EX-10.1






Amendment no. 2 To Credit Agreement




This amendment no. 2 to credit agreement (this “Amendment”) is made effective as of
March 1, 2006 (the “Effective Date”), by and between Neose Technologies, Inc. (the
“Borrower”) and Brown Brothers Harriman & Co. (the “Bank”).



Background




Whereas, pursuant to a Credit Agreement dated as of January 30, 2004, by and between
the Bank and the Borrower, as amended by Amendment No. 1 dated March 8, 2005 (the “Credit
Agreement”), the Bank agreed, inter alia, to provide to the Borrower a credit
facility in the maximum aggregate principal amount of $9,000,000 (the “Loan”).



Whereas, the Borrower has requested that the Bank make certain amendments and
modifications to the Credit Agreement, including, without limitation, reducing the liquidity
requirements set forth in the Credit Agreement, and the Lender has agreed to such modifications
under the terms and conditions herein set forth. Any capitalized terms not defined herein shall
have the meaning assigned to them in the Credit Agreement.



Terms




Now, therefore, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound hereby, the parties hereto agree as follows:




	1.	 	Interest. Section 2.2(d) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:






(d) Interest. The outstanding principal amount of the Term Loan Note
shall bear interest at Borrower’s option, at: (1) the As-Offered Fixed Rate; or (2)
LIBOR plus 5.00% (provided, however, that if Borrower fails to maintain Liquidity of
at least $18,000,000, based on Bank’s determination (in its sole discretion), then
option (2) shall be LIBOR plus 5.50%). Borrower shall provide Bank with telephonic
notice prior to the initial advance of the Term Loan and, if applicable, not less
than 2 Business Days prior to the last day of each LIBOR Term or As-Offered Fixed
Rate Term, as the case may be, of Borrower’s selection of a rate option and term,
which telephonic notice shall be promptly confirmed in writing. In the absence of
such notice, the interest rate on the Term Loan Note shall continue at the LIBOR
rate as provided herein, or, in the event a LIBOR rate is not available, the Base
Rate plus 2.50% (or, if Borrower’s Liquidity is less than $18,000,000, the
Base Rate plus 3.00%). Interest shall be due and payable to Bank quarterly
on each Interest Payment Date.




	2.	 	Maturity. The following is added as a final sentence to Section 2.2(e) of the Credit
Agreement:






In addition to the foregoing, Borrower may be required to make certain additional
principal payments pursuant to Section 5.12.




	3.	 	Optional Prepayments. The first two sentences of Section 2.2(f) of the Credit Agreement are
hereby amended and restated to read in their entirety as follows:






The principal of the Term Loan Note, with respect to an As-Offered Fixed Rate Loan,
may be prepaid in whole or in part (but if in part only in amounts of $100,000 or
integral multiples of $25,000 in excess thereof) at any time, by Borrower upon three
Business Days’ written notice to Bank, which prepayment shall be subject to the
applicable prepayment premium set forth in subsection (g) below. The principal of
the Term Loan Note, with respect to a LIBOR-based interest rate Loan or a Base
Rate-based interest rate Loan, as the case may be, may be prepaid in whole or in
part (but if in part only in amounts of $100,000 or integral multiples of $25,000 in
excess thereof) at the end of the applicable LIBOR Term or term of a Base Rate-based
interest rate Loan, by Borrower upon three Business Days’ written notice to Bank,
which prepayment shall be subject to the applicable prepayment premium set forth in
subsection (g) below. No partial prepayment shall reduce Borrower’s obligation to
make principal payments next becoming due under the Term Loan Note, but shall reduce
such principal payment obligations in reverse order of due date.




	4.	 	Prepayment Premium. The following subsection (g) is hereby added to Section 2.2 of the
Credit Agreement.





(g) Prepayment Premium. Based on the amount of Loans prepaid, the following
prepayment premium shall apply: (a) if the prepayment occurs on or before June 30, 2006, three
percent (3.0%) of the principal amount prepaid; (b) if the prepayment occurs after June 30, 2006
but on or before December 31, 2006, two percent (2.0%) of the principal amount prepaid; and (c) if
the prepayment occurs after December 31, 2006 but on or before termination of the Credit Agreement,
one percent (1.0%) of the principal amount prepaid. Any such prepayment premium shall be paid by
Borrower to Bank at the time of the applicable prepayment.




	5.	 	Liquidity. Section 5.12 of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:






Section 5.12 Liquidity; Grant of Security Interest.




(a) Within 14 days after the Second Advance, Borrower shall have deposited all
of its Financial Assets, other than $100,000, in account(s) maintained by the Bank
and/or its affiliates. Thereafter, Borrower shall keep and maintain all of its
Financial Assets, other than $100,000, in an account or accounts with the Bank
and/or its affiliates except as may be necessary to fund the Borrower’s business, or
as otherwise consented to in writing by Bank.




(b) If Borrower fails to maintain Liquidity of at least $12,000,000, based on
Bank’s determination (in its sole discretion), Bank may require, in its sole
discretion, that Borrower make a payment to reduce the principal of the Term Loan
Note to no more than $5,000,000.




(c) If Borrower fails to maintain Liquidity of at least $10,000,000, based on
Bank’s determination (in its sole discretion), Bank may require, in its sole
discretion, that Borrower make a payment to reduce the principal of the Term Loan
Note to no more than $4,000,000.




(d) Borrower hereby creates and grants to Bank and its affiliates a security
interest in and lien upon the Liquidity, provided that such security
interest and lien shall attach and become perfected upon the earlier of (i) Bank’s
receipt of notice from a Person that has provided Capital Lease financing to
Borrower, which notice evidences such Person’s commencement of, or intention to
commence, foreclosure or other action against the Borrower or such equipment, or
(ii) commencement by a Person that has provided Capital Lease financing to Borrower
of foreclosure or other action against the Borrower or the financed equipment; and
further provided that such security interest and lien shall be
limited to an amount equal to the outstanding balance of the Loan at the time of
such attachment and perfection, and all other amounts due and payable under this
Agreement. Borrower hereby authorizes Bank to file and record, and agrees and
covenants that it will execute and deliver to Bank, any and all such UCC financing
statements, agreements, documents, instruments and/or certificates necessary for the
perfection of such security interest and lien.




(e) Any payments required pursuant to Sections 5.12(b) or 5.12(c) shall not be
subject to any prepayment premium set forth elsewhere in this Credit Agreement.




	6.	 	Additional Event of Default. Section 6.1(n) is amended to remove the word “or” following the
semi-colon at the end of such section, Section 6.1(o) is amended to replace the period at the
end of such section with “; or” and the following is added as a new Section 6.1(p) to the
Credit Agreement:






(p) Borrower fails to maintain Liquidity of at least $5,000,000, based on
Bank’s determination (in its sole discretion).




	7.	 	Nullification of Additional Collateral Requirement. The Additional Collateral requirement in
Section 5.12 is hereby deleted and all references to “Additional Collateral” in the Credit
Agreement are hereby removed and shall have no further force or effect.






	8.	 	Further Assurances. The Bank and the Borrower agree to take all action, including the
execution of all documents, necessary to amend the Montgomery County Industrial Development
Authority $1,000,000 Variable Rate Revenue Bond (Neose Technologies, Inc. Project) Series 2004
and all documents related thereto (collectively, the “Bond”) in order to:






	 	8.1	 	Increase the interest rate payable on the Bond (retroactive to the Effective
Date) by 200 basis points, with such additional interest to be paid by Borrower with
the next interest payment after execution of such documents; and






	 	8.2	 	Replace all provisions requiring the payment of “breakage costs” upon the
redemption of the Bond with like provisions requiring the payment of the prepayment
premiums set forth in Section 2.2(g) of the Credit Agreement (as defined in the
Agreement).






	9.	 	Miscellaneous.






	 	9.1	 	Representations and Warranties; No Event of Default; Consents; Due
Authorization. Borrower hereby certifies that: (a) all of its representations and
warranties in the Loan Documents are: (i) true and correct as of the date of this
Amendment (except to the extent such representations and warranties specifically relate
to a prior date), (ii) ratified and confirmed without condition as if made anew, and
(iii) incorporated into this Amendment by reference, (b) no Event of Default or event
or condition which, with the passage of time or the giving of notice or both, would
constitute an Event of Default, exists under any Loan Document, (c) no consent,
approval, order or authorization of, or registration or filing with, any third party is
required in connection with the execution, delivery and carrying out of this Amendment
and/or the enforceability hereof, and (d) this Amendment has been duly authorized,
executed and delivered so that it constitutes the legal, valid and binding obligation
of Borrower, enforceable in accordance with its terms.






	 	9.2	 	Obligations Due and Owing. Borrower acknowledges, confirms and agrees
that as of the date of this Amendment the Loan and obligations arising therefrom remain
outstanding and unconditionally owing by Borrower to Bank without defense, set-off,
counterclaim, discount or charge of any kind.






	 	9.3	 	Confirmation of Liens and Right of Set-Off. Borrower hereby
acknowledges, confirms and agrees that (a) any collateral for the Loan, including
liens, security interests, mortgages, and pledges granted by Borrower or third parties
(if applicable), and (b) Bank’s right of set-off under Section 8.2 of the Credit
Agreement, shall continue unimpaired and in full force and effect, and shall cover and
secure the Loan and all of Borrower’s existing and future obligations to Bank, as
modified by this Amendment.






	 	9.4	 	Ratification and Confirmation of Indemnification, Waiver of Jury Trial and
Confession of Judgment Provisions. Borrower hereby ratifies and confirms the
indemnification, waiver of jury trial and confession of judgment provisions contained
in the Loan Documents.






	 	9.5	 	Payment of Bank’s Expenses. Without limiting other payment obligations
of Borrower set forth in the Loan Documents, Borrower agrees to pay all costs and
expenses incurred by Bank in connection with the preparation, negotiation, execution
and delivery of this Amendment and any other agreements, instruments and/or other
documents which may be delivered in connection herewith, including, without limitation,
the fees and expenses of Bank’s counsel, Stradley Ronon Stevens & Young, LLP.






	 	9.6	 	Conditions to Effectiveness of Amendment. This Amendment shall be
effective upon the Bank’s receipt of this Amendment, duly executed by the Borrower and
the Bank.






	 	9.7	 	Inconsistencies. To the extent of any inconsistency between the terms,
conditions and provisions of this Amendment and the terms, conditions and provisions of
the Credit Agreement, the terms, conditions and provisions of this Amendment shall
prevail. All terms, conditions and provisions of the Credit Agreement not inconsistent
herewith shall remain in full force and effect and are hereby ratified and confirmed by
the Borrower and the Bank.






	 	9.8	 	Construction. All references to the Credit Agreement therein shall be
deemed to be a reference to the Credit Agreement as amended by this Amendment.






	 	9.9	 	Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.






	 	9.10	 	Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference to its
choice of law doctrines.






	 	9.11	 	Headings. The headings of the sections of this Amendment are inserted
for convenience only and shall not be deemed to constitute a part of this Amendment.






	 	9.12	 	Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all of the signatures on such counterparts
appeared on one document and each counterpart shall be deemed an original.





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In witness whereof, the parties hereto by their respective duly authorized officers,
have executed this Amendment as of the Effective Date.




Neose Technologies, Inc.




By: /s/ A. Brian Davis

Name: A. Brian Davis

Title: Senior Vice President and CFO





Brown Brothers Harriman & Co.



	 	 	 
	By: /s/ J. Clark O’Donoghue

	 

	Name:

Title:

	 	J. Clark O’Donoghue

Managing Director
	 
	 	 







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