Exhibit 10.1
AMENDMENT NO. 4 TO GUARANTEE
     This Amendment No. 4 (this “Amendment No. 4”), dated as of May 24, 2011, to
that certain Guarantee dated as of January 18, 2011 (the “Original Guarantee”),
as amended by Amendment No. 1 dated as of April 3, 2011 (“Amendment No. 1”),
Amendment No. 2 dated as of May 17, 2011 (“Amendment No. 2”) and Amendment No. 3
dated as of May 20, 2011 (“Amendment No. 3,” and collectively with the Original
Guarantee, Amendment No. 1 and Amendment No. 2, the “Guarantee”), is entered
into by Vector Capital IV, L.P. (“VCIV”) and Vector Capital III, L.P. (“VCIII,”
and each of VCIII and VCIV, a “Guarantor” and collectively VCIII and VCIV, the
“Guarantors”) in favor of RAE Systems Inc., a Delaware corporation (the
“Company”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings assigned to such terms in the Merger Agreement (as
defined below).
RECITAL
     Ray Holding Corporation, a Delaware corporation (“Parent”), Ray Merger Sub
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
(“Merger Sub”), and the Company have entered into that certain Agreement and
Plan of Merger, dated as of January 18, 2011 (as amended by Amendment No. 1
thereto dated as of April 3, 2011, Amendment No. 2 thereto dated May 17, 2011
and Amendment No. 3 dated as of May 20, 2011, and as may be further amended,
modified or supplemented from time to time, the “Merger Agreement”), and it was
a requirement of the Merger Agreement that Parent deliver this Guarantee to the
Company concurrently with the execution and delivery thereof.
     On May 24, 2011, Parent offered to amend the Merger Agreement on the terms
set forth in an Amendment No. 4 to the Merger Agreement to provide for, among
other things, an increase in the Merger Consideration payable.
     The parties to this Amendment No. 4, intending to be legally bound, agree
as follows:
     1. Cap. Section 1(b) of the Guarantee is amended by replacing, in the
definition of Cap set forth therein, the reference to “$97,720,000 minus an
amount equal to (x) the Transferable Shares times (y) the Merger Consideration”
with “$107,651,000 minus an amount equal to (x) the Transferable Shares times
(y) the Merger Consideration.”
     2. Guarantee References. The parties hereto hereby agree that all
references to the “Guarantee” set forth in the Guarantee shall be deemed to be
references to the Guarantee as amended by this Amendment No. 4.
     3. Full Force and Effect. Except as expressly amended or modified hereby,
the Guarantee shall remain in full force and effect without any amendment or
other modification thereto.

 

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     4. Counterparts. This Amendment No. 4 may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument. The exchange of a fully executed
Amendment No. 4 (in counterparts or otherwise) by facsimile shall be sufficient
to bind the parties to the terms and conditions of this Amendment No. 4.
[Remainder of Page Intentionally Left Blank]

 

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     IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 4 to be
duly executed and delivered as of the date first written above.

            Vector Capital IV, L.P.
      By:   Vector Capital Partners IV, L.P.,
its general partner         By:  Vector Capital, L.L.C.,
its general partner            By:   /s/ Alexander R. Slusky         Name:  
Alexander R. Slusky        Title:   Managing Member        Vector Capital III,
L.P.
      By:   Vector Capital Partners III, L.P.,
its general partner               By: Vector Capital, L.L.C.,
its general partner            By:   /s/ Alexander R. Slusky         Name:  
Alexander R. Slusky        Title:   Managing Member     

Signature Page to Amendment No. 4 to Guarantee

 

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            RAE Systems Inc.
      By:   /s/ Randall Gausman         Name:   Randall Gausman        Title:  
CFO     

Signature Page to Amendment No. 4 to Guarantee