Document:

Exhibit 10.4

 

FOURTH LOAN MODIFICATION AGREEMENT

 

This Fourth Loan
Modification Agreement (this “Loan Modification Agreement’) is entered into as
of November 14, 2008, by and between SILICON VALLEY BANK,
a California corporation 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, as amended by a certain Second Loan Modification Agreement dated as of November 30,
2004, between Borrower and Bank, and as further amended by a certain Third Loan
Modification Agreement dated as of November 16, 2006, 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, and as amended by a Second
Amendment to Intellectual Property Security Agreement dated as of November 16,
2006 (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 text, appearing in Section 2.1.2(a) thereof:

 

“              (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).”

 

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 Forty Million Dollars ($40,000,000.00).”

 

 

2.             The Loan Agreement
shall be amended by deleting the following appearing as Section 2.1.3
thereof:

 

“2.1.3     Foreign Exchange Sublimit.  If
there is availability under the Revolving Line and the Borrowing Base, then
Borrower may enter in foreign exchange forward contracts with the Bank under
which Borrower commits to purchase from or sell to Bank a set amount of foreign
currency more than one business day after the contract date (the “FX Forward Contract”).  Bank shall subtract 10% of each outstanding
FX Forward Contract from the foreign exchange sublimit, which sublimit is a
maximum of $5,000,000.00 (the “FX Reserve”). 
The total FX Forward Contracts at any one time may not exceed 10 times
the amount of the FX Reserve.  Bank may
terminate the FX Forward Contracts if an Event of Default occurs.”

 

and
inserting in lieu thereof the following:

 

“2.1.3     Foreign Exchange Sublimit.  If there is availability under
the Revolving Line and the Borrowing Base, then Borrower may enter in foreign
exchange forward contracts with the Bank under which Borrower commits to
purchase from or sell to Bank a set amount of foreign currency more than one
business day after the contract date (the “FX Forward Contract”).  Bank shall subtract 10% of each outstanding
FX Forward Contract from the foreign exchange sublimit, which sublimit is a
maximum of $10,000,000.00 (the “FX Reserve”). 
The total FX Forward Contracts at any one time may not exceed 10 times
the amount of the FX Reserve.  Bank may
terminate the FX Forward Contracts if an Event of Default occurs.”

 

3.             The Loan Agreement
shall be amended by deleting the following appearing as Section 2.1.4
thereof:

 

“2.1.4     Cash Management Services Sublimit.  Borrower may use up to $5,000,000.00
for the Bank’s Cash Management Services, which may include merchant services,
direct deposit of payroll, business credit card, and check cashing services
identified in the various cash management services agreements related to such
Cash Management Services (the “Cash Management Services”).  Such aggregate amounts utilized under the
Cash Management Services Sublimit shall at all times reduce the amount
otherwise available for Credit Extensions under the Revolving Line.  Any amounts Bank pays on behalf of Borrower
or any amounts that are not paid by Borrower for any Cash Management Services
will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances.”

 

and
inserting in lieu thereof the following:

 

“2.1.4     “Cash Management Services Sublimit.  Borrower may use up to $10,000,000.00 for the
Bank’s Cash Management Services, which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified
in the various cash management services agreements related to such Cash
Management Services (the “Cash Management Services”).  Such aggregate amounts utilized under the
Cash Management Services Sublimit shall at all times reduce the amount
otherwise available for Credit Extensions under the Revolving Line.  Any amounts Bank pays on behalf of Borrower
or any amounts that are not paid by Borrower for any Cash Management Services
will be treated as Advances under the Revolving Line and will accrue interest at
the interest rate applicable to Advances.”

 

 

4.             The Loan Agreement
shall be amended by deleting the following appearing as Section 2.2
thereof:

 

“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.”

 

and inserting in lieu
thereof the following:

 

“2.2        Overadvances.  If, at any time Borrower’s Unrestricted Cash,
Cash Equivalents, and short-term investments maintained with Bank or Bank’s
Affiliates are less than Sixty Million Dollars ($60,000,000.00) 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.”

 

5.             The Loan Agreement
shall be amended by deleting the following appearing as Sections 2.4(b) and
(c) 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.

 

(c)                                  Letter of Credit Fee.  The
Borrower shall pay the Bank’s customary fees and expenses for the issuance of
Letters of Credit, including, without limitation, a Letter of Credit Fee of
..85% per annum of the face amount of each Letter of Credit issued, upon the
issuance or renewal of such Letter of Credit by the Bank; and “

 

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.  Notwithstanding  the  foregoing,  such  Unused  Revolving  Line  Facility  Fee  shall  be  waived  for  any  quarter  in  which  Credit  Extensions  have  been  made  in  an  aggregate  average  amount  equal  to  or  greater  than  Twenty-Five  Million  Dollars  ($25,000,000.00)  for  such  quarter.

 

 

(c)           Letter of
Credit Fee.  The Borrower
shall pay the Bank’s customary fees and expenses as set forth in Schedule 2.3 attached hereto, for
the issuance or renewal of Letters of Credit, upon the issuance or the renewal
of such Letter of Credit by Bank; and”

 

6.             The Loan Agreement
shall be amended by inserting the following new text, appearing at the end of Section 6.2
thereof:

 

“              Notwithstanding the
above financial reporting requirements, in the event that Borrower maintains
cash with Bank in an amount equal to or greater than Sixty Million Dollars
($60,000,000) at all times during any quarter, the financial reporting
requirements set forth in subsections (b) and (d) above shall not be
required in connection with such quarter.”

 

7.             The Loan Agreement shall
be amended by deleting the following text, appearing as Section 6.7(b) thereof:

 

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

 

and
inserting in lieu thereof the following:

 

“              (b)           Minimum EBIT.  Commencing as of September 30, 2008, and
as of the last day of each quarter thereafter, Borrower shall have minimum
quarterly EBIT of at least Three Million Dollars ($3,000,000.00).”

 

8.             The Loan Agreement
shall be amended by deleting the following provision appearing as Section 7.6
thereof:

 

“7.6        Distributions; Investments.  (i) Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of
its Subsidiaries to do so; or (ii) pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock, except
for repurchases of stock from former employees or directors of Borrower under
the terms of applicable repurchase agreements in an aggregate amount not to
exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate in any
fiscal year, provided that no Event of Default has occurred, is continuing or
would exist after giving effect to the repurchases.”

 

and
inserting in lieu thereof the following:

 

“7.6        Distributions; Investments.  (i) Directly
or indirectly acquire or own any Person, or make any Investment in any Person,
other than Permitted Investments, or permit any of its Subsidiaries to do so;
or (ii) pay any dividends in an amount not to exceed Ten Million Dollars
($10,000,000.00) in the aggregate, per fiscal year, or make any distribution or
payment or redeem, retire or purchase any capital stock, except for repurchases
of stock from former employees or directors of Borrower under the terms of
applicable repurchase agreements in an aggregate amount not to exceed One
Hundred Thousand Dollars ($100,000.00) in the aggregate in any fiscal year,
provided that no Event of Default has occurred, is continuing or would exist
after giving effect to the repurchases.”

 

 

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

 

“              “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).”

 

“              “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.”

 

“              “Eligible
Accounts” are billed Accounts in the ordinary course of Borrower’s
business that meet all Borrower’s representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower
notice.  Unless Bank agrees otherwise in
writing, Eligible Accounts shall not include:

 

(a)           Accounts that the account
debtor has not paid within one hundred twenty (120) days of invoice date;

 

(b)           Accounts for an account
debtor, fifty percent (50%) or more of whose Accounts have not been paid within
one hundred twenty (120) days of invoice date;

 

(c)           Credit balances over one
hundred twenty (120) days from invoice date;

 

(d)           Accounts for an account
debtor, including Affiliates, whose total obligations to Borrower exceed
thirty-five (35%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;

 

(e)           Accounts for which the
account debtor does not have its principal place of business in the United
States;

 

 

(f)            Accounts for which the
account debtor is a federal, state or local government entity or any
department, agency or instrumentality thereof except for Accounts of the United
States if the payee has assigned its payment rights to Bank and the assignment
has been acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C.
3727) (with the exception of such Accounts approved by the Bank, on a case by a
case basis, in its sole and absolute discretion);

 

(g)           Accounts for which
Borrower owes the account debtor, but only up to the amount owed (sometimes
called “contra” accounts, accounts payable, customer deposits or credit
accounts);

 

(h)           Accounts for demonstration
or promotional equipment, or in which goods are consigned, sales guaranteed,
sale or return, sale on approval, bill and hold, or other terms if account debtor’s
payment may be conditional;

 

(i)            Accounts for which the
account debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(j)            Accounts in which the
account debtor disputes liability or makes any claim and Bank believes there
may be a basis for dispute (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;

 

(k)           Accounts for which Bank
reasonably determines collection to be doubtful.”

 

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

 

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

 

and inserting in lieu
thereof the following:

 

“              “Availability Amount” is: (a) if Borrower’s Unrestricted
Cash, Cash Equivalents, and short-term investments maintained at Bank or Bank’s
Affiliates are greater than or equal to Sixty Million Dollars ($60,000,000.00),
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, Cash Equivalents, and short-term investments are maintained at Bank or
Bank’s Affiliates are less than Sixty Million Dollars ($60,000,000.00) 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).”

 

 

“              “Borrowing Base” is eighty percent (80.0%) 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.”

 

“              “Eligible
Accounts” are billed Accounts in the ordinary course of Borrower’s
business that meet all Borrower’s representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower
notice.  Unless Bank agrees otherwise in
writing, Eligible Accounts shall not include:

 

(a)           Accounts that the account
debtor has not paid within ninety (90) days of invoice date;

 

(b)           Accounts for an account
debtor, fifty percent (50%) or more of whose Accounts have not been paid within
ninety (90) days of invoice date;

 

(c)           Credit balances over
ninety (90) days from invoice date;

 

(d)           Accounts for an account
debtor, including Affiliates, whose total obligations to Borrower exceed
twenty-five (25%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;

 

(e)           Accounts for which the
account debtor does not have its principal place of business in the United
States;

 

(f)            Accounts for which the
account debtor is a federal, state or local government entity or any
department, agency or instrumentality thereof except for Accounts of the United
States if the payee has assigned its payment rights to Bank and the assignment
has been acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C.
3727) (with the exception of such Accounts approved by the Bank, on a case by a
case basis, in its sole and absolute discretion);

 

(g)           Accounts for which
Borrower owes the account debtor, but only up to the amount owed (sometimes
called “contra” accounts, accounts payable, customer deposits or credit
accounts);

 

(h)           Accounts for demonstration
or promotional equipment, or in which goods are consigned, sales guaranteed,
sale or return, sale on approval, bill and hold, or other terms if account
debtor’s payment may be conditional;

 

(i)            Accounts owing from an
Account Debtor with respect to which Borrower has received deferred revenue
(but only to the extent of such deferred revenue);

 

 

(j)            Accounts for which the
account debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(k)           Accounts in which the
account debtor disputes liability or makes any claim and Bank believes there
may be a basis for dispute (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;

 

(l)            Accounts for which Bank
reasonably determines collection to be doubtful.”

 

“              “Revolving Line”
is an Advance or Advances of up to Forty Million Dollars ($40,000,000.00).”

 

“              “Revolving Maturity Date”
is November 13, 2009.”

 

10.           The Loan Agreement
shall be amended by inserting the following new definition to appear
alphabetically in Section 13.1:

 

“              “Cash
Equivalents” means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or any agency or any
State thereof having maturities of not more than one (1) year from the
date of acquisition; (b) commercial paper maturing no more than one (1) year
after its creation and having the highest rating from either Standard &
Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s
certificates of deposit issued maturing no more than one (1) year after
issue; and (d) money market funds at least ninety-five percent (95%) of
the assets of which constitute Cash Equivalents of the kinds described in
clauses (a) through (c) of this definition.”

 

11.           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.

 

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

 

13.           The Loan Agreement
shall be amended by inserting Schedule 2.3,
attached as Exhibit D hereto.

 

B.            Waivers.

 

1.             Bank hereby waives
Borrower’s existing defaults under the Loan Agreement by virtue of Borrower’s
failure to comply with the financial reporting requirements set forth in Section 6.2(c) thereof
as of the quarters ended December 31, 2007, March 31, 2008, and June 30,
2008.  Bank’s waiver of Borrower’s
compliance of said affirmative covenant shall apply only to the foregoing
specific periods.

 

4.             FEES.  A fully earned, non-refundable facility fee
of Three Hundred Thousand Dollars ($300,000.00) is earned and payable as of the
date hereof.  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.

 

[Remainder of page intentionally left blank]

 

 

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/ Jane A. Braun

  
	
   

  	
   

  
	
  Name: Kenneth J.
  Galaznik

  	
  Name: Jane A. Braun

  
	
   

  	
   

  
	
  Title: Chief Financial
  Officer

  	
  Title: Senior 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/ Kenneth J. Galaznik

  
	
   

  	
   

  
	
   

  	
  Name: Kenneth J. Galaznik

  
	
   

  	
   

  
	
   

  	
  Title:  Chief
  Financial Officer

  

 

 

EXHIBIT A

 

BORROWING BASE CERTIFICATE

 

Borrower: American Science and
Engineering, Inc.

Lender:   Silicon Valley Bank

Commitment Amount:     $40,000,000.00

 

	
  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 90
  days due

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  Balance of 50%
  over 90 day accounts

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
  Credit balances
  over 90 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)

  	
  Deferred Revenue

  	
   

  	
  $                       

  
	
  (16)

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $                       

  
	
  (17)

  	
  Eligible Accounts (#3 minus #16)

  	
   

  	
  $                       

  
	
  (18)

  	
  ELIGIBLE AMOUNT OF ACCOUNTS (80% of #17)

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  
	
  (19)

  	
  Maximum Loan Amount

  	
   

  	
  $                       

  
	
  (20)

  	
  Total Funds Available (Lesser of #19 and #18)

  	
   

  	
  $                       

  
	
  (21)

  	
  Present balance owing on Line of Credit

  	
   

  	
  $                       

  
	
  (22)

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

  	
   

  	
  $                       

  
	
  (23)

  	
  RESERVE POSITION (#20 minus #21 and #22)

  	
   

  	
  $                       

  

 

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

 

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,*

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Deferred Revenue Schedule

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Audit*

  	
   

  	
  Annually

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

* When cash at Bank is less
than $60,000.00 (See Section 6.2 of the Loan Agreement)

 

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)

  	
   

  	
  $3,000,000

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

	
  Comments
  Regarding Exceptions:
  See Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  Received
  By:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  SIGNATURE

  	
   

  	
  Reviewed
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance
  Status:  Yes / No

  
	
  TITLE

  	
   

  	
   

  
									

 

 

EXHIBIT C

 

 

EXHIBIT D

 

Schedule 2.3

 

	
  Export
  Letters of Credit

  
	
   

  	
   

  	
  Pre-Advice

  	
   

  	
  $      45.00

  	
   

  	
   

  
	
   

  	
   

  	
  Advice

  	
   

  	
  $      85.00

  	
   

  	
   

  
	
   

  	
   

  	
  Amendment

  	
   

  	
  $      70.00

  	
   

  	
   

  
	
   

  	
   

  	
  Confirmation

  	
   

  	
  By Arrangement, Minimum
  $ 150.00/Quarter

  	
   

  	
   

  
	
   

  	
   

  	
  Confirmation-Standby LC

  	
   

  	
   By Arrangement,
  Minimum $ 250.00/Quarter

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Less than $5M

  	
  -

  	
  1/8%, Minimum $125.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $5M - $15M

  	
  -

  	
  1/10%, Minimum $125.00

  	
   

  	
   

  
	
   

  	
   

  	
  Examination \ Payment:

  	
   

  	
  Great than $15M

  	
  -

  	
  1/12%, Minimum $125.00

  	
   

  	
   

  
	
   

  	
   

  	
  Documents Sent
  Unexamined

  	
   

  	
  $      100.00

  	
   

  	
   

  
	
   

  	
   

  	
  Acceptance

  	
   

  	
  2%,
  Minimum $ 150.00

  	
   

  	
   

  
	
   

  	
   

  	
  Deferred Payment:
  Confirmed LC

  	
   

  	
  By Arrangement, Minimum
  $ 150.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Unconfirmed LC

  	
   

  	
  $      100.00

  	
   

  	
   

  
	
   

  	
   

  	
  Transfer Letter of
  Credit

  	
   

  	
   

  	
  1/4%,
  Minimum $ 250.00

  	
   

  	
   

  
	
   

  	
   

  	
  Assignment of Proceeds

  	
   

  	
   

  	
  1/4%,
  Minimum $ 150.00

  	
   

  	
   

  
	
   

  	
   

  	
  Discrepancy

  	
   

  	
   

  	
  $      75.00

  	
   

  	
   

  
	
   

  	
   

  	
  Export Bills Discounting

  	
   

  	
   

  	
  By
  Arrangement, Minimum $ 250.00

  	
   

  	
   

  
	
   

  	
   

  	
  Document Preparation

  	
   

  	
   

  	
  $      150.00

  	
   

  	
   

  
	
   

  	
   

  	
  Re-examination &
  Pre-examination Fee

  	
   

  	
   

  	
  $      50.00

  	
  Per Examination

  
	
   

  	
   

  	
  Special Handling -
  Excess Detail

  	
   

  	
   

  	
  $      125.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standby
  Letters of Credit

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Issuance:

  	
  Opening Commission

  	
   

  	
  85% P.A., Minimum $  300.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Auto-renewal/Evergreen

  	
   

  	
  $      150.00
  Per Renewal Period Plus Commission

  	
   

  
	
   

  	
   

  	
   

  	
  Origination Fee

  	
   

  	
  $      250.00

  	
   

  	
   

  
	
   

  	
   

  	
  Amendment:

  	
  Increase or Extension

  	
   

  	
  85%
  P.A., Minimum $ 300.00

  	
   

  
	
   

  	
   

  	
   

  	
  Narrative

  	
   

  	
  $      100.00

  	
   

  	
   

  
	
   

  	
   

  	
  Examination\Payment

  	
   

  	
  1/8%,
  Minimum $ 150.00

  	
   

  	
   

  
	
   

  	
   

  	
  Transfer

  	
   

  	
  1/4%,
  Minimum $ 250.00

  	
   

  	
   

  
	
   

  	
   

  	
  Assignment of Proceeds

  	
   

  	
  1/4%,
  Minimum $ 150.00

  	
   

  	
   

  
	
   

  	
   

  	
  Discrepancy

  	
   

  	
  $      75.00

  	
   

  	
   

  
	
   

  	
   

  	
  Auto-Reduction -
  Maintenance Fee

  	
   

  	
  1st Free, $250.00 Each
  Reduction Thereafter

  
	
   

  	
   

  	
  Drafted but not issued

  	
   

  	
  $ 300.00
  Per Draft

  	
   

  	
   

  
	
   

  	
   

  	
  Consultation Fee

  	
   

  	
  $      100.00

  	
   

  	
  Per hour

  
	
   

  	
   

  	
  Special Handling -
  Excess Detail

  	
   

  	
  $      125.00

  	
   

  	
   

  

 

 

	
  Collections
  - Incoming & Outgoing

  
	
   

  	
   

  	
  Documentary:

  	
  Sight

  	
   

  	
   

  	
  $      110.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Usance

  	
  (Time)

  	
  $      125.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Direct Collection

  	
   

  	
   

  	
  $      75.00

  	
   

  	
   

  
	
   

  	
   

  	
  Clean Collection

  	
   

  	
   

  	
   

  	
  $      50.00

  	
   

  	
   

  
	
   

  	
   

  	
  Other Collection
  Services:

  	
   

  	
   

  	
  Amendment

  	
  $      30.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Partial Payments

  	
  $      50.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tracers

  	
  1st Free, $ 30.00
  Each Tracer Thereafter

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Protest

  	
  $      250.00

  	
   

  	
  Plus expenses

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Cancellation Unpaid

  	
  $      30.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Air Release / Shipside
  Bond

  	
  1/4%
  Per Quarter, Minimum $150.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Maintenance:

  	
  $      50.00

  	
   

  	
  Per Month

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Items unpaid beyond 30
  days from due date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Postage

  	
   

  	
   

  	
   

  	
  $      10.00

  	
   

  	
  Minimum

  
	
   

  	
   

  	
  Courier:

  	
  Domestic

  	
   

  	
   

  	
  $      25.00

  	
   

  	
  Minimum

  
	
   

  	
   

  	
   

  	
  International

  	
   

  	
   

  	
  $      60.00

  	
   

  	
  Minimum

  
	
   

  	
   

  	
  Fax Messages:

  	
  Domestic

  	
   

  	
   

  	
  $      10.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  International

  	
   

  	
   

  	
  $      20.00

  	
   

  	
   

  
	
   

  	
   

  	
  Swift or Telex:

  	
  Short (1Page)

  	
   

  	
   

  	
  $      30.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Long (2 or More Pages)

  	
   

  	
  $      75.00

  	
   

  	
  Minimum

  
	
   

  	
   

  	
  Investigations

  	
   

  	
   

  	
   

  	
  $      75.00

  	
   

  	
  Per Hour Plus
  Swift/Telex Charges

  
	
   

  	
   

  	
  Payments by Cashiers
  Check

  	
   

  	
   

  	
   

  	
  $      35.00

  	
   

  	
   

  
	
   

  	
   

  	
  Payments by Fedwire

  	
   

  	
   

  	
   

  	
  $      30.00

  	
   

  	
   

  
											

 

NOTE:
Additional charges may be added to cover out-of-pocket or unusual expenses.Exhibit 10.5

 

CONSENT TO STOCK REPURCHASE PROGRAM

 

This
consent to Loan and Security Agreement (this  “Consent”) is entered into this 14th day of November, 2008
by and between Silicon Valley Bank (“Bank”) and American Science and
Engineering, Inc., a Massachusetts corporation (“Borrower”).

 

RECITALS

 

A.            Bank
and Borrower have entered into that certain Loan and Security Agreement dated
as of August 11, 2003, as amended by a certain First Loan Modification
Agreement dated as of June 30, 2004, between Borrower and Bank, as amended
by a certain Second Loan Modification Agreement dated as of November 30,
2004, between Borrower and Bank, as further amended by a certain Third Loan
Modification Agreement dated as of November 16, 2006, between Borrower and
Bank, and as further amended by a certain Fourth Loan Modification Agreement
dated as of November 14, 2008 (as the same may from time to time be
further amended, modified, supplemented or restated, the “Loan Agreement”).  Bank has extended credit to Borrower for the purposes
permitted in the Loan Agreement.

 

B.            Borrower is contemplating: (i) entering
into a capital stock repurchase program, and (ii) making a dividend
payment (collectively, the “Transactions”). 
Borrower has requested that Bank consent to the Transactions.

 

C.            Bank has agreed to so consent to the
Transactions, but only to the extent, in accordance with the terms, subject to
the conditions and in reliance upon the representations and warranties set
forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the
foregoing recitals and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

 

1.             Definitions.  Capitalized terms used but not defined in
this Consent shall have the meanings given to them in the Loan Agreement.

 

2.             Consent.  Pursuant to Section 7.6 of the Loan
Agreement relative to distributions and investments, Bank hereby consents to
the Transactions for fiscal year ending March 31, 2009, provided that the
aggregate amount of Borrower’s cash used to consummate the Transactions do not
exceed Thirty-Five Million Dollars ($35,000,000.00).

 

3.             Representations and Warranties.  To induce Bank to enter into this Consent,
Borrower hereby represents and warrants to Bank as follows:

 

3.1         Immediately after
giving effect to this Consent (a) 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 (b) no
Event of Default has occurred and is continuing;

 

3.2          Borrower has the
power and due authority to execute and deliver this Consent; and

 

3.3          The organizational
documents of Borrower delivered to Bank on November 30, 2004 remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect.

 

4.             Integration.  This Consent and the Loan Documents represent
the entire agreement about this subject matter and supersede prior negotiations
or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the parties
about the subject matter of this Amendment and the Loan Documents merge into
this Consent and the Loan Documents.

 

5.             Prior Agreement.  The Loan Documents are hereby ratified and
reaffirmed and shall remain in full force and effect.  This Consent is not a novation and the terms
and conditions of this Consent shall be in addition to and supplemental to all
terms and conditions set forth in the Loan Documents.  In the event of any conflict or inconsistency
between this Consent and the terms of such documents, the terms of this Consent
shall be controlling, but such document shall not otherwise be affected or the
rights therein impaired.

 

6.             Counterparts.  This Consent may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

 

7.             Effectiveness.  This Consent shall be deemed effective upon the
due execution and delivery to Bank of this Consent by each party hereto.

 

8.             Governing
Law.  This Amendment and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.

 

[Signature page follows.]

 

 

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

 

 

	
  BANK

  	
   

  	
  BORROWER

  
	
   

  	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  	
  AMERICAN SCIENCE AND

  ENGINEERING, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jane A. Braun

  	
   

  	
  By:

  	
  /s/ Kenneth J. Galaznik

  
	
  Name: Jane A. Braun

  	
   

  	
  Name: Kenneth J. Galaznik

  
	
  Title: Senior Vice President

  	
   

  	
  Title: Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]