AMENDMENT TO TRANSACTION DOCUMENTS
Exhibit
10.3
This
AMENDMENT TO TRANSACTION DOCUMENTS (this “Amendment”) is
entered into as of October 23, 2009 by and among MICROFLUIDICS
INTERNATIONAL CORPORATION, a Delaware corporation (the “Borrower”),
MICROFLUIDICS CORPORATION, a Delaware corporation (“Microfluidics
Corporation” or the “Guarantor” and,
together with the Borrower, each a “Loan Party” and,
collectively, the “Loan Parties”), and
GLOBAL STRATEGIC PARTNERS, LLC, a Delaware limited liability company (the “Lender”).
The
Borrower and the Lender are parties to (a) that certain Debenture and
Warrant Purchase Agreement, dated as of November 14, 2008 (as amended as of
November 17, 2008 and as further amended as of March 11, 2009, the “Debenture and Warrant
Purchase Agreement”), (b) that certain Common Stock Purchase
Warrant, dated as of November 14, 2008 (the “Warrant”),
(c) that certain Security Agreement, dated as of November 14, 2008 (as
amended as of March 11, 2009, the “Borrower Security
Agreement”), (d) that certain Patent Security Agreement, dated as of
November 14, 2008 (the “Borrower Patent Security
Agreement”), and (e) that certain Trademark Security Agreement,
dated as of November 14, 2008 (the “Borrower Trademark Security
Agreement”).
The
Borrower previously executed in favor of the Lender that certain Convertible
Debenture, dated as of November 14, 2008 in the original principal amount of
$5,000,000 (as amended as of May 4, 2009, the “Debenture”).
The
Guarantor and the Lender are parties to (a) that certain Subsidiary
Guaranty, dated as of November 14, 2008 (the “Subsidiary
Guaranty”), (b) that certain Guarantor Security Agreement, dated as
of November 14, 2008 (the “Guarantor Security
Agreement”), and (c) that certain Guarantor Trademark Security
Agreement, dated as of November 14, 2008 (the “Guarantor Trademark Security
Agreement”).
The
Borrower has proposed to incur secured Indebtedness from Xxxxxxx Bank, National
Association (“Xxxxxxx
Bank”) in the aggregate principal amount of $1,000,000 (the “Senior
Indebtedness”), which Senior Indebtedness will rank senior to the
Obligations arising pursuant to the Transaction Documents to the extent
contemplated by that certain Intercreditor and Subordination Agreement, of near
or even date herewith, among the Borrower, Microfluidics Corporation, the Lender
and Xxxxxxx Bank (the “Subordination
Agreement”).
To
facilitate the subordination of the Obligations to the Senior Indebtedness to
the extent and in the manner specified in the Subordination Agreement, the
Borrower has requested that the Lender agree to certain amendments to certain of
the Transaction Documents, and the Lender has agreed to such request, subject to
the terms and conditions of this Amendment.
In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
|
1.
|
Definitions;
References; Interpretation.
|
(a) Unless
otherwise specifically defined herein, each term used herein (including in the
Recitals hereof and in the Consent and Agreement of Guarantor attached hereto)
which is defined in the Transaction Documents shall have the meaning assigned to
such term in such Transaction Documents.
(b) Each
reference to “this Agreement”, “hereof”, “hereunder”, “herein” and “hereby” and
each other similar reference contained in each Transaction Document amended
hereby, and each reference to a Transaction Document, shall from and after the
Effective Date (as defined in Section 2) refer to
such Transaction Document as amended hereby.
(c) With
reference to this Amendment, except to the extent the context otherwise
requires: (i) any reference to an Article, a Section, a Schedule
or an Exhibit is a reference to an article or section hereof, or a schedule or
an exhibit hereto, respectively, and to a subsection or a clause is, unless
otherwise stated, a reference to a subsection or a clause of the Section or
subsection in which the reference appears; (ii) the words “hereof,”
“herein,” “hereto,” “hereunder” and the like mean and refer to this Amendment as
a whole and not merely to the specific Article, Section, subsection, paragraph
or clause in which the respective word appears; (iii) the meaning of
defined terms shall be equally applicable to both the singular and plural forms
of the terms defined; (iv) the words “including,” “includes” and “include”
shall be deemed to be followed by the words “without limitation;”
(v) references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of the Transaction Documents; (vi) references to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending, supplementing, interpreting or replacing the
statute or regulation referred to; (vii) any table of contents, captions
and headings are for convenience of reference only and shall not affect the
construction of this Amendment; and (viii) in the computation of periods of
time from a specified date to a later specified date, the word “from” means
“from and including”; the words “to” and “until” each mean “to but excluding”;
and the word “through” means “to and including”.
|
2.
|
Amendments to
Debenture and Warrant Purchase
Agreement
|
. Subject
to the terms and conditions hereof, the Debenture and Warrant Purchase Agreement
is amended as follows, effective as of the date of satisfaction of the
conditions set forth in Section 11 (the
“Effective
Date”):
(a) Subordination
Legend. The Debenture and Warrant Purchase Agreement shall be
amended by adding the following legend to the beginning of such
agreement:
THIS
DEBENTURE AND WARRANT PURCHASE AGREEMENT AND THE RIGHTS AND OBLIGATIONS
EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT SET FORTH IN
THE SUBORDINATION AGREEMENT (DEFINED BELOW). BY ITS ACCEPTANCE
HEREOF, INVESTOR (AND ANY ASSIGNEE OF THIS DEBENTURE AND WARRANT PURCHASE
AGREEMENT PERMITTED BY THE TERMS OF THE SUBORDINATION AGREEMENT) IRREVOCABLY
AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
(b) Additional Defined Terms in
the Debenture and Warrant Purchase Agreement. The following
defined terms shall be added to Section 1.1 of the Debenture and Warrant
Purchase Agreement in the appropriate alphabetical order:
“Contingent
Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to (a) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, (b) any obligations
with respect to undrawn letters of credit, corporate credit cards, or merchant
services issued or provided for the account of such Person, and (c) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designed to protect such Person against fluctuations in
interest rates, currency exchange rates or commodity prices; provided, however, that
the term “Contingent Obligations” shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
“Guarantor” means
Microfluidics Corporation, a Delaware corporation.
“Permitted Senior
Indebtedness” means Indebtedness in an aggregate principal amount not
exceeding $1,000,000 owed by the Company and Guarantor to the Senior Lender
pursuant to the terms of the Permitted Senior Indebtedness
Documents.
“Permitted Senior
Indebtedness Documents” means, collectively, that certain Loan Agreement,
dated on or about October 23, 2009, among the Company, Guarantor and the Senior
Lender, and all other agreements and instruments evidencing, securing or
guaranteeing, or otherwise executed in connection with the Permitted Senior
Indebtedness, as the same may be amended from time to time in accordance with
the terms and provisions of the Subordination Agreement.
“Senior Lender” means
Xxxxxxx Bank, National Association.
“Subordination
Agreement” means that certain Intercreditor and Subordination Agreement,
dated as of October 23, 2009 among the Company, Guarantor, the Investor and the
Senior Lender.
(c) Amendment of Defined Terms
in the Debenture and Warrant Purchase Agreement. The following
terms defined in Section 1.1 of the Debenture and Warrant Purchase Agreement
shall be amended as follows:
(i) The
definition of “Permitted Indebtedness” shall be amended and restated to read in
full as follows:
“Permitted
Indebtedness” means, collectively, (i) the Indebtedness arising
under the Transaction Documents, (ii) Subordinated Debt,
(iii) Permitted Senior Indebtedness, (iv) Indebtedness owing to trade
creditors and incurred in the ordinary course of business, and (iv) other
Indebtedness secured by Permitted Liens.
(ii) Clause
(vi) of the definition of “Permitted Liens” shall be amended and restated
to read in full as follows:
(vi) senior
liens of the Senior Lender securing Permitted Senior Indebtedness.
(d) Amendment to Section
6.1(e) of the Debenture and Warrant Purchase
Agreement. The sixth, seventh and eighth sentences of Section
6.1(e) shall be amended and restated to read in full as
follows:
Subject
to the terms and conditions of the Subordination Agreement, (i) so long as
no Event of Default has occurred and is continuing, the Company shall have the
option of applying the proceeds of any casualty policy toward the replacement or
repair of destroyed or damaged property; provided that any such replaced or
repaired property (A) shall be of equal or like value as the replaced or
repaired Collateral and (B) shall be deemed Collateral in which Investor has
been granted a first priority security interest (subject to the terms of the
Subordination Agreement) and (ii) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Investor, be payable to Investor on account of
the Obligations (subject to the terms of the Subordination
Agreement). If the Company fails to obtain insurance as required
under this Section 6.1(e) or to pay any amount or furnish any required
proof of payment to third persons and Investor, Investor may make all or part of
such payment or obtain such insurance policies required in this
Section 6.1(e) and take any action under the policies Investor deems
prudent, in accordance with and subject to the provisions of the Subordination
Agreement.
(e) Amendment to Section
6.1(f) of the Debenture and Warrant Purchase
Agreement. The second sentence of Section 6.1(f) of the
Debenture and Warrant Purchase Agreement shall be amended and restated to read
in full as follows:
(f)
In addition, for each such account that the Company or a Subsidiary opens or
maintains, the Company shall, at Investor’s request and option (but subject to
the terms and provisions of the Subordination Agreement), pursuant to an
agreement in form and substance acceptable to Investor, cause the depository
bank or securities intermediary to agree that such account is the collateral of
Investor pursuant to the terms hereunder, which control agreement may not be
terminated without the prior written consent of Investor.
(f) Amendment to Section
6.2(d) of the Debenture and Warrant Purchase
Agreement. Section 6.2(d) of the Debenture and Warrant
Purchase Agreement shall be amended and restated to read in full as
follows:
(d) Encumbrance. The
Company shall not create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interests granted pursuant to the Collateral Documents (other than to the extent
any such Collateral is subject to senior Permitted Liens in favor of the Senior
Lender which secure obligations of the Company and the Guarantor arising under
the Permitted Senior Indebtedness), or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Investor) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
the Company or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of the Company’s or any
Subsidiary’s intellectual property, except as is otherwise permitted in
Section 6.2(a) hereof and the definition of “Permitted Liens”
herein.
|
3.
|
Amendments to
Debenture
|
. Subject
to the terms and conditions hereof, the Debenture is amended as follows,
effective as of the Effective Date:
(a) Subordination
Legend. The Debenture shall be amended by adding the following
legend to the beginning of such agreement:
THIS CONVERTIBLE DEBENTURE AND THE
RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO
THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT (AS DEFINED IN THE
“AGREEMENT” REFERENCED HEREIN). BY ITS ACCEPTANCE HEREOF, HOLDER (AND
ANY ASSIGNEE OF THIS CONVERTIBLE DEBENTURE PERMITTED BY THE TERMS OF THE
SUBORDINATION AGREEMENT) IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
(b) Amendment to Section 6 of
the Debenture. The first sentence of Section 6 of the
Debenture shall be amended and restated to read in full as follows:
Notwithstanding
anything in this Debenture to the contrary, should an Event of Default, as such
term is defined herein, occur and be continuing, interest on the outstanding
principal amount of this Debenture and unpaid interest shall be increased by two
percent (2%) per annum, or if less, at the highest rate permitted by applicable
law, and the outstanding balance of the principal amount, including unpaid
interest, shall continue to accrue from the date of such Event of Default at
such interest rate until such Event of Default is cured or waived (including
during any period during which the Holder’s ability to receive a payment in
respect of such default interest is prohibited or otherwise restricted by the
terms of the Subordination Agreement).
(c) New Section 6(vii) of
the Debenture. Section 6 of the Debenture shall be amended by
replacing the period appearing at the end of Section 6(vi) with a
semi-colon, adding the word “or” to the end of such Section 6(vi), and adding
the following to Section 6 as new subsection (vii) thereof:
(vii) (A)
an “Event of Default” (as defined in the Permitted Senior Indebtedness
Documents) constituting a payment default shall occur and be continuing under
the Permitted Senior Indebtedness Documents, (B) an “Event of Default” (as
defined in the Permitted Senior Indebtedness Documents) not constituting a
payment default shall occur and be continuing under the Permitted Senior
Indebtedness Documents, which “Event of Default” is not cured by the Issuer or
waived by the Senior Lender within 30 days after the occurrence thereof, or (C)
the Issuer shall materially breach any of its respective obligations under the
Subordination Agreement and such breach is not waived in accordance with the
terms thereof or otherwise cured by the Issuer, in any such case, within ten
days after the earlier of (1) the date on which a senior officer of the Issuer
becomes aware of such breach and (2) the date on which the Investor notifies the
Issuer in writing of such breach.
(d) Amendment to Section 7 of
the Debenture. Section 7 of the Debenture shall be amended and
restated to read in full as follows:
7. Notwithstanding
anything in this Debenture to the contrary but subject to the terms and
provisions of the Subordination Agreement, in case an Event of Default shall
occur and be continuing, payment of this Debenture may be accelerated at the
option of the Holder and the entire unpaid principal amount of this Debenture,
and all accrued and unpaid interest thereon, shall become immediately due and
payable in full, provided that upon the occurrence of an Event of Default under
Section 6(iv), all Indebtedness under this Debenture shall automatically be due
and payable without notice of any kind. Holder shall also have any
rights which Holder may have been afforded under any contract or agreement at
any time and any other rights which Holder may have pursuant to applicable
law. Subject to the terms and provisions of the Subordination
Agreement, Holder may exercise any and all of its remedies under the Collateral
Documents contemporaneously or separately from the exercise of any other
remedies hereunder or under applicable law.
(e) Amendment to Section 9 of
the Debenture. Section 9 of the Debenture shall be amended and
restated to read in full as follows:
9. Any
and all payments made by the Issuer in respect of this Debenture shall, subject
to the terms and provisions of the Subordination Agreement, be applied first to
payments of the fees and charges due under this Debenture, second to payment of
accrued and unpaid interest, and then to payment of the outstanding principal
amount of this Debenture.
(f) Amendment to Section 11 of
the Debenture. Section 11 of the Debenture shall be
amended and restated to read in full as follows:
The
Issuer may, at its option, upon thirty (30) days’ advance written notice to the
Holder, prepay all of the principal balance of this Debenture, without penalty
or premium, together with accrued and unpaid interest through the date of
prepayment. Any prepayment must occur on a regularly scheduled
Interest Payment Date. The Issuer’s right to prepay this Debenture is
subject to the right of the Holder to convert this Debenture as contemplated
herein and to the terms and conditions of the Subordination
Agreement.
(g) Amendment of Section 12 of
the Debenture. Section 12 of the Debenture shall be amended
and restated to read in full as follows:
12. This
Debenture is secured by all assets, property rights and interests of the Issuer
(as more fully described in the Collateral Documents) and shall be senior to all
other Indebtedness of the Issuer, other than Indebtedness constituting Permitted
Senior Indebtedness.
|
4.
|
Amendments to Borrower
Security Agreement
|
. Subject
to the terms and conditions hereof, the Borrower Security Agreement is amended
as follows, effective as of the Effective Date:
(a) Subordination
Legend. The Borrower Security Agreement shall be amended by
adding the following legend to the beginning of such agreement:
THIS SECURITY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO
THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT (AS DEFINED IN THE
“DEBENTURE AND WARRANT PURCHASE AGREEMENT” REFERENCED HEREIN). BY ITS
ACCEPTANCE HEREOF, SECURED PARTY (AND ANY ASSIGNEE OF THIS SECURITY AGREEMENT
PERMITTED BY THE TERMS OF THE SUBORDINATION AGREEMENT) IRREVOCABLY AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
(b) Amendment to Defined Terms
in the Security Agreement. The following terms defined in
Section 1(b) of the Borrower Security Agreement shall be amended as
follows:
(i) The
definition of “Debenture” shall be amended and restated to read in full as
follows:
“Debenture” means that
certain Convertible Debenture in the aggregate principal amount of $5,000,000,
dated as of November 14, 2008 and made by Debtor in favor of Secured Party, as
amended, modified, renewed, extended or replaced from time to time, including as
amended as of November 17, 2008, as further amended as of May 4, 2009, and as
further amended as of October 23, 2009.
(ii) The
definition of “Debenture and Warrant Purchase Agreement shall be amended and
restated to read in full as follows:
“Debenture and Warrant
Purchase Agreement” means that certain Debenture and Warrant Purchase
Agreement, of even date herewith, between Debtor and Secured Party, as amended,
modified, renewed, extended or replaced from time to time, including as amended
as of November 17, 2008, as further amended as of March 11, 2009, and as further
amended as of October 23, 2009.
(c) Amendment to Section
3(b) of the Borrower Security Agreement. Section
3(b) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(b) Subject
to the terms and conditions of the Subordination Agreement, Debtor will join
with Secured Party in notifying any third party who has possession of any
Collateral of Secured Party’s security interest therein and in obtaining an
acknowledgment from the third party that it is holding the Collateral for the
benefit of Secured Party.
(d) Amendment to Section
3(c) of the Borrower Security Agreement. Section
3(c) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(c) Within
30 days after the date hereof (or such later date as shall be consented to by
Secured Party) Debtor shall cause (subject to terms and conditions of the
Subordination Agreement) (i) any depository institution at which Debtor
maintains any deposit account to execute a deposit account control agreement, in
form and substance reasonably satisfactory to Secured Party, establishing
Secured Party’s “control” over such depository account for purposes of UCC
Article 9 and (ii) any securities intermediary or other Person with which
Debtor maintains any securities account containing any investment property of
Debtor to execute a securities account control agreement, in form and substance
reasonably satisfactory to Secured Party, establishing Secured Party’s “control”
over such securities account for purposes of UCC Article 9.
(e) Amendment to Section
3(d) of the Borrower Security Agreement. Section
3(d) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(d) Upon
request of Secured Party, Debtor (subject to the terms and conditions of the
Subordination Agreement) (i) shall cause certificates to be issued in
respect of any uncertificated Pledged Collateral (ii) shall exchange
certificated Pledged Collateral for certificates of larger or smaller
denominations, and (iii) shall cause any
securities intermediaries to show on the books that Secured Party is
the entitlement holder with respect to any Pledged Collateral.
(f) Amendment to Section
4(e) of the Borrower Security Agreement. Section
4(e) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(e) Debtor
has rights in or the power to transfer the Collateral, subject to the Lien of
the Secured Party and to the Lien of the Senior Lender therein, and Debtor is
the sole and complete owner of the Collateral, free from any Lien other than
Permitted Liens.
(g) Amendment to Section
4(g) of the Borrower Security Agreement. Section
4(g) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(g) No
control agreements exist with respect to any Collateral other than control
agreements in favor of Secured Party or Senior Lender.
(h) Amendment to Section
4(j) of the Borrower Security Agreement. Section
4(j) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(j) Debtor
is and will be the legal record and beneficial owner of all Pledged Collateral,
and has or will have good and marketable title thereto, subject to the Lien of
the Secured Party therein and to the Lien of the Senior Lender
therein.
(i) Amendment to Section
5(e) of the Borrower Security Agreement. Section
5(e) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(e) Subject
to the terms of the Subordination Agreement, all insurance policies shall
provide that any losses payable thereunder be payable directly to Secured Party
unless written authority to the contrary is obtained. In the event
that Debtor shall receive any proceeds of any insurance (other than in respect
of third party liability insurance) it shall, subject to the terms of the
Subordination Agreement, immediately cause such proceeds to be paid over to
Secured Party. If the Collateral shall be materially damaged or
destroyed, in whole or in part, by fire or other casualty, Debtor shall give
prompt notice thereof to Secured Party. Additionally, Debtor shall in
any event promptly give Secured Party notice of all reports made to insurance
companies in respect of any claim in excess of $100,000. Subject to
the terms of the Subordination Agreement, no settlement on account of any loss
covered by insurance shall be made for less than insured value without the
consent of Secured Party. Provided that no Event of Default then
exists and subject to the terms of the Subordination Agreement, Secured Party
shall apply all or any portion of such insurance proceeds to Debtor to be
applied to the replacement and/or restoration of damaged or destroyed property,
equipment, inventory, etc.
(j) Amendment to Section 6 of
the Borrower Security Agreement. Section (6) of the Borrower
Security Agreement shall be amended to add a new clause (d) to read in full
as follows:
(d) All
of the rights, authorizations and appointments of Secured Party under this
Section 6 shall be subject to the terms and conditions of the Subordination
Agreement.
(k) Amendment to Section
7(f) of the Borrower Security Agreement. Section
7(f) of the Borrower Security Agreement shall be amended and restated to
read in full as follows:
(f) Any
material impairment in the priority of Secured Party’s Lien hereunder (it being
acknowledged by Secured Party that the execution and delivery of the
Subordination Agreement shall not constitute such a material impairment in the
priority of Secured Party’s Lien hereunder).
(l) Amendment to Section 8 of
the Borrower Security Agreement. Section 8 of the Borrower
Security Agreement shall be amended to add a new clause (f) to read in full
as follows:
(f) All
of Secured Party’s rights and remedies granted under Section 8 shall be subject
to the terms and conditions of the Subordination Agreement.
|
5.
|
Amendments to Borrower
Patent Security Agreement
|
. Subject
to the terms and conditions hereof, the Borrower Patent Security Agreement is
amended, effective as of the Effective Date, by adding the following legend to
the beginning of such agreement:
THIS
PATENT SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATED IN THE MANNER AND TO THE EXTENT SET FORTH IN THE SUBORDINATION
AGREEMENT (AS DEFINED IN THE “DEBENTURE AND WARRANT PURCHASE AGREEMENT”
REFERENCED IN THE “SECURITY AGREEMENT” REFERENCED HEREIN). BY ITS
ACCEPTANCE HEREOF, LENDER (AND ANY ASSIGNEE OF THIS PATENT SECURITY AGREEMENT
PERMITTED BY THE TERMS OF THE SUBORDINATION AGREEMENT) IRREVOCABLY AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
|
6.
|
Amendments to Borrower
Trademark Security Agreement
|
. Subject
to the terms and conditions hereof, the Borrower Trademark Security Agreement is
amended, effective as of the Effective Date, by adding the following legend to
the beginning of such agreement:
THIS TRADEMARK SECURITY AGREEMENT AND
THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND
TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT (AS DEFINED IN THE
“SECURITY AGREEMENT” REFERENCED HEREIN). BY ITS ACCEPTANCE HEREOF,
LENDER (AND ANY ASSIGNEE OF THIS TRADEMARK SECURITY AGREEMENT PERMITTED BY THE
TERMS OF THE SUBORDINATION AGREEMENT) IRREVOCABLY AGREES TO BE BOUND BY THE
PROVISIONS OF THE SUBORDINATION AGREEMENT.
|
7.
|
Amendments to
Subsidiary Guaranty
|
. Subject
to the terms and conditions hereof, the Subsidiary Guaranty is amended as
follows, effective as of the Effective Date:
(a) Subordination
Legend. The Subsidiary Guaranty shall be amended by adding the
following legend to the beginning of such agreement:
THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT
SET FORTH IN THE SUBORDINATION AGREEMENT (AS DEFINED IN THE “DEBENTURE AND
WARRANT PURCHASE AGREEMENT” REFERENCED HEREIN). BY ITS ACCEPTANCE
HEREOF, LENDER (AND ANY ASSIGNEE OF THIS GUARANTY PERMITTED BY THE TERMS OF THE
SUBORDINATION AGREEMENT) IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
(b) Amendment to Recitals of the
Subsidiary Guaranty. The first sentence of the recital
paragraph to the Subsidiary Guaranty shall be amended and restated to read in
full as follows:
Microfluidics
International Corporation, a Delaware corporation and parent of Guarantor
(“Company”),
and Lender are parties to a Debenture and Warrant Purchase Agreement (as
amended, modified, renewed or extended from time to time, including as amended
as of November 17, 2008, as further amended as of March 11, 2009, and as further
amended as of October 23, 2009, the “Debenture and Warrant
Purchase Agreement”), and is indebted and otherwise obligated to Lender
pursuant to (a) the Convertible Debenture, of near or even date herewith,
issued by Company to Lender pursuant to the Debenture and Warrant Purchase
Agreement (as amended, modified, renewed or extended from time to time,
including as amended as of November 17, 2008, as further amended as of May 4,
2009, and as further amended as of October 23, 2009, the “Debenture”),
(b) the Common Stock Purchase Warrant, of near or even date herewith,
issued by Company in favor of Lender (the “Warrant”), and
(c) the other Transaction Documents referenced in the Debenture and Warrant
Purchase Agreement (the “Transaction
Documents”).
(c) Amendment to Section 2(v)(D)
of the Subsidiary Guaranty. Section 2(v)(D) of the Subsidiary
Guaranty shall be amended and restated to read in full as follows:
(D)
any (1) assignment or other transfer, in whole or in part, of Lender’s interests
in and rights under this Guaranty, including Lender’s right to receive payment
of the Obligations, (2) any assignment or other transfer, in whole or in part,
of Lender’s interests in and to any collateral securing the Obligations, and (3)
the subordination of the Obligations pursuant to the terms and provisions of the
Subordination Agreement;
|
8.
|
Amendments to
Guarantor Security Agreement
|
. Subject
to the terms and conditions hereof, the Guarantor Security Agreement is amended
as follows, effective as of the Effective Date:
(a) Subordination
Legend. The Guarantor Security Agreement shall be amended by
adding the following legend to the beginning of such agreement:
THIS GUARANTOR SECURITY AGREEMENT AND
THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND
TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT (AS DEFINED
BELOW). BY ITS ACCEPTANCE HEREOF, SECURED PARTY (AND ANY ASSIGNEE OF
THIS GUARANTOR SECURITY AGREEMENT PERMITTED BY THE TERMS OF THE SUBORDINATION
AGREEMENT) IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
(b) Amendment to Definition of
“Permitted Liens” appearing in Guarantor Security
Agreement. Clause (vi) of the definition of “Permitted
Liens” appearing in Section 1 of the Subsidiary Guaranty shall be amended and
restated to read in full as follows:
(vi) senior
liens of the Senior Lender securing Permitted Senior Indebtedness.
(c) Additional Defined Terms in
the Guarantor Security Agreement. The following defined terms
shall be added to Section 1 of the Guarantor Security Agreement in the
appropriate alphabetical order:
“Permitted Senior
Indebtedness” means indebtedness in an aggregate principal amount not
exceeding $1,000,000 owed by Microfluidics International Corporation and Debtor
to the Senior Lender pursuant to the terms of the Permitted Senior Indebtedness
Documents.
“Permitted Senior
Indebtedness Documents” means, collectively, that certain Loan Agreement,
dated on or about October 23, 2009, among Microfluidics International
Corporation, Debtor and Senior Lender, and all other agreements and instruments
evidencing, securing or guaranteeing, or otherwise executed in connection with
the Permitted Senior Indebtedness, as the same may be amended from time to time
in accordance with the terms and provisions of the Subordination
Agreement.
“Senior Lender” means
Xxxxxxx Bank, National Association.
“Subordination
Agreement” means that certain Intercreditor and Subordination Agreement,
dated as of October 23, 2009 among Microfluidics International Corporation,
Debtor, Secured Party and the Senior Lender.
(d) Amendment to Section
3(b) of the Guarantor Security Agreement. Section
3(b) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(b) Subject
to the terms and conditions of the Subordination Agreement, Debtor will join
with Secured Party in notifying any third party who has possession of any
Collateral of Secured Party’s security interest therein and in obtaining an
acknowledgment from the third party that it is holding the Collateral for the
benefit of Secured Party.
(e) Amendment to Section
3(c) of the Guarantor Security Agreement. Section
3(c) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(c) Within
30 days after the date hereof (or such later date as shall be consented to by
Secured Party) Debtor shall cause (subject to terms and conditions of the
Subordination Agreement) (i) any depository institution at which Debtor
maintains any deposit account to execute a deposit account control agreement, in
form and substance reasonably satisfactory to Secured Party, establishing
Secured Party’s “control” over such depository account for purposes of UCC
Article 9 and (ii) any securities intermediary or other Person with which
Debtor maintains any securities account containing any investment property of
Debtor to execute a securities account control agreement, in form and substance
reasonably satisfactory to Secured Party, establishing Secured Party’s “control”
over such securities account for purposes of UCC Article 9.
(f) Amendment to Section
3(d) of the Guarantor Security Agreement. Section
3(d) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(d) Upon
request of Secured Party, Debtor (subject to the terms and conditions of the
Subordination Agreement) (i) shall cause certificates to be issued in
respect of any uncertificated Pledged Collateral (ii) shall exchange
certificated Pledged Collateral for certificates of larger or smaller
denominations, and (iii) shall cause any securities intermediaries to show
on the books that Secured Party is the entitlement holder with respect to any
Pledged Collateral.
(g) Amendment to Section
4(e) of the Guarantor Security Agreement. Section
4(e) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(e) Debtor
has rights in or the power to transfer the Collateral, subject to the Lien of
the Secured Party and to the Lien of the Senior Lender therein, and Debtor is
the sole and complete owner of the Collateral, free from any Lien other than
Permitted Liens.
(h) Amendment to Section
4(g) of the Guarantor Security Agreement. Section
4(g) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(g) No
control agreements exist with respect to any Collateral other than control
agreements in favor of Secured Party or the Senior Lender, as
applicable.
(i) Amendment to Section
4(j) of the Guarantor Security Agreement. Section
4(j) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(j) Debtor
is and will be the legal record and beneficial owner of all Pledged Collateral,
and has and will have good and marketable title thereto, subject to the Lien of
Secured Party therein and to the Lien of the Senior Lender therein.
(j) Amendment to Section
5(e) of the Guarantor Security Agreement. Section
5(e) of the Guarantor Security Agreement shall be amended and restated to
read in full as follows:
(e) Subject
to the terms of the Subordination Agreement, all insurance policies shall
provide that any losses payable thereunder be payable directly to Secured Party
unless written authority to the contrary is obtained. In the event
that Debtor shall receive any proceeds of any insurance (other than in respect
of third party liability insurance) it shall, subject to the terms of the
Subordination Agreement, immediately cause such proceeds to be paid over to
Secured Party. If the Collateral shall be materially damaged or
destroyed, in whole or in part, by fire or other casualty, Debtor shall give
prompt notice thereof to Secured Party. Additionally, Debtor shall in
any event promptly give Secured Party notice of all reports made to insurance
companies in respect of any claim in excess of $100,000. Subject to
the terms of the Subordination Agreement, no settlement on account of any loss
covered by insurance shall be made for less than insured value without the
consent of Secured Party. Provided that no Event of Default then
exists and subject to the terms of the Subordination Agreement, Secured Party
shall apply all or any portion of such insurance proceeds to Debtor to be
applied to the replacement and/or restoration of damaged or destroyed property,
equipment, inventory, etc.
(k) Amendment to Section 6 of
the Guarantor Security Agreement. Section 6 of the Guarantor
Security Agreement shall be amended to add a new clause (d) to read in
full as follows:
(d) All
of the rights, authorizations and appointments of Secured Party under this
Section 6 shall be subject to the terms and conditions of the Subordination
Agreement.
(l) Amendment to
Section 7(e) of the Guarantor Security
Agreement. Section 7(e) of the Guarantor Security
Agreement shall be amended and restated to read in full as follows:
(e) Any
material impairment in the priority of Secured Party’s Lien hereunder (it being
acknowledged by Secured Party that the execution and delivery of the
Subordination Agreement shall not constitute such a material impairment in the
priority of Secured Party’s Lien hereunder).
(m) Amendment to Section 8 of
the Guarantor Security Agreement. Section 8 of the Guarantor
Security Agreement shall be amended to add a new clause (f) to read in full
as follows:
(f) All
of Secured Party’s rights and remedies granted under Section 8 shall be subject
to the terms and conditions of the Subordination Agreement.
|
9.
|
Amendments to the
Guarantor Trademark Security
Agreement
|
. Subject
to the terms and conditions hereof, the Guarantor Trademark Security Agreement
is amended, effective as of the Effective Date, by adding the following legend
to the beginning of such agreement:
THIS GUARANTOR TRADEMARK SECURITY
AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN
THE MANNER AND TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT (AS
DEFINED IN THE “SECURITY AGREEMENT” REFERENCED HEREIN). BY ITS
ACCEPTANCE HEREOF, LENDER (AND ANY ASSIGNEE OF THIS GUARANTOR TRADEMARK SECURITY
AGREEMENT PERMITTED BY THE TERMS OF THE SUBORDINATION AGREEMENT) IRREVOCABLY
AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
|
10.
|
Representations and
Warranties
|
. Each
of the Borrower and the Guarantor hereby represent and warrant to the Lender as
follows:
(a) No Event
of Default has occurred and is continuing under any Transaction Document to
which such Loan Party is a party (or would result from the amendment of any such
Transaction Document contemplated hereby).
(b) The
execution, delivery and performance by such Loan Party of this Amendment have
been duly authorized by all necessary corporate and other action and do not and
will not require any registration with, consent or approval of, or notice to or
action by, any Person (including with respect to any Governmental Approval) in
order to be effective and enforceable.
(c) This
Amendment constitutes the legal, valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with the terms
hereof.
(d) All
representations and warranties of such Loan Party contained in the Transaction
Documents to which it is party are true and correct in all material respects
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date).
(e) Such Loan
Party is entering into this Amendment on the basis of its own investigation and
for its own reasons, without reliance upon the Lender or any other
Person.
(f) The
respective obligations of each Loan Party under the Transaction Documents are
not subject to any defense, counterclaim, set-off, right of recoupment,
abatement or other claim.
|
11.
|
Conditions of
Effectiveness.
|
(a) The
effectiveness of Section 2 of this
Amendment shall be subject to the satisfaction of each of the following
conditions precedent:
(i) The
Lender shall have received from each Loan Party a duly executed original
(or, if elected by the Lender, an executed facsimile copy) of this
Amendment.
(ii) The
Lender shall have received from the Guarantor a duly executed original (or, if
elected by the Lender, an executed facsimile copy) of the Consent and Agreement
of Guarantor attached hereto as Exhibit A.
(iii) The
Lender shall have received evidence of payment by the Borrower of all fees,
costs and expenses due and payable as of the Effective Date under or in
connection with this Amendment and the Transaction Documents, including any
costs and expenses payable under Section 12(g) of
this Amendment (including the reasonable fees, charges and disbursements of
counsel for the Lender, to the extent invoiced on or prior to the Effective
Date).
(iv) The
Lender shall have received fully-executed copies of the principal loan documents
entered into by the Borrower and the Guarantor in connection with the incurrence
by such Loan Parties of the Senior Indebtedness.
(v) The
Lender shall have received all other documents it may reasonably request
relating to any matters relevant hereto, all in form and substance satisfactory
to the Lender.
(vi) The
representations and warranties provided by Borrower and Guarantor in Section 10 of
this Amendment shall be true and correct on and as of the Effective Date with
the same effect as if made on and as of the Effective Date.
(b) From and
after the Effective Date, the Transaction Documents shall be modified as set
forth herein. Except as expressly amended pursuant hereto, the
Transaction Documents shall remain unchanged and in full force and effect and
are hereby ratified and confirmed in all respects.
|
12.
|
Miscellaneous.
|
(a) The
Borrower acknowledges and agrees that the execution and delivery by the Lender
of this Amendment shall not be deemed to create a course of dealing or an
obligation to execute similar amendments under the same or similar circumstances
in the future.
(b) This
Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted by the Transaction
Documents.
(c) The
provisions of Section 7.3 of the Debenture and Warrant Purchase Agreement
relating to governing law, venue and the waiver of the right to jury trial shall
be incorporated herein by this reference, mutatis
mutandis.
(d) This
Amendment may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This
Amendment and the other Transaction Documents constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof.
(e) This
Amendment may not be amended except in accordance with the provisions of Section
7.7 of the Debenture and Warrant Purchase Agreement.
(f) If any
provision of this Amendment is held to be illegal, invalid or unenforceable,
(i) the legality, validity and enforceability of the remaining provisions
of this Amendment shall not be affected or impaired thereby and (ii) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(g) The
Borrower and the Guarantor agree to pay or reimburse all reasonable
out-of-pocket expenses incurred by the Lender (including the reasonable fees,
charges and disbursements of counsel for the Lender), in connection with the
preparation, negotiation, execution, delivery and administration of this
Amendment or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby shall be
consummated).
(h) This
Amendment shall constitute a Transaction Document.
[Remainder
of page intentionally left blank; signature pages follow]
IN
WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed as of the date
first above written.
THE
BORROWER:
By:/s/ Xxxxx X.
Xxxxxx
Name:Xxxxx X.
Xxxxxx
Title:Vice President of
Finance
THE
GUARANTOR:
MICROFLUIDICS
CORPORATION
By:/s/ Xxxxx X.
Xxxxxx
Name:Xxxxx X.
Xxxxxx
Title:Vice President of
Finance
THE
LENDER:
GLOBAL
STRATEGIC PARTNERS, LLC
By:/s/ Xxxxx
Xxxxxx
Name:Xxxxx
Xxxxxx
Title:
An Authorized
Person
EXHIBIT
A
CONSENT
AND AGREEMENT OF GUARANTOR
The
undersigned, in its capacity as the Guarantor, acknowledges that its consent to
the foregoing Amendment to Transaction Documents (the “Amendment”), other
than the Transaction Documents to which it is a party, is not required, but the
undersigned nevertheless does hereby consent to the foregoing Amendment and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned or
the Collateral Documents executed by the undersigned in the Lender’s favor, or
any other Transaction Document executed by the undersigned (as the same may be
amended from time to time), except in each case, as specifically set forth
herein with respect to the Subordination Agreement, all of which are hereby
ratified and affirmed in all respects.
IN
WITNESS WHEREOF, the
undersigned Guarantor has caused this Consent and Agreement of Guarantor to be
duly executed as of October 23, 2009.
GUARANTOR:
MICROFLUIDICS
CORPORATION
By:/s/ Xxxxx X.
Xxxxxx
Name:Xxxxx X.
Xxxxxx
Title:Vice President of
Finance
