Exhibit 10.1
AMENDMENT NO. 2
TO
LOAN AND SECURITY AGREEMENT WITH LIMITED WAIVER
     THIS AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT WITH LIMITED WAIVER
(this “Amendment”) is entered into this 10 day of November, 2005, by and between
Silicon Valley Bank (“Bank”) and Sipex Corporation, a Delaware corporation
(“Borrower”) whose address is 233 South Hillview Drive, Milpitas, California
95035.
Recitals
     A. Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of July 21, 2005,(as amended by that certain Amendment No. 1
dated October 7, 2005, and as the same may from time to time be further amended,
modified, supplemented or restated, the “Loan Agreement”).
     B. Bank has extended credit to Borrower for the purposes permitted in the
Loan Agreement.
     C. Borrower has requested that Bank waive compliance with a covenant and
amend the Loan Agreement to make certain revisions to the Loan Agreement as more
fully set forth herein.
     D. Bank has agreed to so waive and amend certain provisions of the Loan
Agreement, 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 Amendment
shall have the meanings given to them in the Loan Agreement.
     2. Amendments to Loan Agreement.
          2.1 Section 6.7 (Financial Covenants). Section 6.7 is amended in its
entirety to read as follows:
“(a) Minimum Liquidity Ratio. Borrower will maintain as of the last day of each
month, a Liquidity Ratio of not less than 1.50:1.00. The Liquidity Ratio is
calculated as the sum of (i) Borrower’s unrestricted cash and cash equivalents
and consolidated Accounts divided by (ii) the Obligations.”

 

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“(b) Tangible Net Worth. Borrower will maintain, as of the last day of each
quarter set forth below, a Tangible Net Worth of at least the amount set forth
opposite such date. For purposes of this calculation, up to $5,000,000 in
non-cash charges relating to inventory write-downs may be added to Tangible Net
Worth.

          Quarter Ending Date   Minimum Tangible Net Worth
September 30, 2005
  Compliance waived
December 31, 2005
  $ 37,500,000  
March 31,2006
  $ 32,151,200  
June 30, 2006
  $ 26,113,000  

          2.2 Exhibits to the Loan Agreement. Exhibit C (Compliance Certificate)
is deleted and replaced with the form attached hereto as Exhibit A.
     3. Limited Waiver. Bank hereby waives Borrower’s compliance with the
financial covenant contained in Section 6.7(b) (Tangible Net Worth) for the
period ended September 30, 2005 only.
     4. Limitation of Amendments and Waiver.
          4.1 The amendments and waiver set forth in Sections 2 and 3, above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may have
in the future under or in connection with any Loan Document.
          4.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
     5. Representations and Warranties. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
          5.1 Immediately after giving effect to this Amendment (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;
          5.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;

 

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          5.3 The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
          5.4 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
          5.5 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
          5.6 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
          5.7 This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
     6. Counterparts. This Amendment 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 Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, and
(b) Borrower’s payment of a loan fee in an amount equal to $3,000.
[Signature page follows.]

 

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     In Witness Whereof, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.

              BANK   BORROWER
 
            Silicon Valley Bank   Sipex Corporation
 
            By: /s/ Tom Smith   By: /s/ Clyde R. Wallin
Name:
  Tom Smith   Name:   Clyde R. Wallin
 
           
Title:
  Senior Relationship Manager   Title:   Sr. VP Finance & CFO
 
           

 

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EXHIBIT A
EXHIBIT C
COMPLIANCE CERTIFICATE

TO:   SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054

FROM:   Sipex Corporation

     The undersigned authorized officer (“Officer”) of Sipex Corporation
(“Borrower”) 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. In
addition, the Officer certifies that Borrower and each Subsidiary (i) has timely
filed all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP and (ii) does not have any legal actions pending or
threatened against Borrower or any Subsidiary of which Borrower has not notified
Bank in accordance with Section 6.2 of the Agreement. Attached are the required
documents supporting the certifications contained herein. The Officer certifies
that these are prepared in accordance with 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
Compliance Certificate
  With 10Q, 10K and monthly financial statements   Yes   No
Monthly Financial Statements
  Monthly within 30 days   Yes   No
10Q, 10K (Audited)
  Within 5 days of issuance (at 6/30/05, company prepared financial statements.
Thereafter, financial statements prepared by outside accountants, until SEC
filings are timely made)   Yes   No
A/R and A/P Aging Report and Borrowing Base Certificate
  Semi-monthly within 15 and 30 days   Yes   No
Cash Holding Report and Deferred Revenue Report
  Monthly within 30 days   Yes   No
Annual Forecast
  Annually within 45 days of FYE   Yes   No

 

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              Reporting Covenant   Required   Complies
Budgets, sales projections,
operating plans, or other
financial information as
Lender may request
  Promptly after Lender requests   Yes   No

                  Financial Covenant   Required   Actual   Complies
Maintain (at month end):
               
 Minimum Liquidity Ratio
  1.5:1.00   ___:1.00   Yes   No
Maintain (at quarter end):
               
 Minimum Tangible Net Worth
  $37,500,000 (at
12/30/05)   $___   Yes   No
 
  $32,151,200 (at
3/31/06)            
 
  $26,113,000 (at
6/30/06)            

Borrower has deposit accounts located at the
following institutions only: Silicon Valley
Bank,___________________________

Comments Regarding Exceptions: See Attached.
Sincerely,
Sipex Corporation
 
Signature
 
Title
 
Date

BANK USE ONLY

Received by:    
 

AUTHORIZED SIGNER

Date:    
 

Verified:    
 

AUTHORIZED SIGNER

Date:    
 

         
Compliance Status:
  Yes   No