Exhibit 10.8


 


FIRST LOAN MODIFICATION AGREEMENT


 


This First Loan
Modification Agreement (this “Loan Modification
Agreement”) is entered into as of July 2, 2007, by and between (i) SILICON VALLEY BANK, a California corporation with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at One Newton Executive Park, Suite 200,
2221 Washington Street, Newton, Massachusetts 02462 (“Bank”),
and (ii) MICROFLUIDICS INTERNATIONAL CORPORATION,
a Delaware corporation and MICROFLUIDICS CORPORATION,
a Delaware corporation, each with offices located at 30 Ossipee Road, Newton,
Massachusetts 02464 (“Borrower”).


 


1.             DESCRIPTION
OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to a loan arrangement dated as of June 30, 2008, evidenced
by, among other documents, a certain Loan and Security Agreement dated as of June 30,
2008, between Borrower and Bank, (as amended, the “Loan
Agreement”).  Capitalized
terms used but not otherwise defined herein shall have the same meaning as in
the Loan Agreement.


 


2.             DESCRIPTION
OF COLLATERAL.  Repayment of the
Obligations is secured by the Collateral as described in the Loan Agreement
(together with any other collateral security granted to Bank, the “Security Documents”).


 


Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”.


 


3.             DESCRIPTION
OF CHANGE IN TERMS.


 


A.                                   Modifications
to Loan Agreement.


 


1                                          The
Loan Agreement shall be amended by inserting the following text after the last
paragraph in Section 4.1:


 


“              Notwithstanding
the foregoing, it is expressly acknowledged and agreed that the security
interest created in this Agreement only with respect to Export-Related Accounts
Receivable, Export-Related Inventory and Export-Related General Intangibles (as
such terms are defined in the EXIM Loan Agreement) is subject to and
subordinate to the security interest granted to Bank in the EXIM Loan Agreement
with respect to such Export-Related Accounts Receivable, Export-Related
Inventory and Export-Related General Intangibles.”


 


2                                          The
Loan Agreement shall be amended by deleting the period at the end of Section 8.10
and inserting the following in lieu thereof:


 


“              ; and


 


                8.11        EXIM
Default.  After the effective
date of the EXIM Loan Agreement, the occurrence of an Event of Default under
the EXIM Loan Agreement.”


 


3                                          The
Loan Agreement shall be amended by inserting the following definitions in the
appropriate alphabetical order in Section 13.1 entitled “Definitions”:


 


“              “EXIM Loan” is any loan, advance or other financial
accommodation made under or pursuant to the EXIM Loan Agreement.


 


                “EXIM Loan Agreement” is a certain Export-Import Bank Loan
and Security Agreement dated as of the Effective Date by and between Bank and
Borrower, and all documents, instruments and agreements executed in connection
therewith, as each may be amended from time to time.”


 

















 


4                                          The
Loan Agreement shall be amended by deleting the following definitions from Section 13.1
thereof in their entirety:


 


“              “Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, the IP
Agreement, the Post-closing Letter, any subordination or intercreditor
agreement entered into with respect to any Subordinated Debt, any note, or
notes or guaranties executed by Borrower or any Guarantor, and any other
present or future agreement between Borrower any Guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.


 


                “Obligations”
are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this
Agreement, the Loan Documents, or otherwise, including, without limitation, all
obligations relating to letters of credit (including reimbursement obligations
for drawn and undrawn letters of credit), cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned
to Bank, and the performance of Borrower’s duties under the Loan Documents.


 


                “Permitted Indebtedness”
is:


 


 


(a)           Borrower’s Indebtedness to Bank under
this Agreement and the other Loan Documents;


 


(b)           Indebtedness existing on the
Effective Date and shown on the Perfection Certificate;


 


(c)           Subordinated Debt;


 


(d)           unsecured Indebtedness to trade creditors; and


 


(e)           extensions, refinancings,
modifications, amendments and restatements of any items of Permitted
Indebtedness (a) through (d) above, provided that the principal
amount thereof is not increased or the terms thereof are not modified to impose
more burdensome terms upon Borrower.”


 


and inserting in lieu
thereof the following:


 


“              “Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, the IP
Agreement, the EXIM Loan Agreement, the Post-closing Letter, any subordination
or intercreditor agreement entered into with respect to any Subordinated Debt,
any note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement between Borrower any Guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.


 


                “Obligations”
are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this
Agreement, the EXIM Loan Agreement, the other Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit
(including reimbursement obligations for drawn and undrawn letters of credit),
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.


 


                “Permitted Indebtedness”
is:


 

















 


(a)           Borrower’s Indebtedness to Bank under
this Agreement, the EXIM Loan Agreement and the other Loan Documents;


 


(b)           Indebtedness existing on the
Effective Date and shown on the Perfection Certificate;


 


(c)           Subordinated Debt;


 


(d)           unsecured Indebtedness to trade creditors; and


 


(e)           extensions, refinancings,
modifications, amendments and restatements of any items of Permitted
Indebtedness (a) through (d) above, provided that the principal
amount thereof is not increased or the terms thereof are not modified to impose
more burdensome terms upon Borrower.”


 


4.             FEES.  Borrower shall reimburse Bank for all legal
fees and expenses incurred in connection with this amendment to the Existing
Loan Documents.


 


5.             RATIFICATION OF INTELLECTUAL
PROPERTY SECURITY AGREEMENT. 
Borrower hereby ratifies, confirms and reaffirms, all and singular, the
terms and conditions of a certain Intellectual Property Security Agreement
dated as of June 30, 2008 between Borrower and Bank, and acknowledges,
confirms and agrees that said Intellectual Property Security Agreement contains
an accurate and complete listing of all Intellectual Property Collateral as
defined in said Intellectual Property Security Agreement, shall remain in full
force and effect.  Notwithstanding the
terms and conditions of the Intellectual Property Security Agreement, the
Borrower shall not register any Copyrights or Mask Works in the United States
Copyright Office unless it: (i) has given at least fifteen (15) days’
prior written notice to Bank of its intent to register such Copyrights or Mask
Works and has provided Bank with a copy of the application it intends to file
with the United States Copyright Office (excluding exhibits thereto); (ii) executes
a security agreement or such other documents as Bank may reasonably request in
order to maintain the perfection and priority of Bank’s security interest in
the Copyrights proposed to be registered with the United States Copyright
Office; and (iii) records such security documents with the United States
Copyright Office contemporaneously with filing the Copyright application(s) with
the United States Copyright Office. 
Borrower shall promptly provide to Bank a copy of the Copyright
application(s) filed with the United States Copyright Office, together
with evidence of the recording of the security documents necessary for Bank to
maintain the perfection and priority of its security interest in such
Copyrights or Mask Works.  Borrower shall
provide written notice to Bank of any application filed by Borrower in the
United States Patent Trademark Office for a patent or to register a trademark
or service mark within thirty (30) days of any such filing.


 


6.             ADDITIONAL COVENANTS:
RATIFICATION OF PERFECTION CERTIFICATE. 
Borrower shall not, without providing the Bank with thirty (30) days
prior written notice: (i) relocate its principal executive office or add
any new offices or business locations or keep any Collateral in any additional
locations, or (ii) change its jurisdiction of organization, or (iii) change
its organizational structure or type, (iv) change its legal name, or (v) change
any organizational number (if any) assigned by its jurisdiction of
organization.  In addition, the Borrower
hereby certifies that no Collateral is in the possession of any third party
bailee (such as at a warehouse).  In the
event that Borrower, after the date hereof, intends to store or otherwise
deliver the Collateral to such a bailee, then Borrower shall first receive, the
prior written consent of Bank and such bailee must acknowledge in writing that
the bailee is holding such Collateral for the benefit of Bank.  Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain
Perfection Certificate dated as of June 30, 2008 provided by Borrower to
Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate have not changed,
as of the date hereof.]


 


7.             AUTHORIZATION TO FILE.  Borrower hereby authorizes Bank to file UCC financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank’s interest
in the Collateral, including a notice that any disposition of the Collateral,
by either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.


 


8.             CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.


 

















 


9.             RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.


 


10.           NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES
Bank from any liability thereunder.


 


11.           CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the
existing Obligations pursuant to this 
Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Obligations. 
Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Obligations.  It is
the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by
virtue of this Loan Modification Agreement.


 


12.           RIGHT OF SET-OFF.  In consideration of Bank’s agreement to enter
into this Loan Modification Agreement, Borrower hereby reaffirms and hereby
grants to Bank, a lien, security interest and right of set off as security for
all Obligations to Bank, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank 
(including a Bank subsidiary) or in transit to any of them.  At any time after the occurrence and during
the continuance of an Event of Default, without demand or notice, Bank may set
off the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured and regardless of the adequacy of
any other collateral securing the loan. 
ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.


 


13.           JURISDICTION/VENUE.  Borrower accepts for itself and in connection
with its properties, unconditionally, the exclusive jurisdiction of any state
or federal court of competent jurisdiction in the Commonwealth of Massachusetts
in any action, suit, or proceeding of any kind against it which arises out of
or by reason of this Loan Modification Agreement; provided, however, that if
for any reason Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.  NOTWITHSTANDING THE FOREGOING,  THE BANK SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE
BORROWER OR ITS PROPERTY.


 


14.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.


 


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intentionally left blank]


 

















 


IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the First Loan Modification Effective Date.


 


BORROWER:


 


	
  MICROFLUIDICS INTERNATIONAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Brian E. LeClair

  	
   

  
	
  Name:

  	
          Brian
  E. LeClair

  	
   

  
	
  Title:

  	
      Exec. V.P. & CFO

  	
   

  
					



 


 


	
  MICROFLUIDICS CORPORATION

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Brian E. LeClair

  	
   

  
	
  Name:

  	
          Brian
  E. LeClair

  	
   

  
	
  Title:

  	
      Exec. V.P. & CFO

  	
   

  
					



 


	
  BANK:

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Mark Sperling

  	
   

  
	
  Name:

  	
  Mark Sperling

  	
   

  
	
  Title:

  	
                Vice
  President

  	
   

  
					



 


 


First Loan Modification
Effective Date: July 2, 2008