio of 1.50 to 1.00.  If
Borrower’s Adjusted Quick Ratio is less than 1.50 to 1.00, Borrower is “below”
the Asset Based Threshold.  If Borrower’s Adjusted Quick Ratio is not less than
1.50 to 1.00, Borrower is “at or above” the Asset Based Threshold.”
 
““Borrowing Base” is the sum of (a) 80% of Eligible Accounts, plus (b) 50% of
Eligible Inventory (valued at the lower of cost or wholesale fair market value),
plus (c) the amount, if any, by which Borrower’s and Guarantors’ unrestricted
cash held at Bank exceeds $3,000,000, in each case as determined by Bank from
Borrower’s most recent Transaction Report; provided, however, that Bank may
decrease the foregoing percentages in its good faith business judgment based on
 
 
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events, conditions, contingencies, or risks which, as determined by Bank, may
adversely affect Collateral.”
 
““Continuation Date” means any date on which Borrower elects to continue a LIBOR
Rate Advance into another Interest Period.”
 
““Conversion Date” means any date on which Borrower elects to convert a Prime
Rate Advance to a LIBOR Rate Advance or a LIBOR Rate Advance to a Prime Rate
Advance.”
 
“Deferred Revenue” is all amounts received or invoiced in advance of performance
under contracts and not yet recognized as revenue.
 
““Domestic Cash” means the sum of (1) Borrower’s and Guarantors’ unrestricted
cash and Cash Equivalents maintained in the United States of America with Bank,
plus (2) Borrower’s and Guarantors’ unrestricted cash and Cash Equivalents
maintained in the United States 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.”
 
“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) cash and non-cash expenses related to mergers
and acquisitions permissible under Section 7.3 or related to restructuring
charges (such cash expenses not to exceed $1,000,000 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 Amount” means with respect to any Advances on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such date.”
 
““Eligible Accounts” means Accounts which arise in the ordinary course of
Borrower’s or a Guarantors’ business that meet all Borrower’s representations
and warranties in Section 5.3(a).  Bank reserves the right at any time after the
Effective Date to adjust any of the criteria set forth below and to establish
new
 
 
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criteria in its good faith business judgment.  Unless Bank otherwise agrees in
writing, Eligible Accounts shall not include:
 
 
(a)
Accounts for which the Account Debtor is Borrower’s Affiliate, officer,
employee, or agent;

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

 
 
(c)
Accounts with credit balances over ninety (90) days from invoice date;

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

 
 
(e)
Accounts 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.;

 
 
(f)
Accounts billed and/or payable outside of the United States unless Bank has a
first priority, perfected security interest or other enforceable Lien in such
Accounts under all applicable laws, including foreign laws (sometimes called
foreign invoiced accounts);

 
 
(g)
Accounts owing from an Account Debtor to the extent that Borrower or a Guarantor
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 or a
Guarantor in the ordinary course of its business;

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

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

 
 
(j)
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;

 
 
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“sale on approval”, or other terms if Account Debtor’s payment may be
conditional;

 
 
(k)
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);

 
 
(l)
Accounts subject to contractual arrangements between Borrower or a Guarantor 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, or the respective
Guarantor’s, failure to perform in accordance with the contract (sometimes
called contracts accounts receivable, progress billings, milestone billings, or
fulfillment contracts);

 
 
(m)
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, or the
respective Guarantor’s, complete performance (but only to the extent of the
amount withheld; sometimes called retainage billings);

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

 
 
(o)
Accounts owing from an Account Debtor that has been invoiced for goods that have
not been shipped to the Account Debtor unless Bank, Borrower or a Guarantor, 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 or the respective Guarantor (sometimes called “bill and
hold” accounts);

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

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

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

 
 
(s)
Accounts arising from chargebacks, debit memos, or other payment deductions
taken by an Account Debtor (but only to the extent the chargeback or other
deduction is not later determined to be invalid and subsequently collected by
Borrower or a Guarantor);

 
 
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(t)
Accounts arising from product returns and/or exchanges (sometimes called
“warranty” or “RMA” accounts);

 
 
(u)
Accounts owing from an Account Debtor with respect to which Borrower or a
Guarantor has received Deferred Revenue (but only to the extent of such Deferred
Revenue);

 
 
(v)
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

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

 
““Eligible Inventory” means Inventory (a) owned and in Borrower’s, or a
Guarantor’s, possession, (b) located in the United States of America, (c)
consisting of raw materials and finished goods, (d) meeting all of Borrower’s
representations and warranties in Sections 5.2 and 5.3(b), and (e) otherwise
acceptable to Bank in all respects.”
 
““Interest Payment Date” means, with respect to any LIBOR Rate Advance, the last
day of each Interest Period applicable to such LIBOR Rate Advance and, with
respect to Prime Rate Advances, the first day of each month (or, if that day of
the month does not fall on a Business Day, then on the first Business Day
following such date), and each date a Prime Rate Advance is converted into a
LIBOR Rate Advance to the extent of the amount converted to a LIBOR Rate
Advance.”
 
““Interest Period” means, as to any LIBOR Rate Advance, the period commencing on
the date of such LIBOR Rate Advance, or on the conversion/continuation date on
which the LIBOR Rate Advance is converted into or continued as a LIBOR Rate
Advance, and ending on the date that is 1, 2 or 3 months thereafter, in each
case as Borrower may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided, however, that (a) no Interest Period with
respect to any LIBOR Rate Advance shall end later than the Revolving Line
Maturity Date, (b) the last day of an Interest Period shall be determined in
accordance with the practices of the LIBOR interbank market as from time to time
in effect, (c) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless, in the case of a LIBOR Rate Advance, the result of such extension
would be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day, (d) any
Interest Period pertaining to a LIBOR Rate Advance that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period, and (e) interest shall accrue from and include the first
 
 
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Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.”
 
““Interest Rate Determination Date” means each date for calculating the LIBOR
for purposes of determining the interest rate in respect of an Interest
Period.  The Interest Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period for a LIBOR Rate Advance.”
 
““LIBOR” means, for any Interest Rate Determination Date with respect to an
Interest Period for any Advance to be made, continued as or converted into a
LIBOR Rate Advance, the rate of interest per annum determined by Bank to be the
per annum rate of interest at which deposits in United States Dollars are
offered to Bank in the London interbank market (rounded upward, if necessary, to
the nearest 0.0001%) in which Bank customarily participates at 11:00 a.m. (local
time in such interbank market) two (2) Business Days prior to the first day of
such Interest Period for a period approximately equal to such Interest Period
and in an amount approximately equal to the amount of such Advance.”
 
““LIBOR Rate Advance” means an Advance that bears interest based at the LIBOR
Rate.”
 
““LIBOR Rate” means, for each Interest Period in respect of LIBOR Rate Advances
comprising part of the same Advances, an interest rate per annum (rounded
upward, if necessary, to the nearest 0.0001%) equal to LIBOR for such Interest
Period divided by one (1) minus the Reserve Requirement for such Interest
Period.”
 
““LIBOR Rate Margin” is 400 basis points.”
 
““Liquidity”  means, on any date, (1) Domestic Cash plus (2) up to $1,500,000 of
the Availability Amount then available to Borrower.”
 
““Net Billed Accounts Receivable” means accounts receivables net of reserves.
 
““Notice of Borrowing” means a notice given by Borrower to Bank in accordance
with Section 3.2(a), substantially in the form of Exhibit D hereto, with
appropriate insertions.”
 
““Notice of Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5, substantially in the form of Exhibit E, with
appropriate insertions.”
 
“”Prime Rate Margin” is 175 basis points.”
 
““Quick Assets” means, on any date, (1) Borrower’s and Guarantors’ unrestricted
cash and Cash Equivalents plus (2) Net Billed Accounts Receivable.”
 
 
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““Regulatory Change” means, with respect to Bank, any change on or after the
date of this Agreement in United States federal, state, or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives, or requests applying to a class of
lenders including Bank, of or under any United States federal or state, or any
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.”
 
““Reserve Requirement” means, for any Interest Period, the average maximum rate
at which reserves (including any marginal, supplemental, or emergency reserves)
are required to be maintained during such Interest Period under Regulation D
against “Eurocurrency liabilities” (as such term is used in Regulation D) by
member banks of the Federal Reserve System.  Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by Bank by reason of any Regulatory Change against (a) any
category of liabilities which includes deposits by reference to which the LIBOR
Rate is to be determined as provided in the definition of LIBOR or (b) any
category of extensions of credit or other assets which include Advances.”
 
““Revolving Line Maturity Date” is June 15, 2012.”
 
1.19  
Exhibit C to Loan Agreement (Form of Compliance Certificate).  Exhibit C to the
Loan Agreement is hereby amended in its entirety by deleting it and replacing it
with Exhibit C attached to this Amendment.

 
1.20  
Exhibit D to Loan Agreement (Form of Notice of Borrowing).  A new Exhibit D is
hereby added to the Loan Agreement in the form of Exhibit D attached to this
Amendment.

 
1.21  
Exhibit E to Loan Agreement (Form of Notice of Conversion/Continuation).  A new
Exhibit E is hereby attached to the Loan Agreement in the form of Exhibit E
attached to this Amendment.

 
2.  
Borrower’s Representations and Warranties.

 
2.1  
Borrower represents and warrants that:

 
(a)  
immediately upon giving effect to this Amendment (i) as updated by reference to
the information set forth on Schedule 2.1(c) and attachments thereto, the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (ii) no Event of
Default has occurred and is continuing;

 
 
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(b)  
Borrower has the corporate power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;

 
(c)  
except as listed on Schedule 2.1(c), the certificate of incorporation, bylaws,
and other organizational documents of Borrower delivered to Bank in connection
with the execution of the Loan Agreement, remain true, accurate and complete and
have not been amended, supplemented or restated and are and continue to be in
full force and effect;

 
(d)  
the execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized by all necessary corporate action on the
part of Borrower;

 
(e)  
this Amendment has been duly executed and delivered by the Borrower and is the
binding obligation of Borrower, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’ rights;
and

 
(f)  
as of the date hereof, it has no defenses against the obligations to pay any
amounts under the Obligations.  Borrower acknowledges that Bank has acted in
good faith and has conducted in a commercially reasonable manner its
relationships with Borrower in connection with this Amendment and in connection
with the Loan Documents.

 
2.2  
Borrower understands and acknowledges that Bank is entering into this Amendment
in reliance upon, and in partial consideration for, the representations and
warranties in Section 2.1, and agrees that such reliance is reasonable and
appropriate.

 
3.  
Limitation.  The amendments set forth in Section 1 shall be limited precisely as
written and shall not be deemed (a) to be a waiver or modification of any other
term or condition of the Loan Agreement or of any other instrument or agreement
referred to therein or to prejudice any right or remedy which Bank may now have
or may have in the future under or in connection with the Loan Agreement or any
instrument or agreement referred to therein; or (b) to be a consent to any
future amendment or modification or waiver to any instrument or agreement the
execution and delivery of which is consented to hereby, or to any waiver of any
of the provisions thereof.  Except as expressly amended hereby, the Loan
Agreement shall continue in full force and effect.  All other Loan Documents
shall continue in full force and effect.  This Amendment is a Loan Document and
any breach of this Amendment by Borrower shall be an immediate Event of Default
under the Loan Agreement.

 
4.  
Effectiveness.  This Amendment shall become effective upon the satisfaction of
all of the following conditions precedent:

 
4.1  
Amendment.  Borrower and Bank shall have duly executed and delivered this
Amendment to Bank.

 
 
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4.2  
Updated Guarantor Resolutions.  Bank shall have received from each Guarantor a
duly executed Corporate Guarantor Certificate (substantially in the form
provided by Bank) or other evidence satisfactory to Bank that each Guarantor has
adopted authorizing resolutions in form and substance satisfactory to Bank.

 
4.3  
Reaffirmation of Guaranty.  Each Guarantor shall have duly executed and
delivered to Bank the Reaffirmation of Unconditional Secured Guaranty
substantially in the form of Exhibit A to this Amendment.

 
4.4  
Bank Expenses.  Borrower shall have paid all Bank Expenses incurred through the
date of this Amendment.

 
5.  
Loan Fee.  Borrower previously paid to Bank a $30,000 loan fee (the “Prior Loan
Fee Payment”) on the first anniversary of the Effective Date, as required by
Section 2.4(a) of the Loan Agreement (as in effect prior to this Amendment) (the
“First Anniversary Loan Fee Payment Requirement”).  The loan fee required to be
paid by Borrower on the Amendment 1 Date pursuant to Section 2.4(a) of the Loan
Agreement (as amended by this Amendment) is intended to be a replacement of, and
not in addition to, the First Anniversary Loan Fee Payment
Requirement.  Therefore, the Prior Loan Fee Payment shall be applied to the loan
fee due on the Amendment 1 Date and to any Bank Expenses required to be paid
pursuant to Section 4.4.  The excess remaining after such application, if any,
shall be refunded to Borrower.

 
6.  
Counterparts.  This Amendment may be signed in any number of counterparts, and
by different parties hereto in separate counterparts, with the same effect as if
the signatures to each such counterpart were upon a single instrument.  All
counterparts shall be deemed an original of this Amendment.

 
7.  
Integration.  This Amendment and any documents executed in connection herewith
or pursuant hereto contain the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
offers and negotiations, oral or written, with respect thereto and no extrinsic
evidence whatsoever may be introduced in any judicial or arbitration proceeding,
if any, involving this Amendment; except that any financing statements or other
agreements or instruments filed by Bank with respect to Borrower shall remain in
full force and effect.

 
8.  
Governing Law; Venue.  THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.  Borrower and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in Santa Clara County, California.

 

 
[Remainder of page intentionally left blank - signature page follows]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Loan
and Security Agreement to be executed as of the Amendment Date.
 

 
Borrower:
Adept Technology, Inc.
 
a Delaware corporation
     
By: /s/ Lisa Cummins
Printed Name: Lisa Cummins
Title: Vice President & CFO
           
Bank:
Silicon Valley Bank
     
By: /s/ Kevin Wallace
Printed Name: Kevin Wallace
Title: Relationship Manager
   

 
 
 
 
 
 
 

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Schedule 1

 
3.5 Conversion and Continuation Elections.
 
(a) So long as (i) no Event of Default or Default exists or has occurred and is
continuing; (ii) Borrower shall not have sent any notice of termination of this
Agreement; and (iii) Borrower shall have complied with such customary procedures
as Bank has established from time to time for Borrower’s requests for LIBOR Rate
Advances, Borrower may, upon irrevocable written notice to Bank:
 
 
(1)
elect to convert on any Business Day, Prime Rate Advances into LIBOR Rate
Advances;

 
 
(2)
elect to continue on any Interest Payment Date any LIBOR Rate Advances maturing
on such Interest Payment Date; or

 
 
(3)
elect to convert on any Interest Payment Date any LIBOR Rate Advances  maturing
on such Interest Payment Date into Prime Rate Advances.

 
(b) Borrower shall deliver a Notice of Conversion/Continuation in accordance
with Section 10 to be received by Bank prior to 12:00 p.m. Pacific time (i) at
least three (3) Business Days in advance of the Conversion Date or Continuation
Date, if any Advances are to be converted into or continued as LIBOR Rate
Advances; and (ii) on the Conversion Date, if any Advances are to be converted
into Prime Rate Advances, in each case specifying the:
 
 
(1)
proposed Conversion Date or Continuation Date;

 
 
(2)
aggregate amount of the Advances to be converted or continued;

 
 
(3)
nature of the proposed conversion or continuation; and

 
 
(4)
duration of the requested Interest Period.

 
(c) If upon the expiration of any Interest Period applicable to any LIBOR Rate
Advances, Borrower shall have timely failed to select a new Interest Period to
be applicable to such LIBOR Rate Advances, Borrower shall be deemed to have
elected to convert such LIBOR Rate Advances into Prime Rate Advances.
 
(d) Any LIBOR Rate Advances shall, at Bank’s option, convert into Prime Rate
Advances in the event that (i) an Event of Default or Default shall exist or
shall have occurred and be continuing, or (ii) the aggregate principal amount of
the Prime Rate Advances which have been previously converted to LIBOR Rate
Advances, or the aggregate principal amount of existing LIBOR Rate Advances
continued, as the case may be, at the beginning of an Interest Period shall at
any time during such Interest Period exceed the Revolving Line.  Borrower agrees
to pay Bank, upon demand by Bank (or Bank may, at its option, charge the
Designated Deposit Account or any other account Borrower maintains with Bank)
any amounts required to compensate Bank for any loss (including loss of
anticipated profits), cost, or expense incurred by Bank, as a result of the
conversion of LIBOR Rate Advances to Prime Rate Advances pursuant to this
Section 3.5(d).
 
 
Schedule 1 - Page 1

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(e) Notwithstanding anything to the contrary contained herein, Bank shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR market to fund any LIBOR Rate Advances, but the
provisions hereof shall be deemed to apply as if Bank had purchased such
deposits to fund the LIBOR Rate Advances.
 
3.6 Special Provisions Governing LIBOR Rate Advances.   Notwithstanding any
other provision of this Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Rate Advances as to the matters covered:
 
(a) Determination of Applicable Interest Rate.  As soon as practicable on each
Interest Rate Determination Date, Bank shall determine (which determination
shall, absent manifest error in calculation, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the LIBOR Rate Advances
for which an interest rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower.
 
(b) Inability to Determine Applicable Interest Rate.  In the event that Bank
shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto), on any Interest Rate Determination Date with
respect to any LIBOR Rate Advance, that by reason of circumstances affecting the
London interbank market adequate and fair means do not exist for ascertaining
the interest rate applicable to such Advance on the basis provided for in the
definition of LIBOR, Bank shall on such date give notice (by facsimile or by
telephone confirmed in writing) to Borrower of such determination, whereupon (i)
no Advances may be made as, or converted to, LIBOR Rate Advances until such time
as Bank notifies Borrower that the circumstances giving rise to such notice no
longer exist, and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to Advances in respect of
which such determination was made shall be deemed to be rescinded by Borrower.
 
(c) Compensation for Breakage or Non-Commencement of Interest Periods.  Borrower
shall compensate Bank, upon written request by Bank (which request shall set
forth the manner and method of computing such compensation), for all reasonable
losses, expenses, unrealized gains and liabilities (including any interest paid
by Bank to lenders of funds borrowed by it to make or carry its LIBOR Rate
Advances, any loss, expense or liability incurred by Bank in connection with the
liquidation or re-employment of such funds, and, in the case of complete or
partial principal payments or conversions of LIBOR Rate Advances prior to the
last day of the applicable Interest Period, any amount by which (A) the
additional interest which would have been payable on the amount so prepaid or
converted had it not been paid or converted until the last day of the applicable
Interest Period exceeds (B) the interest which would have been recoverable by
Bank by placing the amount so received on deposit in the certificate of deposit
markets, the offshore currency markets, or United States Treasury investment
products, as the case may be, for a period starting on the date on which it was
so paid or converted and ending on the last day of such Interest Period at the
interest rate determined by Bank in its reasonable discretion), if any, that
Bank may incur: (i) if for any reason (other than a default by Bank or due to
any failure of Bank to fund LIBOR Rate Advances due to impracticability or
illegality under Sections 3.7(d) and 3.7(e)) a borrowing or a conversion to or
continuation of any LIBOR Rate Advance does not occur on a date specified in a
Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be,
or (ii) if for any reason (including voluntary or mandatory prepayment or
acceleration) any complete or partial principal payment or any conversion of any
of Borrower’s LIBOR Rate Advances occurs on a date prior to the last day of
 
 
Schedule 1 - Page 2

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an Interest Period applicable to that Advance.  Bank’s determination as to such
amount shall be conclusive absent manifest error.  Borrower shall immediately
notify Borrower’s account officer at Bank if any of the situations described in
(ii) above occur.
 
(d) Assumptions Concerning Funding of LIBOR Rate Advances.  Calculation of all
amounts payable to Bank under this Section 3.6 and under Section 3.7 shall be
made as though Bank had actually funded each of its relevant LIBOR Rate Advances
through the purchase of a Eurodollar deposit bearing interest at the rate
obtained pursuant to the definition of LIBOR Rate in an amount equal to the
amount of such LIBOR Rate Advance and having a maturity comparable to the
relevant Interest Period; provided, however, that Bank may fund each of its
LIBOR Rate Advances in any manner it sees fit and the foregoing assumptions
shall be utilized only for the purposes of calculating amounts payable under
this Section 3.6 and under Section 3.7.
 
(e) LIBOR Rate Advances After Default.  After the occurrence and during the
continuance of an Event of Default, (i) Borrower may not elect to have an
Advance be made or continued as, or converted to, a LIBOR Rate Advance after the
expiration of any Interest Period then in effect for such Advance and (ii)
subject to the provisions of Section 3.6(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred may, at Bank’s option, be
deemed to be rescinded by Borrower and be deemed a request to convert or
continue Advances referred to therein as Prime Rate Advances.
 
3.7 Additional Requirements/Provisions Regarding LIBOR Rate Advances.
 
(a) [Reserved.]
 
(b) Borrower shall pay Bank, upon demand by Bank, from time to time such amounts
as Bank may determine to be necessary to compensate it for any costs incurred by
Bank that Bank determines are attributable to its making or maintaining of any
amount receivable by Bank hereunder in respect of any LIBOR Rate Advances
relating thereto (such increases in costs and reductions in amounts receivable
being herein called “Additional Costs”), in each case resulting from any
Regulatory Change which:
 
(i)  
changes the basis of taxation of any amounts payable to Bank under this
Agreement in respect of any LIBOR Rate Advances (other than changes which affect
taxes measured by or imposed on the overall net income of Bank by the
jurisdiction in which Bank has its principal office);

 
(ii)  
imposes or modifies any reserve, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with,
or other liabilities of Bank (including any LIBOR Rate Advances or any deposits
referred to in the definition of LIBOR); or

 
(iii)  
imposes any other condition affecting this Agreement (or any of such extensions
of credit or liabilities).

 
Bank will notify Borrower of any event occurring after the Closing Date which
will entitle Bank to compensation pursuant to this Section 3.7(b) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.  Bank will furnish Borrower with a statement setting forth the
basis and amount of each request by Bank for compensation under this Section
3.7(b).  Determinations and allocations by Bank for purposes of this Section
3.7(b) of the effect of any Regulatory Change on its costs of maintaining its
 
 
Schedule 1 - Page 3

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obligations to make LIBOR Rate Advances, of making or maintaining LIBOR Rate
Advances, or on amounts receivable by it in respect of LIBOR Rate Advances, and
of the additional amounts required to compensate Bank in respect of any
Additional Costs, shall be conclusive absent manifest error.
 
(c) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation, or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank, or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a “Parent”)
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change, or compliance
(taking into consideration policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within 15 days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction.  A statement of Bank
claiming compensation under this Section 3.7(c) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive absent manifest
error.
 
(d) If, at any time, Bank, in its sole and absolute discretion, determines that
(i) the amount of LIBOR Rate Advances for periods equal to the corresponding
Interest Periods are not available to Bank in the offshore currency interbank
markets, or (ii) LIBOR does not accurately reflect the cost to Bank of lending
the LIBOR Rate Advances, then Bank shall promptly give notice thereof to
Borrower.  Upon the giving of such notice, Bank’s obligation to make the LIBOR
Rate Advances shall terminate; provided, however, LIBOR Rate Advances shall not
terminate if Bank and Borrower agree in writing to a different interest rate
applicable to LIBOR Rate Advances.
 
(e) If it shall become unlawful for Bank to continue to fund or maintain any
LIBOR Rate Advances, or to perform its obligations hereunder, upon demand by
Bank, Borrower shall prepay the LIBOR Rate Advances in full with accrued
interest thereon and all other amounts payable by Borrower hereunder (including,
without limitation, any amount payable in connection with such prepayment
pursuant to Section 3.6(c)(ii)).  Notwithstanding the foregoing, to the extent a
determination by Bank as described above relates to a LIBOR Rate Advance then
being requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the
provisions of Section 3.6(c)(ii), to (i) rescind such Notice of Borrowing or
Notice of Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives
notice of its determination as described above, or (ii) modify such Notice of
Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or
to have outstanding Advances converted into or continued as Prime Rate Advances
by giving notice (by facsimile or by telephone confirmed in writing) to Bank of
such modification on the date on which Bank gives notice of its determination as
described above.
 
 
 
 
 Schedule 1 - Page 4

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