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Financing Arrangements (Notes)
6 Months Ended
Dec. 29, 2012
Debt Disclosure [Abstract]  
Financing Arrangements
Financing Arrangements
Redeemable Convertible Preferred Stock
On September 18, 2012, the Company issued 8,000 shares of the Company's preferred stock, par value $0.001 per share (the "Preferred Stock"), at a price of $1,000 per share to Hale Capital Partners, LP ("Hale Capital"). The Company received net proceeds of approximately $7.6 million from the issuance of the Preferred Stock, after deducting expenses paid by the Company.
Holders of Preferred Stock (the "Holders") are entitled to receive dividends payable quarterly in arrears, at the election of the Company either in cash or, subject to certain equity conditions not met in the first two quarters of fiscal 2013, in common stock. Dividends on the Preferred Stock accrue at Prime Rate (Wall Street Journal Eastern Edition) plus 3% (up to a maximum amount of 4%). The interest rate for the first and second quarters of fiscal 2013 was 4%.
Each share of the Preferred Stock is convertible, at the option of the Holder and upon certain mandatory conversion events described below, at a conversion rate of $4.60.
If on or after the first anniversary of the issuance of the Preferred Stock, the Company's common stock price exceeds the “Applicable Percentage” (meaning, 200% of the conversion rate from the first anniversary to the second anniversary, 175% until the third anniversary, and 150% thereafter) for a consecutive 60 days, such price is maintained until conversion, and certain equity conditions exist providing that such shares of common stock issued upon conversion can be immediately saleable by the Holders (the "Equity Conditions”), the Company can convert shares of the Preferred Stock up to an amount equal to the greater of the then-one week trading volume of the Company's common stock (the “Volume Limit”) or the amount of an identified bona fide block trade at a price not less than the then-current market price.
Starting 18 months after issuance of the Preferred Stock, if the trading price of the Company's common stock is more than 110% of the conversion price of approximately ten trading days for a specified period, the Company may convert up to 10% of the Preferred Stock issued pursuant to the Securities Purchase Agreement per quarter at 100% of the original price plus the amount of any accrued and unpaid dividends, subject to a maximum conversion amount equal to the Volume Limit per month, subject to the Equity Conditions. The ability to require conversion requires that the Company (i) maintains such amount of cash and cash equivalents and (ii) satisfies such EBITDA threshold, in each case as is mutually determined by the Company and Silicon Valley Bank and reasonably acceptable to Hale Capital. If the Company cannot convert the Preferred Stock due to its failure to satisfy the conditions, then it may redeem the same number of shares for cash at the same price subject to agreement of the Holder.
Upon certain triggering events, such as bankruptcy, insolvency or a material adverse effect or failure of the Company to issue shares upon conversion of the Preferred Stock in accordance with its obligations, the Holders may require the Company to redeem all or some of the Preferred Stock at a price equal to 100% of the conversion amount, and in certain events, the higher trading price of the Company's common stock underlying the Preferred Stock between the date of the redemption notice and redemption, plus accrued and unpaid dividends.
On or after September 30, 2016, each Holder can require the Company to redeem its Preferred Stock in cash at a price equal to 100% of the conversion amount being redeemed plus accrued and unpaid dividends.
Silicon Valley Bank Line of Credit
Adept has a revolving line of credit with Silicon Valley Bank, or SVB. Adept originally entered into the Loan and Security Agreement and related agreements for the revolving line in May 2009. In March 2011, Adept entered into an additional Loan and Security Agreement (EX-IM Loan Facility) and related agreements with SVB, pursuant to which a portion of the revolving line (the “EX-IM Line”) is guaranteed by the Export-Import Bank of the United States, and Adept is able to borrow against foreign accounts receivable and export-related inventory. The loan documents have been amended in previous quarters. The revolving line of credit and recent amendments are also described in this Quarterly Report on Form 10-Q under the section entitled "Liquidity and Capital Resources". Please refer to the audited consolidated financial statements and Notes 6 and 12 thereto for the fiscal year ended June 30, 2012 included in Adept's Annual Report on Form 10-K as filed with the SEC on September 24, 2012 for additional disclosures regarding the revolving line of credit.
Adept must meet specified financial and other covenants during the term of the revolving line. Under the financial covenants, Adept must maintain (a) liquidity (domestic cash plus the available domestic borrowing base, measured monthly) of at least $5 million and (b) minimum aggregate rolling six-month EBITDA (measured at the end of each fiscal quarter for the six months ending on such date and applying the EBITDA definition set forth in the Loan and Security Agreement) equal to or exceeding specified amounts for each quarter. The quarterly EBITDA amounts in the Loan and Security Agreement are minimum amounts for financial covenant purposes only, and do not represent projections of Adept's financial results.

During the second quarter, Adept repaid the remaining outstanding loan balance under the revolving line of credit. As of December 29, 2012, Adept did not meet the financial covenant requiring Adept to maintain minimum aggregate rolling six-month EBITDA. Adept has entered into a forbearance agreement with SVB in which SVB agreed not to exercise its default-related rights and remedies with respect to this financial covenant default through March 2, 2013, during which period Adept is not able to borrow funds under the credit line. The revolving line of credit expires on March 25, 2013, and Adept is currently seeking to negotiate a replacement line of credit. Adept was in compliance with the covenants in the loan documents as of June 30, 2012. At December 29, 2012, the Company had no outstanding principal balance under the revolving line.