Exhibit 10.61


 


PATENT SECURITY AGREEMENT


 


THIS SECURITY
AGREEMENT is entered into as of
March             ,
2004, by and between MFIC Corporation, a Delaware corporation having its
principal place of business at 30 Ossipee Road, Newton, Massachusetts 02464-9101
(the “Borrower”), and Banknorth,
N.A., a national banking association organized and existing under the laws of
the United States of America with a usual place of business at 7 New England
Executive Park, Burlington, Massachusetts (“Bank”).


 


NOW THEREFORE,
in consideration of the premises, Borrower hereby agrees with Bank as follows:


 


1.             Grant of Security
Interest.  Borrower hereby grants to
Bank a first priority security interest in, and conditionally assigns, but does
not transfer title to Secured party, all of Borrower’s right, title and
interest in and to the following (collectively, the “Collateral”) to
secure payment and performance of all obligations of Borrower to Bank whether
such obligations are direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, including, without limitation,
those liabilities of Borrower to Bank pursuant to a Loan and Security Agreement
(All Assets) of even date herewith by and among Bank, Borrower and
Microfluidics Corporation (the “Loan
Agreement”) (collectively, the “Obligations”).


 


The Collateral
shall consist of the following:


 


(a)           Each of the patents and
patent applications which are presently, or in the future may be, owned,
issued, acquired or used (whether pursuant to a license or otherwise) by
Borrower, in whole or in part, and all patent rights with respect thereto
throughout the world, including all proceeds thereof (including license
royalties and proceeds of infringement suits), foreign filing rights and rights
to extend such patents and patent rights;


 


(b)           All of Borrower’s
right, title and interest, in and to the patents and patent applications listed
on Schedule A attached hereto, as the same may be updated hereafter from time
to time;


 


(c)           All of Borrower’s right,
title and interest in all patentable inventions, and to file applications for
patent under federal patent law or regulation of any foreign country, and to
request reexamination and/or reissue of the patents, the right (without
obligation) to sue or bring interference proceedings in the name of Borrower or
in the name of Bank for past, present and future infringements of the patents,
and all rights (but not obligations) corresponding thereto in the United States
and any foreign country;


 


(d)           All general intangibles
relating to the Collateral; and


 


(e)           All proceeds of any and
all of the foregoing (including, without limitation, license royalties and
proceeds of infringement suits) and, to the extent not otherwise included, all
payments under insurance, or any indemnity, warranty or guaranty payable by
reason of loss or damage to or otherwise with respect to the Collateral.


 

















 


2.             Warranties and
Representations.  Borrower hereby
warrants and represents to Bank the following:


 


(a)           A true and complete
schedule setting forth all patents and patent applications owned or controlled
by Borrower or licensed to Borrower, together with a summary description and
full information in respect of the filing or issuance thereof and expiration
dates is set forth on Schedule A;


 


(b)           To the best of
Borrower’s knowledge, each of the patents is valid and enforceable, and
Borrower is not presently aware of any past, present or prospective claim by
any third party that any of the patents are invalid or unenforceable, or that
the use of any patents violates the rights of any third person, or of any basis
for any such claims;


 


(c)           Borrower is the sole
and exclusive owner of the entire and unencumbered right, title and interest in
and to each of the patents and patent applications, free and clear of any
liens, charges and encumbrances, including, without limitation, pledges,
assignments, licenses, shop rights and covenants by Borrower not to sue third
persons;


 


(d)           Borrower has used and
will continue to use proper statutory notice in connection with its use of each
of the patents;


 


(e)           Except for the filing
of financing statements with the Secretary of State of Delaware under the
Uniform Commercial Code and filings with the United States Patent and Trademark
Office necessary to perfect the security interests created hereunder, no
authorization, approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either for the grant
by Borrower of the security interest hereunder or for the execution, delivery
or performance of this Agreement by Borrower or for the perfection of or the
exercise by Bank of its rights hereunder to the Collateral in the United
States.


 


3.             After-Acquired Patent
Rights.  If Borrower shall obtain
rights to any new patentable inventions or become entitled to the benefit of
any patent application or patent for any reissue, divisional or continuation,
of any patent, the provisions of this Agreement shall automatically apply
thereto.  Borrower shall give prompt
notice in writing to Bank with respect to any such new patents.  Borrower shall bear any expenses incurred in
connection with future applications for patent.


 


4.             Litigation and
Proceedings.  Borrower shall
commence and diligently prosecute in its own name, as the real party in
interest, for its own benefit, and its own expense, such suits, administrative
proceedings or other actions for infringement or other damages as are in its
reasonable business judgment necessary to protect the Collateral.  Borrower shall provide to Bank any
information with respect thereto requested by Bank.  Bank shall provide at Borrower’s expense all necessary
cooperation in connection with any such suit, proceeding or action, including,
without limitation, joining as a necessary party.  Following Borrower’s becoming aware thereof, Borrower shall
notify Bank of the institution of, or any adverse determination in, any
proceeding in the United States Patent and Trademark Office, or any United
States, state or foreign court regarding Borrower’s claim of ownership in any
of the patents, its right to apply for


 


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the same, or its right to keep
and maintain such patent rights.


 


5.             Power of Attorney.  Borrower grants Bank power of attorney,
having the full authority, and in the place of Borrower and in the name of
Borrower, from time to time in Bank’s discretion, after the occurrence of an
Event of Default, to take any action and to execute any instrument which Bank
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, as may be subject to the provisions of the Loan
Agreement:


 


(a)           To endorse Borrower’s
name on all applications, documents, papers and instruments necessary for Bank
to use or maintain the Collateral;


 


(b)           To ask, demand,
collect, sue for, recover, impound, receive and give acquittance and receipts
for money due or to become due under or in respect of any of the Collateral;


 


(c)           To file any claims or
take any action or institute any proceedings that Bank may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
Bank’s rights with respect to any of the Collateral and to assign, pledge,
convey or otherwise transfer title in or dispose of the Collateral to any
person.


 


7.             Events of Default.  Any of the following events shall be an
Event of Default:


 


(a)           Borrower fails to make
any payment of principal or interest or any other payment on any Obligation
when due and payable, by acceleration or otherwise under the loan documents;
and


 


(b)           the occurrence of an
Event of Default as that term is defined in the Loan Agreement.


 


8.             Specific Remedies.  Upon the occurrence of any Event of Default:


 


(a)           Bank may cease
advancing money or extending credit to or for the benefit of Borrower under the
Loan Agreement or under any other agreement between Borrower and Bank.


 


(b)           Bank may declare all
Obligations to be due and payable immediately, whereupon they shall immediately
become due and payable without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by Borrower;


 


(c)           After an Event of
Default, Bank may set off against the Obligations all Collateral, balances,
credits, deposits, accounts or moneys of Borrower then or thereafter held with
Bank, including amounts represented by certificates of deposit;


 


(d)           After an Event of
Default, Bank may notify licensees to make royalty payments on license
agreements directly to Bank;


 


(e)           Bank may sell or assign
the Collateral at public or private sale for such amounts, and at such time or
times as Bank deems advisable.  Any
requirement of reasonable notice of any disposition of the Collateral shall be
satisfied if such notice is sent to Borrower ten (10) days prior


 


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to such disposition.  Borrower
shall be credited with the net proceeds of such sale only when they are
actually received by Bank, and Borrower shall continue to be liable for any
deficiency remaining after the Collateral is sold or collected;


 


(f)            If the sale is to be a
public sale, Bank shall also give notice of the time and place by publishing a
notice one time at least ten (10) calendar days before the date of the sale in
a newspaper of general circulation in the county in which the sale is to be
held; and


 


(g)           To the maximum extent
permitted by applicable law, Bank may be the purchaser of any or all of the
Collateral at any public sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any public sale, to use and apply all or any part of
the Obligations as a credit on account of the purchase price of any Collateral
payable by Bank at such sale.


 


9.             Governing Law.  All acts and transactions hereunder and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.


 


IN WITNESS WHEREOF, the Borrower and Bank
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.


 


	
   

  	
  MFIC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Irwin J.
  Gruverman, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANKNORTH,
  N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Brant A.
  McDougall, Senior Vice President

  
					



 


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COMMONWEALTH OF MASSACHUSETTS


 


Suffolk, Boston, ss.


 


On
this              day
of March, 2004, before me, the undersigned notary public, personally appeared
Irwin J. Gruverman, as Chief Executive Officer of MFIC Corporation, proved to
me to be the person whose name is signed on the preceding document, through
satisfactory evidence of identification, namely,  a driver’s license issued by the State of Massachusetts,
bearing the photographic image of the face and signature of Irwin J. Gruverman,
and acknowledged to me that he signed it voluntarily for its stated purpose.


 


	
   

  	
   

  	
   

  
	
   

  	
  Michael J.
  Ruberto, Notary Public

  
	
   

  	
  My
  Commission Expires: June 13, 2008

  



 


COMMONWEALTH
OF MASSACHUSETTS


 


Suffolk, Boston ss.


 


On this               day
of March, 2004, before me, the undersigned notary public, personally appeared
Brant A. McDougall, as Senior Vice President of Banknorth, N.A., a corporation,
proved to me to be the person whose name is signed on the preceding document,
through satisfactory evidence of identification, namely, my personal knowledge
of the identity of that individual, and acknowledged to me that he signed it
voluntarily for its stated purpose.


 


	
   

  	
   

  	
   

  
	
   

  	
  Michael J.
  Ruberto, Notary Public

  
	
   

  	
  My
  Commission Expires:   June 13, 2008

  



 


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SCHEDULE A


TO A PATENT SECURITY AGREEMENT


BETWEEN


MFIC CORPORATION (BORROWER)


AND


BANKNORTH, N.A. (BANK)


DATED: 
MARCH      , 2004


 


ISSUED PATENTS (USA)


 


	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Owner

  
	
  4,908,154

  	
   

  	
  March 13,
  1990

  	
   

  	
  Method of
  Forming Microemulsions

  	
   

  	
  MFIC
  Corporation

  (successor to Biotechnology Development Corporation)

  
	
  5,533,254

  	
   

  	
  August 6,
  1995

  	
   

  	
  Apparatus
  for Forming Emulsions

  	
   

  	
  MFIC
  Corporation

  (successor to Biotechnology Development Corporation)

  
	
  6,221,332 B1

  	
   

  	
  April 24,
  2001

  	
   

  	
  Multiple
  Stream High Pressure Mixer/Reactor

  	
   

  	
  MFIC
  Corporation

  (successor to Microfluidics International Corporation)

  
	
  6,159,442

  	
   

  	
  December 12,
  2000

  	
   

  	
  Use of
  Multiple Stream High Pressure Mixer/Reactor

  	
   

  	
  MFIC Corporation