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
