AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT WITH LIMITED WAIVER
Exhibit 10.1
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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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/ ▇▇▇ ▇▇▇▇▇ | By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
Name:
|
▇▇▇ ▇▇▇▇▇ | Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
Title:
|
Senior Relationship Manager | Title: | Sr. VP Finance & CFO | |||
EXHIBIT A
EXHIBIT C
COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
| TO: | SILICON VALLEY BANK ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
| 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,___________________________
following institutions only: Silicon Valley
Bank,___________________________
BANK USE ONLY
| Received by: | |
AUTHORIZED SIGNER
| Date: | |
| Verified: | |
AUTHORIZED SIGNER
| Date: | |
Compliance Status:
|
Yes | No |