SCIENTIFIC TECHNOLOGIES INC
AMENDMENT TO LOAN AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>exh10-3.htm
<DESCRIPTION>AMENDMENT TO LOAN AND SECURITY AGREEMENT
<TEXT>
<HTML>
<head>
<title>FY2003 10K Exhibit 10.3</title>
</head>
<BODY LINK="#0000ff">
<font FACE="Times New Roman" SIZE="3">

<B><U><P ALIGN="CENTER">EXHIBIT 10.3</P>
</U><FONT FACE="CG Times,Times New Roman" SIZE=2><P ALIGN="JUSTIFY"></P>
</FONT><FONT FACE="CG Times,Times New Roman" SIZE=3><P ALIGN="CENTER">TENTH AMENDMENT TO<BR>
                  LOAN AND SECURITY AGREEMENT</P>
</FONT><FONT FACE="CG Times,Times New Roman" SIZE=1><P ALIGN="CENTER"></P>
</B></FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P ALIGN="JUSTIFY">THIS
TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Tenth Amendment") is dated
as of June 16, 2003 and is entered into between <B>SCIENTIFIC TECHNOLOGIES
INCORPORATED WHICH WILL DO BUSINESS IN CALIFORNIA AS OREGON SCIENTIFIC
TECHNOLOGIES</B>, an Oregon corporation (the "Borrower"), and <B>BANK OF THE
WEST</B>, a California banking corporation (the "Bank").</P>
<P ALIGN="JUSTIFY"></P>
</FONT><B><FONT FACE="CG Times,Times New Roman" SIZE=3><P
ALIGN="CENTER">RECITALS:</P>
</B></FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P ALIGN="JUSTIFY">A.
Borrower and Bank have entered into that certain Loan and Security Agreement
dated November 29, 1994, that certain First Amendment to Loan and Security
Agreement dated as of May 31, 1995, that certain Second Amendment to Loan and
Security Agreement dated as of May 31, 1996, that certain Third Amendment to
Loan and Security Agreement dated as of May 31, 1997, that certain Fourth
Amendment to Loan and Security Agreement dated as of June 9, 1998, that certain
Fifth Amendment to Loan and Security Agreement dated as of June 30, 1999, that
certain Sixth Amendment to Loan and Security Agreement dated as of June 30,
2000, that certain Seventh Amendment to Loan and Security Agreement dated as of
October 6, 2000, that certain Eighth Amendment to Loan and Security Agreement
dated as of June 28, 2001, and that certain Ninth Amendment to Loan and Security
Agreement dated as of May 25, 2002 (collectively, the "Loan Agreement"), and
that certain Equipment Purchase Line Note dated December 6, 1994 (the "Equipment
Purchase Line Note");</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">B. Borrower and Bank intend to further amend the Loan
Agreement as provided by this Tenth Amendment.</P>
<P ALIGN="JUSTIFY"></P>
</FONT><B><FONT FACE="CG Times,Times New Roman" SIZE=3><P
ALIGN="CENTER">AMENDMENT:</P>
</B></FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P>NOW, THEREFORE,
Borrower and Bank hereby agree as follows:</P>

<P ALIGN="JUSTIFY">1. &#9;<B>Definitions. </B>This Tenth Amendment shall modify
and, to the extent inconsistent with, amend the Loan Agreement. Any capitalized
term not specifically defined herein shall have the meaning assigned to it in
the Loan Agreement.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">2. &#9;<B>Draw Period Amendment. </B>The last sentence of
Section 3.1(a) of the Loan Agreement is hereby deleted in its entirety and is
replaced with the following: </P><DIR>

<P ALIGN="JUSTIFY">For the purpose of this Agreement, "Draw Period" shall mean
the period between the date of this Loan and Security Agreement and the earlier
of: (i) June 30, 2004 or (ii) the date on which the aggregate of all advances
made pursuant to this Section 3.1 equals One Million and 00/100 Dollars
($1,000,000.00).</P>
<P ALIGN="JUSTIFY"></P></DIR>

<P ALIGN="JUSTIFY">3.
<B>Credit Facility Term Amendment. </B>The second
sentence of the first paragraph of Section 4.1 of
the Loan Agreement is hereby deleted in its entirety and is
replaced with the following:  </P>
<DIR>
<P ALIGN="JUSTIFY">Borrower's right to obtain advances under Section 2.1, to
enter into foreign exchange contracts under the FX Facility under Section 15,
and to obtain the issuance of commercial and standby letters of credit under
Section 16 shall remain in full force and effect until June 30, 2004, and shall
continue on a month-to-month basis thereafter until terminated by either party
on thirty (30) days' prior written notice to the other. </P>
</DIR>

<P ALIGN="JUSTIFY">4.
<B>Standby Letter of Credit Subfacility. </B>Add a new
Section 16 to the Loan Agreement, which
will read in its entirety as follows:</P>
<P ALIGN="JUSTIFY"></P>
</FONT><B><FONT FACE="CG Times,Times New Roman" SIZE=3><P ALIGN="JUSTIFY">LETTER
OF CREDIT FACILITY</P>
</FONT><FONT FACE="CG Times,Times New Roman" SIZE=1><P ALIGN="JUSTIFY"></P>
</FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P ALIGN="JUSTIFY">16.1
&#9;Revolving Letters of Credit</B>. Upon the request of Borrower, made at any
time and from time to time during the term hereof, so long as no Event of
Default has occurred, and subject to the limitations set forth below, Bank will,
on a revolving basis, issue commercial letters of credit for Borrower's account
to facilitate the importation of merchandise by Borrower for resale by Borrower
and issue standby letters of credit or Borrower's account for purposes
acceptable to Bank; provided, however, that in no event shall Bank be obligated
to issue any letters of credit under this Section 16.1 whenever the total of
Borrower's Obligations in respect to all letters of credit outstanding under
this Section 16.1, when added to the Daily Balance, exceeds, at any time, the
sum of Five Million Dollars ($5,000,000); provided, further, however that the
aggregate total of Borrower's Obligations in respect to all commercial letters
of credit and standby letters of credit outstanding may not exceed at any one
time One Million Dollars ($1,000,000.00). If, any time and for any reason, the
total of Borrower's Obligations in respect to all letters of credit outstanding
under this Section 16.1, when added to the Daily Balance, exceeds the sum of
Five Million Dollars ($5,000,000) (an "Overline") or if, at any time and for any
reason the aggregate total of Borrower's Obligations in respect to all
commercial letters of credit and standby letters of credit outstanding hereunder
exceeds One Million Dollars ($1,000,000.00) (a "L/C Overline"), then Borrower
shall immediately pay to Bank, in cash, the amount of such Overline or L/C
Overline (as the case may be). Bank may, in its sole discretion, elect to treat
a L/C Overline as an advance under the Credit. </P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY">16.2 &#9;Advances re: Letters of Credit</B>. All amounts
actually paid or advanced by Bank to or for the benefit of Borrower under or in
respect to letters of credit issued under Section 16.1 above shall, when made,
constitute advances under the Credit and shall be payable and bear interest as
provided in this Agreement, and shall otherwise be subject to all terms and
conditions hereof.</P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY">16.3 &#9;Application and Agreement re: Commercial Letters
of Credit</B>. Each commercial letter of credit issued under Section 16.1 above
shall be issued pursuant to the terms and conditions hereof and of a Bank
standard form Application For Commercial Letter of Credit and Agreement
(Commercial Letter of Credit) executed by Borrower and shall:</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(a) &#9;Expire on or before ninety (90) days after the
earlier of (i) the date such commercial letter of credit is issued or (ii) the
date certain maturity date set forth in Section 4.1 of this Loan Agreement (as
such maturity date may from time to time be amended);</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">(b) &#9;Require drafts payable at sight [or up to thirty (30)
days after sight];</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">and</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(c)       Be otherwise in form and substance and in favor of
beneficiaries satisfactory to Bank.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Borrower shall pay Bank issuance fees, negotiation fees and
such other fees at the times and in the amounts Bank advises Borrower from time
to time as being applicable to commercial letters of credit. In the event of any
inconsistency between the terms of this Agreement and the terms of such
Application for Commercial Letter of Credit and Agreement (Commercial Letter of
Credit), the terms of such Application for Commercial Letter of Credit and
Agreement (Commercial Letter of Credit) shall control. </P>
<P ALIGN="JUSTIFY"></P></DIR>
</DIR>

<B><P ALIGN="JUSTIFY">16.4 &#9;Application and Agreement re: Standby Letters of
Credit</B>. Each standby letter of credit issued under Section 16.1 above shall
be issued pursuant to the terms and conditions hereof and of a Bank standard
form Application For Standby Letter of Credit and Agreement (Standby Letter of
Credit) executed by Borrower and shall:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">(a) &#9;Expire on or before twelve (12) months after the
earlier of (i) the date</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">such standby letter of credit is issued or (ii) the date
certain maturity date set forth in Section 4.1 of this Loan Agreement (as such
maturity date may from time to time be amended); </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">and</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY"> (b) &#9;Be otherwise in form and substance and in favor of
beneficiaries satisfactory to Bank. Borrower shall pay to Bank issuance fees and
other fees at the times and in the amounts Bank advises Borrower from time to
time as being applicable to standby letters of credit. In the event of any
inconsistency between the terms of this Agreement and the terms of such
Application for Standby Letter of Credit and Agreement (Standby Letter of
Credit), the terms of such Application for Standby Letter of Credit and
Agreement (Standby Letter of Credit) shall control. </P>
<P ALIGN="JUSTIFY"></P></DIR>
</DIR>

<B><P ALIGN="JUSTIFY">16.5 &#9;Obligations re: Letters of Credit</B>. All
advances made, letters of credit issued and other financial accommodations
extended by Bank to or for the account or benefit of Borrower under Article 16
of this Agreement shall be added to and deemed part of the Obligations when
made, issued, created and/or extended. </P>
<P ALIGN="JUSTIFY"></P>

<P ALIGN="JUSTIFY">5. <B>Renewal of ACH Facility</B>. Borrower's right to obtain
automatic clearinghouse services (&quot;ACH Services&quot;) from Bank shall
remain in full force and effect until June 30, 2004, shall constitute
Obligations under the Loan Agreement and shall be governed by the Loan
Agreement, as modified by this Amendment, and the Bank's standard terms of
business in effect with respect to ACH Services, which terms and conditions are
incorporated herein by this reference. Borrower shall pay Bank such fees at the
times and in the amounts that Bank may from time to time impose in connection
with the provision of ACH Services. Borrower agrees to execute and deliver to
Bank such documents as Bank deems necessary in connection with Bank's provision
of ACH Services. In the event of any inconsistency between the terms of this
Agreement and Bank's standard terms of business in effect with respect to ACH
Services, Bank's standard terms of business in effect with respect to ACH
Services shall control.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">6. <B>Renewal of Credit Card Facility</B>. Bank shall grant
Borrower a credit card facility, which credit card facility shall constitute
Obligations under the Loan Agreement and shall be governed by the Loan
Agreement, as modified by this Amendment, and the Bank's standard terms of
business in effect with respect to credit card facilities, which terms and
conditions are incorporated herein by this reference. Borrower shall pay Bank
such fees at the times and in the amounts that Bank may from time to time impose
in connection with the provision of credit card facilities. Borrower agrees to
execute and deliver to Bank such documents as Bank deems necessary in connection
with Bank's provision of credit card facilities. In the event of any
inconsistency between the terms of this Agreement and Bank's standard terms of
business respecting its credit card facilities, Bank's standard terms of
business respecting its credit card facilities shall control. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">7. <B>Tangible Net Worth Covenant. </B>Revise Subsection
10.13(d) of the Loan Agreement, which shall read in its entirety as follows:
Borrower shall maintain a Tangible Net Worth in an amount not less than
Seventeen Million Dollars ($17,000,000). For the purpose of the Loan Agreement,
as modified and amended by this Tenth Amendment, the term "Tangible Net Worth"
means net worth as determined in accordance with generally accepted accounting
principles consistently applied, increased by debt subordinated to Bank and
decreased by the following: patents, licenses, goodwill, capitalized research
and development costs, subscription lists, organization expenses and monies due
from affiliates (including officers, directors, shareholders, parents, partners,
joint venturers, subsidiaries and commonly held companies). For the purpose of
the Loan Agreement, as modified and amended by this Tenth Amendment, the term
"debt subordinated to Bank" shall mean any loans, debts, or other obligations
("Third Party Debts") owing by Borrower to any third parties (including, without
limitation, any shareholders or affiliates of Borrower) and/or security
interests ("Third Party Security Interests") in the  assets of Borrower
(including, without limitation, the Collateral) in favor of any third parties
(including, without limitation, any shareholders or affiliates of Borrower),
which has been subordinated to Borrower's Obligations to Bank under the Loan
Agreement, as modified and amended by this Tenth Amendment, and to Bank's
security interest in the Collateral. Such subordination shall be on terms and
conditions acceptable to Bank in its sole and absolute discretion. With respect
to Third Party Debt, such subordination shall include (at a minimum) an
agreement by the holder of the Third Party Debt to suspend payments by Borrower
of any principal, interest or other amount under the Third Party Debt until the
Loan Agreement, as modified and amended by this Tenth Amendment, has been
terminated and all of Borrower's Obligations to Bank have been paid off and
satisfied. With respect to Third Party Security Interests, such subordination
shall include (at a minimum) an agreement by the beneficiary of the Third Party
Security Interest to (i) subordinate the priority of its lien to the lien in
favor of Bank and (ii) refrain from exercising any rights or remedies with
respect to the property encumbered and hypothecated by such Third Party Security
Interest until all Obligations owing by Borrower to Bank have been paid,
performed and satisfied. All monies due from affiliates (including officers,
directors, shareholders, parents, partners, joint venturers, subsidiaries and
commonly held companies) shall be excluded from Borrower's assets for all
purposes hereunder.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">8. <B>Conditions Precedent. </B>Bank's duties to extend and
renew the Obligations and to make Advances in accordance with this Tenth
Amendment shall be subject to (i) there being no outstanding and uncured
defaults under the Loan Agreement, the Equipment Purchase Line Note or any other
obligation owing by Borrower to Bank; (ii) the satisfaction of each of the
conditions precedent set forth in Article 6 of the Loan Agreement (including,
without limitation, the provisions of insurance coverage in quantities, forms
and content required by the Loan Agreement), each of which is incorporated
herein by this reference; (iii) the payment to Bank of a fee in the amount of
Fifteen Thousand Dollars ($15,000.00), which fee shall represent an
unconditional and nonrefundable payment to Bank in consideration of Bank's
agreement to enter into this Tenth Amendment and equals the sum of (a) one-
quarter of one percentage point (0.25%) of the amount of the commitment for the
revolving credit facility under the Loan Agreement and (b) one-quarter of one
percentage point (0.25%) of the amount of the commitment for the non-revolving
equipment purchase line facility under the Loan Agreement; and (iv) the
execution and delivery of this Tenth Amendment, a Corporate Resolution to Borrow
and Pledge in the form of the attached Exhibit "A", and such other documents as
Bank may request.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">9. <B>Filing of Perfection, Continuation and Other Documents.
</B>By executing this Tenth Amendment, Bank is hereby authorized to file any and
all financing statements, continuation financing statements, fixture filings,
landlord waivers, security agreements, chattel mortgages, assignments, deeds of
trust, assignments of leases, endorsements of certificates of title, affidavits,
reports, notices, schedules of Accounts, schedules of Inventory, and letters of
authority and all other documents that Bank may reasonably request, in form
satisfactory to Bank, to perfect and maintain perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Agreement, as modified and amended by
this Tenth Amendment,, as modified and amended by this Tenth Amendment. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">10. <B>Further Assurances. </B>The parties hereby agree, to
the extent permitted by law, from time to time, as and when requested by any
other party hereto or by its successors or assigns, to execute and deliver, or
cause to be executed and delivered, all such instruments, and to take, or cause
to be taken, all such further or other actions as may be reasonably necessary or
desirable in order to implement the provisions hereof and otherwise to effect
the intent and purposes hereof. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">11. <B>Further Modifications. </B>Subject to the provisions
of this Tenth Amendment relating to further assurances, this Tenth Amendment
does not create any right in favor of Borrower nor any duty or obligation on the
part of Bank to enter in to any further modifications or amendments of the Loan
Agreement or to provide any other or additional credit facilities to Borrower.
</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">12. <B>Counterparts. </B>This Tenth Amendment may be executed
in counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts together shall constitute one in the same
instrument. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">13. <B>Rules of Construction. </B>This Tenth Amendment and
all agreements relating to the subject matter hereof are the product of joint
negotiation by the parties and their respective attorneys. The parties waive the
provisions of California Civil Code Section 1654 requiring that any ambiguities
in this Tenth Amendment be construed against either of the parties. The parties
agree that any deletion of language from this Tenth Amendment prior to its
mutual execution by Borrower and Bank shall not be construed to have any
particular meaning or to raise any presumption, canon of construction or
implication, including, without limitation, any implication that the parties
intended thereby to state the converse or opposite of the deleted language. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">14. <B>Modification; Waiver. </B>No failure or delay in
exercising any right or remedy available to any party shall be deemed a waiver
of same, unless such waiver is set forth in writing and signed by the party to
be charged with such waiver. No supplement, modification, or amendment hereof
shall be binding unless executed in writing by all the parties. No waiver of any
of the provisions hereof shall be deemed, or shall constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">15. <B>General. </B>Time is of the essence herein. All
exhibits referred to herein are attached hereto and are incorporated by
reference. The captions and headings appearing herein are for the purpose of
identification only and such captions and headings shall not be construed to
convey any substance or meaning to the text hereof. Each person executing this
Tenth Amendment on behalf of a party represents and warrants that such person is
duly and validly authorized to do so on behalf of the entity it purports to so
bind and, if such party is a partnership, corporation, limited liability
company, or trustee, that such partnership, corporation, limited liability
company or trustee has full right and authority to enter into this Tenth
Amendment and perform all of its obligations hereunder. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">16. <B>Ratification of Warranties and Representations.
</B>Except as amended by this Tenth Amendment, Borrower hereby ratifies,
reaffirms, and remakes as of the date hereof each and every representation and
warranty contained in the Loan Agreement, the Equipment Purchase Line Note, or
in any document executed and delivered in connection therewith. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">17. <B>Continued Force and Effect. </B>Except as amended by
this Tenth Amendment, all of the terms and conditions of the Loan Agreement (and
each and every document or instrument executed and delivered in connection
therewith) is and shall remain in full force and effect. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P>IN WITNESS WHEREOF, Borrower has executed and delivered this Tenth Amendment
to Bank on the date first above written at Walnut Creek, California.</P>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

</FONT><B><FONT FACE="CG Times,Times New Roman" SIZE=2><P>"BORROWER"</P>

</FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P>SCIENTIFIC TECHNOLOGIES
INCORPORATED<BR>
   WHICH WILL DO BUSINESS IN CALIFORNIA AS<BR>
   OREGON SCIENTIFIC TECHNOLOGIES</B>, an Oregon<BR>
   Corporation</P>

<P>&nbsp;</P>
<P>By: <U>Joseph J. Lazzara&#9;&#9;&#9;<BR>
</U> Its: Chief Executive Officer&#9;&#9;</P></DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>


<P>IN WITNESS WHEREOF, Bank hereby accepts this Tenth Amendment to be effective
as of the date first above written in San Francisco, California.</P><DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

</FONT><B><FONT FACE="CG Times,Times New Roman" SIZE=2><P>"BANK"</P>

</FONT><FONT FACE="CG Times,Times New Roman" SIZE=2><P>BANK OF THE WEST</B>, a
California banking corporation</P>

<P>&nbsp;</P>
<P>By: <U>Christopher Golec&#9;&#9;&#9;<BR>
</U>       Assistant Vice President</P>

</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
