exv10w1



 






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.”




 









 







“(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;



 









 





          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.]




 









 





     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
	 

	 	 
	 	 	 	 





 









 






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






 









 






	 	 	 	 	 	 	 
	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