exv10w18






Exhibit 10.18




AMENDMENT NO. 3 TO

LOAN AND SECURITY AGREEMENT




     This Amendment No. 3 to Loan and Security Agreement (this “Amendment”) is entered
into this  12th day of March, 2008, by and among Rae Systems Inc., a Delaware corporation
(“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
March 14, 2007 (as may be amended, restated, or otherwise modified, the “Loan Agreement”), pursuant
to which the Bank has extended and will make available to Borrower certain advances of money.



     B. Borrower desires that Bank amend the Loan Agreement upon the terms and conditions more
fully set forth herein.



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



agreement




     NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound,
the parties hereto agree as follows:



     1. Amendment to Loan Agreement.



          1.1 Section 13 (Definitions). The following term and its definition is amended to read in its
entirety as follows:




     “Revolving Line Maturity Date” is June 12, 2008.



     2. Borrower’s Representations And Warranties. Borrower represents and warrants that:



               (a) immediately upon giving effect to this Amendment (i) 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;



               (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) the certificate of incorporation, bylaws and other organizational documents of Borrower
delivered to Bank on the Effective Date 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 such Borrower in connection with this
Amendment and in connection with the Loan Documents.



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




     3. Limitation. The amendment set forth in this Amendment shall be limited precisely
as written and shall not be deemed (a) to be a forbearance, 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; (b) to be a
consent to any future amendment or modification, forbearance 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; or (c) to limit or impair Bank’s right to demand strict performance of all
terms and covenants as of any date. Except as expressly amended hereby, the Loan Agreement shall
continue in full force and effect.



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



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




          4.2 Payment of Extension Fee. Borrower shall have paid Bank an extension fee of $4,500; and




          4.3 Payment of Bank Expenses. Borrower shall have paid all Bank Expenses (including all
reasonable attorneys’ fees and reasonable expenses) incurred through the date of this Amendment.




     5. 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.



     6. 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



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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.




     7. 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.



     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the
date first written above.



	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Rae Systems Inc.

a Delaware corporation
	 
	 

	 	 	 	By:	 	/s/ Randall K. Gausman
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Printed Name: 	Randall K. Gausman
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title: Chief
Financial Officer


	 
	 	 	 	 	 	 	 	 
	Bank:	 	 	 	Silicon Valley Bank
	 
	 

	 	 	 	By:	 	/s/ Tom Smith
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Printed Name:	Tom Smith
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title: Senior
Relationship Manager 






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