Document:

Exhibit 10.2

 

SECOND LOAN MODIFICATION AGREEMENT

 

(DOMESTIC LINE)

 

This Second Loan
Modification Agreement (this “Loan Modification Agreement’) is entered into as
of November 30, 2004, by and between SILICON VALLEY BANK,
a California-chartered bank, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462, doing business under the name “Silicon
Valley East” (“Bank”) and AMERICAN SCIENCE AND
ENGINEERING, INC, a Massachusetts corporation with its chief
executive office located at 829 Middlesex Turnpike, Billerica, Massachusetts 01821
(“Borrower”).

 

1.             DESCRIPTION OF
EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to a loan arrangement dated as of August 11, 2003, evidenced
by, among other documents, a certain Loan and Security Agreement dated as of August 11,
2003, between Borrower and Bank, as amended by a certain First Loan
Modification Agreement dated as of June 30, 2004, between Borrower and
Bank (as amended, the “Loan Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
same meaning as in the Loan Agreement.

 

2.             DESCRIPTION OF
COLLATERAL. 
Repayment of the Obligations is secured by the Collateral as described
in the Loan Agreement (together with any other collateral security granted to
Bank, the “Security Documents”).

 

Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”.

 

3.             DESCRIPTION OF
CHANGE IN TERMS.

 

A.            Modifications to Loan
Agreement.

 

1.             The Loan Agreement
shall be amended by deleting the following definition appearing in Section 13.1
thereof:

 

“Prime Rate”
is the greater of (i) 4.00% or (ii) Bank’s most recently announced “prime
rate,” even if it is not Bank’s lowest rate.

 

and inserting in lieu
thereof the following:

 

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

 

2.             The Loan Agreement
shall be amended by deleting the following definition appearing in Section 13.1
thereof

 

“Revolving Maturity Date” is November 30,
2004.

 

and inserting in lieu thereof the following:

 

“Revolving Maturity Date” is November 29,
2006.

 

4.             FEES.  A fully earned, non-refundable facility fee
of Thirty-Seven Thousand Five Hundred Dollars ($37,500.00)is earned as of the
date hereof and shall be payable as follows: (i) Eighteen Thousand Seven
Hundred Fifty

 

 

Dollars ($18,750.00) is payable
on November 30, 2004 and (ii) Eighteen Thousand Seven Hundred Fifty
Dollars ($18,750.00) is payable on the sooner to occur of (x) November 30,
2005, (y) the occurrence of an Event of Default, or (z) the early
termination of the Loan Agreement.  The
Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.

 

5.             RATIFICATION OF
INTELLECTUAL PROPERTY SECURITY AGREEMENT. 
Borrower hereby ratifies, confirms and reaffirms, all and singular, the
terms and conditions of a certain Intellectual Property Security Agreement
dated as of August 11, 2003, between Borrower and Bank, as amended by a
certain First Amendment to Intellectual Property Security Agreement dated as of
August 23, 2004, between the Borrower and Bank (as amended, the “Intellectual
Property Security Agreement”) and acknowledges, confirms and agrees that said Intellectual
Property Security Agreement contains an accurate and complete listing of all
Intellectual Property Collateral as defined in said Intellectual Property
Security Agreement, and shall remain in full force and effect.  Notwithstanding the terms and conditions of
the Intellectual Property Security Agreement, the Borrower shall not register
any Copyrights or Mask Works in the United States Copyright Office unless it: (i) has
given at least five (5) days’ prior written notice to Bank of its intent
to register such Copyrights or Mask Works and has provided Bank with a copy of
the application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (ii) executes a security agreement or such
other documents as Bank may reasonably request in order to maintain the
perfection and priority of Bank’s security interest in the Copyrights proposed
to be registered with the United States Copyright Office; and (iii) records
such security documents with the United States Copyright Office
contemporaneously with filing the Copyright application(s) with the United
States Copyright Office.  Borrower shall
promptly provide to Bank a copy of the Copyright application(s) filed with
the United States Copyright Office, together with evidence of the recording of
the security documents necessary for Bank to maintain the perfection and
priority of its security interest in such Copyrights or Mask Works.  In addition, the Borrower shall provide
written notice to Bank, on a quarterly basis, regarding any application filed
by Borrower in the United States Patent Trademark Office for a patent or to
register a trademark or service mark.

 

6.             RATIFICATION OF
PERFECTION CERTIFICATE.  Borrower
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August 11,
2003, between Borrower and Bank, and acknowledges, confirms and agrees the
disclosures and information above Borrower provided to Bank in the Perfection Certificate
has not changed, as of the date hereof, except to the extent such disclosure is
updated by the information contained in Exhibit A  Supplement
attached hereto.

 

7.             CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.

 

8.             RATIFICATION OF
LOAN DOCUMENTS.  Borrower hereby
ratifies, confirms, and reaffirms all terms and conditions of all security or
other collateral granted to the Bank, and confirms that the indebtedness
secured thereby includes, without limitation, the Obligations.

 

9.             NO DEFENSES OF
BORROWER.  Borrower hereby
acknowledges and agrees that Borrower has no offsets, defenses, claims, or
counterclaims against Bank with respect to the Obligations, or otherwise, and that
if Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all
of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any
liability thereunder.

 

10.           CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified pursuant
to this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. 
Bank’s agreement to modifications to the existing Obligations pursuant
to this Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Obligations. 
Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Obligations.  It is
the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by
virtue of this Loan Modification Agreement.

 

 

11.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank (provided,
however, in no event shall this Loan Modification Agreement become effective
until signed by an officer of Bank in California).

 

 

This Loan
Modification Agreement is executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the date first written above.

 

	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
  AMERICAN
  SCIENCE AND ENGINEERING, INC.

  	
   

  	
  SILICON
  VALLEY BANK, doing business as

  SILICON VALLEY EAST

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Anthony R. Fabiano

  	
   

  	
  By:

  	
  /s/ Mark Gallagher

  
	
   

  	
   

  	
   

  
	
  Name: Anthony R.
  Fabiano

  	
   

  	
  Name: Mark Gallagher

  
	
   

  	
   

  	
   

  
	
  Title: President and
  Chief Executive Officer

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
  (signed in Santa Clara
  County, California)

  
									

 

The undersigned, AS&E GLOBAL, INC., 
a Massachusetts corporation (“Guarantor”) hereby: (i) ratifies,
confirms and reaffirms, all and singular, the terms and conditions of a certain
Unlimited Guaranty dated August 11, 2003 (the “Guaranty”), and (B) a
certain Security Agreement by Guarantor in favor of the Bank dated August 11,
2003 (the “Security Agreement”); and (ii) acknowledges, confirms and agrees
that the Guaranty, and Security Agreement shall remain in full force and effect
and shall in no way be limited by the execution of this Loan Modification
Agreement, or any other documents, instruments and/or agreements executed
and/or delivered in connection herewith; and (iii) acknowledges,
confirms and agrees that the obligations of Borrower to Bank under the Guaranty
include, without limitation, all Obligations of Borrower to Bank under the Loan
Agreement, as amended by this Loan Modification Agreement.

 

	
   

  	
  AS&E
  GLOBAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony R. Fabiano

  
	
   

  	
   

  
	
   

  	
  Name: Anthony R. Fabiano

  
	
   

  	
   

  
	
   

  	
  Title:  President
  and Chief Executive OfficerExhibit 10.3

 

THIRD LOAN MODIFICATION AGREEMENT

 

This Third Loan
Modification Agreement (this “Loan Modification Agreement’) is entered into as
of November 16, 2006, by and between SILICON VALLEY BANK,
a California-chartered bank, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”) and AMERICAN SCIENCE AND ENGINEERING, INC, a Massachusetts
corporation with its chief executive office located at 829 Middlesex Turnpike,
Billerica, Massachusetts 01821 (“Borrower”).

 

1.             DESCRIPTION OF
EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to a loan arrangement dated as of August 11, 2003, evidenced
by, among other documents, a certain Loan and Security Agreement dated as of August 11,
2003, between Borrower and Bank, as amended by a certain First Loan
Modification Agreement dated as of June 30, 2004, between Borrower and
Bank, and as further amended by a certain Second Loan Modification Agreement
dated as of November 30, 2004, between Borrower and Bank (as amended, the “Loan
Agreement”).  Capitalized terms used but
not otherwise defined herein shall have the same meaning as in the Loan
Agreement.

 

2.             DESCRIPTION OF
COLLATERAL. 
Repayment of the Obligations is secured by the Collateral as described
in the Loan Agreement and the Intellectual Property Collateral as described in
a certain Intellectual Property Security Agreement dated as of August 11,
2003, as amended by a certain First Amendment to Intellectual Property Security
Agreement dated as of August 23, 2004 (as amended, the “IP Security
Agreement”) (together with any other collateral security granted to Bank, the “Security
Documents”).

 

Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”.

 

3.             DESCRIPTION OF
CHANGE IN TERMS.

 

1.             Modifications to Loan
Agreement.

 

1.             The Loan Agreement
shall be amended by deleting the following subsection (a) appearing in Section 2.1.1
thereof:

 

“              (a)           Availability.  Bank shall make Advances not exceeding (i) the
lesser of (A) the Revolving Line or (B) the Borrowing Base minus (ii) the
amount of all outstanding Letters of Credit (including drawn butunreimbursed
Letters of Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate
outstanding Advances hereunder (including any Cash Management Services).  Amounts borrowed under this Section may
be repaid and reborrowed during the term of this Agreement.”

 

and inserting in
lieu thereof the following:

 

“              (a)           Availability.  Subject to the terms and conditions of this
Agreement, Bank shall make Advances not exceeding the Availability Amount.  Amounts borrowed under the Revolving Line may
be repaid and, prior to the Revolving Maturity Date, reborrowed, subject to the
applicable terms and conditions precedent herein.”

 

2.             The Loan Agreement
shall be amended by deleting the following subsection (a) appearing in Section 2.1.2
thereof:

 

 

“              (a)           Bank shall issue or
have issued Letters of Credit for Borrower’s account not exceeding (i) the
lesser of the Revolving Line or the Borrowing Base minus (ii) the
outstanding principal balance of any Advances (including any Cash Management
Services), minus (iii) the amount of all Letters of Credit (including
drawn but unreimbursed Letters of Credit), plus an amount equal to any Letter
of Credit Reserves.  The face amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) may not exceed $5,000,000.00.  Each Letter of Credit shall have an expiry
date no later than 180 days after the Revolving Maturity Date provided Borrower’s
Letter of Credit reimbursement obligation shall be secured by cash on terms
acceptable to Bank on and after (i) the Revolving Maturity Date of the Revolving
Line if the Revolving Maturity Date of the Revolving Line is not extended by
Bank, or (ii) the occurrence of an Event of Default hereunder.  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 form of standard Application and Letter of
Credit Agreement.  Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request”.

 

and inserting in lieu
thereof the following:

 

“              (a)           As part of the Revolving Line, Bank shall
issue or have issued Letters of Credit for Borrower’s account.  The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed Twenty Million Dollars ($20,000,000.00).  Such aggregate amounts utilized hereunder
shall at all times reduce the amount otherwise available for Advances under the
Revolving Line.  If, on the Revolving
Maturity 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 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
said 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.”

 

3.             The Loan Agreement
shall be amended by deleting Section 2.2 in its entirety, and inserting in
lieu thereof the following:

 

“              2.2          Overadvances.  If, at
any time Borrower’s Unrestricted Cash is less than Thirty Million Dollars
($30,000,000.00) for a period of thirty (30) consecutive days, and the Credit
Extensions under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the lesser of
either (a) the Revolving Line or (b) the Borrowing Base, Borrower
shall immediately pay to Bank in cash such excess.”

 

 

4.             The
Loan Agreement shall be amended by deleting the following appearing as Section 2.4(b) thereof:

 

“              (b)           Unused
Line Fee.  In the event,
in any calendar quarter, the average daily principal balance of the Credit
Extensions outstanding during the quarter is less than $5,000,000.00, Borrower
shall pay Bank an unused line fee in an amount equal to 0.50% per annum on the
difference between $5,000,000.00 and the average daily principal balance of the
Credit Extensions outstanding during the quarter, which unused line fee shall
be computed and paid quarterly, in arrears, on the first day of the following
quarter.

 

and inserting in lieu
thereof:

 

“              (b)           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 one-half of one
percent (0.50%) per annum of the average unused portion of the Revolving Line,
as determined by Bank.   For purposes
hereof, any Letter of Credit Reserve, any F/X Reserve, or Cash Management
Services held or in place for any calendar year shall constitute a utilization
of the Revolving Line. 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.”

 

5.             The
Loan Agreement shall be amended by deleting the following appearing as Section 6.2
thereof:

 

“              6.2          Financial Statements, Reports, Certificates.

 

(a)             Borrower shall
deliver to Bank:  (i) as soon as
available, but no later than thirty (30) days after the last day of each month,
a company prepared consolidated balance sheet and income statement covering
Borrower’s consolidated operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as available, but
no later than ninety (90) 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 reasonably acceptable to Bank; (iii) within
five (5) days of filing, copies of all statements, reports and notices
made available to Borrower’s security holders or to any holders of Subordinated
Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission; (iv) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that is reasonably likely to
result in damages or costs to Borrower or any Subsidiary of One Hundred
Thousand Dollars ($100,000.00) or more; (v) prompt notice of any material
change in the composition of the Intellectual Property, or the registration of
any copyright, including any subsequent ownership right of Borrower in or to
any Copyright, Patent or Trademark not shown in any intellectual property
security agreement between Borrower and Bank or knowledge of an event that
materially adversely affects the value of the Intellectual Property; and (vi) budgets,
sales projections, operating plans or other financial information reasonably
requested by Bank.

 

(b)             Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank a Borrowing Base Certificate signed
by a

 

 

Responsible
Officer in the form of Exhibit C,
with aged listings of accounts receivable (by invoice date).

 

(c)           Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank with the monthly financial
statements a Compliance Certificate signed by a Responsible Officer in the form
of Exhibit D.

 

(d)           Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank Deferred Revenue Schedules.

 

(e)           Allow Bank to audit
Borrower’s Collateral at Borrower’s expense. 
Such audits shall be conducted no more often than once every six (6) months
unless an Event of Default has occurred and is continuing. Notwithstanding the
foregoing, no Credit Extensions shall be made prior to the completion of the
initial audit (the “Initial Audit”).

 

Notwithstanding the above
financial reporting requirements, in the event that Borrower has no Advances or
Credit Extensions in an amount equal to or greater than Five Hundred Thousand
Dollars ($500,000.00) outstanding during any month, the monthly financial
reporting requirements set forth in subsections (a), (b), (c) and (d) above
shall be delivered on a quarterly basis, within forty five (45) days after the
end of each fiscal quarter of Borrower.”

 

and inserting in lieu
thereof the following:

 

“              6.2          Financial Statements, Reports, Certificates.

 

(a)             Borrower shall
deliver to Bank:  (i) as soon as
available, but no later than forty-five (45) days after the last day of each
quarter, a company prepared consolidated balance sheet and income statement
covering Borrower’s consolidated operations during the period certified by a
Responsible Officer and in a form acceptable to Bank; (ii) as soon as
available, but no later than ninety (90) 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 reasonably
acceptable to Bank; (iii) within five (5) days of filing, copies of
all statements, reports and notices made available to Borrower’s security
holders or to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a
prompt report of any legal actions pending or threatened against Borrower or
any Subsidiary that is reasonably likely to result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; (v) prompt notice of any material change in the composition of the
Intellectual Property, or the registration of any copyright, including any
subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark
not shown in any intellectual property security agreement between Borrower and
Bank or knowledge of an event that materially adversely affects the value of
the Intellectual Property; and (vi) budgets, sales projections, operating
plans, listings of accounts payable, or other financial information reasonably
requested by Bank.

 

(b)             Within forty-five (45) days after the last
day of each quarter, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by

 

 

a
Responsible Officer in the form of Exhibit C,
with aged listings of accounts receivable (by invoice date).

 

(c)           Within forty-five (45) days after the last
day of each quarter, Borrower shall deliver to Bank with the monthly financial
statements a Compliance Certificate signed by a Responsible Officer in the form
of Exhibit D.

 

(d)           Allow Bank to audit Borrower’s Collateral at
Borrower’s expense.  Such audits shall be
conducted no more often than once every twelve (12) months unless an Event of
Default has occurred and is continuing.”

 

7.             The Loan Agreement
shall be amended by inserting the following to appear as subsection (b) of
Section 6.6 thereof:

 

“              (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 its Affiliates.  In addition, for each Collateral Account that
Borrower or Guarantor 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.”

 

8.             The Loan Agreement
shall be amended by deleting Section 6.7 thereof in its entirety and inserting
in lieu thereof the following:

 

“              6.7          Financial Covenants.

 

(a)           Adjusted Quick Ratio. 
Borrower shall maintain at all times, to be tested, as of the last day
of each quarter, a ratio of Quick Assets to Current Liabilities minus Deferred
Revenue and customer deposits of at least 2.0 to 1.0.

 

(b)           Minimum EBIT. 
Borrower shall have minimum quarterly EBIT of at least Three Million
Five Hundred Thousand Dollars ($3,500,000.00).”

 

9.             The Loan Agreement
shall be amended by deleting the following definitions appearing in Section 13.1
thereof:

 

““Borrowing Base”
is (i) 80.0% (the “Accounts Advance Rate”) of Eligible Accounts, which, at
Bank’s discretion and upon written notice by Bank shall be net of any Deferred Revenue
plus (ii) the lesser of (A) 10.0% (the “Inventory Advance Rate”) of
the value of Borrower’s Eligible Inventory (valued at the lower of cost or
wholesale fair market value) or (B) $750,000.00 (the “Inventory Cap”), all
as determined by Bank from Borrower’s most recent Borrowing Base Certificate;
provided, however, after performing an audit of Borrower’s Collateral, Bank
may, in its sole discretion, (i) lower the Inventory Advance Rate, lower
the Inventory Cap or lower the Accounts Advance Rate if the results are
unsatisfactory to Bank or (ii) increase the Accounts Advance Rate to 85.0%
if the results are satisfactory to Bank.”

 

 

““Current Liabilities” are the aggregate
amount of Borrower’s Total Liabilities which mature within one (1) year,
which shall include, without limitation, all obligations and liabilities of
Borrower to Bank.”

 

““Quick Assets”  is, on
any date, the Borrower’s consolidated, unrestricted cash (less customer
deposits), cash equivalents, net billed accounts receivable and investments
with maturities of fewer than 12 months determined according to GAAP.

 

““Revolving
Line” is an Advance or Advances of up to Five Million Dollars ($5,000,000.00).”

 

““Revolving
Maturity Date” is November 29, 2006”

 

and inserting in lieu
thereof the following:

 

““Borrowing
Base” is eighty-five percent (85.0%) of Eligible Accounts, as
determined by Bank from Borrower’s most recent Borrowing Base Certificate;
provided, however, that Bank may decrease the foregoing percentages in its good
faith business judgment based on events, conditions, contingencies, or risks
which, as determined by Bank, may adversely affect Collateral.”

 

““ Current
Liabilities” are all obligations and liabilities of Borrower to Bank
(with the exception of Letters of Credit issued by Bank which are specifically
cash secured and segregated) plus, without duplication, the aggregate amount of
Borrower’s Total Liabilities that mature within one (1) year.”

 

““Quick Assets”  is, on
any date, the Borrower’s unrestricted cash (less customer deposits), plus net
billed accounts receivable determined according to GAAP.”

 

““Revolving Line” is an Advance or Advances of up to Twenty
Million Dollars ($20,000,000.00).”

 

““Revolving Maturity Date” is November 14, 2008.”

 

11.           The Loan Agreement shall
be amended by inserting the following definitions to appear alphabetically in Section 13.1:

 

““Availability
Amount” is: (a) if Borrower’s Unrestricted Cash is greater than
or equal to Thirty Million Dollars ($30,000,000.00), the Revolving Line, minus (i) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus
(ii) the FX Reserve, and minus (iii) the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services); or (b) if Borrower’s Unrestricted Cash is less than Thirty Million
Dollars ($30,000,000.00) for a period of thirty (30) consecutive days, the
lesser of (i) the Revolving Line or (ii) the Borrowing Base minus (x) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus
(y) the FX Reserve, and minus (z) the outstanding principal balance
of any Advances (including any amounts used for Cash Management Services).”

 

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

 

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

 

 

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

 

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

 

““Lockbox”
is defined in Section 6.9.”

 

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

 

““Unrestricted
Cash” shall mean all cash maintained at Bank in Borrower’s name that
is unrestricted and not pledged to any other Person.”

 

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

 

12.           The Borrowing Base
Certificate appearing as Exhibit C to the Loan Agreement is hereby replaced
with the Borrowing Base Certificate attached as Exhibit A hereto.

 

13.           The Compliance
Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced
with the Compliance Certificate attached as Exhibit B hereto.

 

4.             FEES.  A fully earned, non-refundable facility fee
of Two Hundred Fifty Thousand Dollars ($250,000.00) is earned as of the date
hereof and shall be payable as follows: (i) One Hundred Fifty Thousand
Dollars ($150,000.00) is payable on the date hereof, and (ii) One Hundred
Thousand Dollars ($100,000.00) is payable on the earlier to occur of (x) November 16,
2007, (y) the occurrence of an Event of Default, or (z) the early
termination of the Loan Agreement.  The
Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.

 

5.             RATIFICATION OF IP
SECURITY AGREEMENT.  Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
the IP Security Agreement and acknowledges, confirms and agrees that said IP
Security Agreement contains an accurate and complete listing of all
Intellectual Property Collateral as defined in said IP Security Agreement, and
shall remain in full force and effect. 
Notwithstanding the terms and conditions of the IP Security Agreement,
the Borrower shall not register any Copyrights or Mask Works in the United
States Copyright Office unless it: (i) has given at least five (5) days’
prior written notice to Bank of its intent to register such Copyrights or Mask
Works and has provided Bank with a copy of the application it intends to file
with the United States Copyright Office (excluding exhibits thereto); (ii) executes
a security agreement or such other documents as Bank may reasonably request in
order to maintain the perfection and priority of Bank’s security interest in
the Copyrights proposed to be registered with the United States Copyright
Office; and (iii) records such security documents with the United States
Copyright Office contemporaneously with filing the Copyright application(s) with
the United States Copyright Office. 
Borrower shall promptly provide to Bank a copy of the Copyright
application(s) filed with the United States Copyright Office, together
with evidence of the recording of the security documents necessary for Bank to
maintain the perfection and priority of its security interest in such
Copyrights or Mask Works.  In addition,
the Borrower shall provide written notice to Bank, on a quarterly basis,
regarding any application filed by Borrower in the United States Patent and
Trademark Office for a patent or to register a trademark or service mark.

 

6.             RATIFICATION OF
PERFECTION CERTIFICATE.  Borrower
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August 11,
2003, between Borrower and Bank, and acknowledges, confirms and agrees the
disclosures and information Borrower provided to Bank in the Perfection
Certificate has not changed, as of the date hereof, except to the extent such
disclosure is updated by the information contained in Exhibit C,
attached hereto as a supplement to the Exhibit B previously delivered to
the Bank.

 

7.             CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.

 

 

8.             RATIFICATION OF
LOAN DOCUMENTS.  Borrower hereby
ratifies, confirms, and reaffirms all terms and conditions of all security or
other collateral granted to the Bank, and confirms that the indebtedness
secured thereby includes, without limitation, the Obligations.

 

9.             NO DEFENSES OF
BORROWER.  Borrower hereby
acknowledges and agrees that Borrower has no offsets, defenses, claims, or
counterclaims against Bank with respect to the Obligations, or otherwise, and
that if Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all
of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any
liability thereunder.

 

10.           CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the
existing Obligations pursuant to this Loan Modification Agreement in no way
shall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to
retain as liable parties all makers of Existing Loan Documents, unless the
party is expressly released by Bank in writing. 
No maker will be released by virtue of this Loan Modification Agreement.

 

11.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.

 

 

This Loan Modification
Agreement is executed as a sealed instrument under the laws of the Commonwealth
of Massachusetts as of the date first written above.

 

	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
  AMERICAN
  SCIENCE AND ENGINEERING, INC.

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kenneth J. Galaznik

  	
   

  	
  By:

  	
  /s/ Mark Gallagher

  
	
   

  	
   

  	
   

  
	
  Name: Kenneth J.
  Galaznik

  	
   

  	
  Name: Mark Gallagher

  
	
   

  	
   

  	
   

  
	
  Title: Chief Financial
  Officer

  	
   

  	
  Title: Vice President

  
					

 

 

The undersigned, AS&E GLOBAL, INC., 
a Massachusetts corporation (“Guarantor”) hereby: (i) ratifies,
confirms and reaffirms, all and singular, the terms and conditions of a certain
(A) Unlimited Guaranty dated August 11, 2003 (the “Guaranty”), and (B) a
certain Security Agreement by Guarantor in favor of the Bank dated August 11,
2003 (the “Security Agreement”); and (ii) acknowledges, confirms and
agrees that the Guaranty and Security Agreement shall remain in full force and
effect and shall in no way be limited by the execution of this Loan
Modification Agreement, or any other documents, instruments and/or agreements
executed and/or delivered in connection herewith; and (iii) acknowledges,
confirms and agrees that the obligations of Borrower to Bank under the Guaranty
include, without limitation, all Obligations of Borrower to Bank under the Loan
Agreement, as amended by this Loan Modification Agreement.

 

	
   

  	
  AS&E
  GLOBAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony R. Fabiano

  
	
   

  	
   

  
	
   

  	
  Name: Anthony R. Fabiano

  
	
   

  	
   

  
	
   

  	
  Title:  President
  and Chief Executive Officer

  

 

 

EXHIBIT A

EXHIBIT C

BORROWING BASE CERTIFICATE

 

Borrower: American Science and Engineering, Inc.

Lender:  Silicon Valley Bank

Commitment Amount:    $20,000,000.00

 

	
  ACCOUNTS
  RECEIVABLE

  
	
  (1)

  	
   

  	
  Accounts
  Receivable Book Value as of

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  Additions (please
  explain on reverse)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  
	
  (4)

  	
   

  	
  Amounts over 120
  days due

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  Balance of 50%
  over 120 day accounts

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  Credit balances
  over 120 days

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  Concentration
  Limits

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (8)

  	
   

  	
  Foreign Accounts

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (9)

  	
   

  	
  Governmental
  Accounts

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (10)

  	
   

  	
  Contra Accounts

  	
   

  	
  $

  
	
  (11)

  	
   

  	
  Promotion or Demo Accounts

  	
   

  	
  $

  
	
  (12)

  	
   

  	
  Intercompany/Employee Accounts

  	
   

  	
  $

  
	
  (13)

  	
   

  	
  Disputed Accounts

  	
   

  	
  $

  
	
  (14)

  	
   

  	
  Other (please explain on reverse)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (15)

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  
	
  (16)

  	
   

  	
  Eligible Accounts (#3 minus #15)

  	
   

  	
  $

  
	
  (17)

  	
   

  	
  ELIGIBLE AMOUNT OF ACCOUNTS (85% of #16)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  
	
  (18)

  	
   

  	
  Maximum Loan Amount

  	
   

  	
  $

  
	
  (19)

  	
   

  	
  Total Funds Available (Lesser of #18 and #17)

  	
   

  	
  $

  
	
  (20)

  	
   

  	
  Present balance owing on Line of Credit

  	
   

  	
  $

  
	
  (21)

  	
   

  	
  Outstanding under Sublimits (L/C, Cash Mgt, Fx)

  	
   

  	
  $

  
	
  (22)

  	
   

  	
  RESERVE POSITION (#19 minus #20 and #21)

  	
   

  	
  $

  

 

The undersigned represents and warrants that this
is true, complete and correct, and that the information in this Borrowing Base
Certificate complies with the representations and warranties in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.

 

 

	
   

  	
  BANK USE ONLY

  
	
  COMMENTS:

  	
  Received
  by:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
  Date:
  

  	
   

  
	
  By:

  	
   

  	
   

  	
  Verified:
  

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  	
   

  	
  AUTHORIZED SIGNER  

  
	
  Date:

  	
   

  	
   

  	
  Date:
  

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance
  Status:                     Yes             No

  
										

 

 

EXHIBIT B

EXHIBIT D

COMPLIANCE CERTIFICATE

 

TO:         SILICON VALLEY BANK

 

FROM:   AMERICAN SCIENCE AND ENGINEERING, INC.

 

The undersigned authorized
officer of AMERICAN SCIENCE AND ENGINEERING, INC. certifies that under the
terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending
                              
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date.  Attached
are the required documents supporting the certification.  The Officer certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes.  The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.

 

Please
indicate compliance status by circling Yes/No under “Complies” column.

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly financial
  statements with CC

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 90 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10-Q, 10-K and 8-K

  	
   

  	
  Within 5 days after filing
  with SEC

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  BBC, A/R Agings, and
  inventory report

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Deferred Revenue Schedule

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Audit

  	
   

  	
  Annually

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

Notification
of registration of Intellectual Property

 

The following Intellectual
Property was registered after the Closing Date (if blank, read “None”)

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Adjusted Quick Ratio (Quarterly)

  	
   

  	
  2.0:1.0        

  	
   

  	
  :1.0

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Minimum EBIT
  (Quarterly)

  	
   

  	
  *

  	
   

  	
  $             

  	
   

  	
  Yes

  	
   

  	
  No

  

 

*See Section 6.7(b) of
Agreement

 

	
  Comments Regarding Exceptions:  See
  Attached.

  	
  BANK USE ONLY

  
	
   

  	
   

  
	
  Sincerely,

  	
  Received
  by:  

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
  Date:
  

  	
   

  
	
  SIGNATURE

  	
   

  	
  Reviewed By:

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance
  Status:               Yes/No

  
	
  TITLE

  	
   

  	
   

  	
   

  
									

 

 

EXHIBIT C

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