**Exhibit 10.61**

** **

**PATENT SECURITY AGREEMENT**

 

THIS SECURITYAGREEMENT is entered into as ofMarch             ,2004, by and between MFIC Corporation, a Delaware corporation having itsprincipal 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 ofthe United States of America with a usual place of business at 7 New EnglandExecutive Park, Burlington, Massachusetts (“**Bank**”).

 

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

 

**1.****             Grant of SecurityInterest.**  Borrower hereby grants toBank a first priority security interest in, and conditionally assigns, but doesnot transfer title to Secured party, all of Borrower’s right, title andinterest in and to the following (collectively, the “**Collateral*”***) tosecure payment and performance of all obligations of Borrower to Bank whethersuch obligations are direct or indirect, absolute or contingent, due or tobecome 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 andMicrofluidics Corporation (the “**LoanAgreement**”) (collectively, the “**Obligations**”).

 

The Collateralshall consist of the following:

 

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

 

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

 

(c)           All of Borrower’s right,title and interest in all patentable inventions, and to file applications forpatent under federal patent law or regulation of any foreign country, and torequest reexamination and/or reissue of the patents, the right (withoutobligation) to sue or bring interference proceedings in the name of Borrower orin the name of Bank for past, present and future infringements of the patents,and all rights (but not obligations) corresponding thereto in the United Statesand any foreign country;

 

(d)           All general intangiblesrelating to the Collateral; and

 

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

 

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**2.****             Warranties andRepresentations.**  Borrower herebywarrants and represents to Bank the following:

 

(a)           A true and completeschedule setting forth all patents and patent applications owned or controlledby Borrower or licensed to Borrower, together with a summary description andfull information in respect of the filing or issuance thereof and expirationdates is set forth on Schedule A;

 

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

 

(c)           Borrower is the soleand exclusive owner of the entire and unencumbered right, title and interest inand to each of the patents and patent applications, free and clear of anyliens, charges and encumbrances, including, without limitation, pledges,assignments, licenses, shop rights and covenants by Borrower not to sue thirdpersons;

 

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

 

(e)           Except for the filingof financing statements with the Secretary of State of Delaware under theUniform Commercial Code and filings with the United States Patent and TrademarkOffice necessary to perfect the security interests created hereunder, noauthorization, approval or other action by, and no notice to or filing with,any governmental authority or regulatory body is required either for the grantby Borrower of the security interest hereunder or for the execution, deliveryor performance of this Agreement by Borrower or for the perfection of or theexercise by Bank of its rights hereunder to the Collateral in the UnitedStates.

 

**3.****             After-Acquired PatentRights.**  If Borrower shall obtainrights to any new patentable inventions or become entitled to the benefit ofany patent application or patent for any reissue, divisional or continuation,of any patent, the provisions of this Agreement shall automatically applythereto.  Borrower shall give promptnotice in writing to Bank with respect to any such new patents.  Borrower shall bear any expenses incurred inconnection with future applications for patent.

 

**4.****             Litigation andProceedings.**  Borrower shallcommence and diligently prosecute in its own name, as the real party ininterest, for its own benefit, and its own expense, such suits, administrativeproceedings or other actions for infringement or other damages as are in itsreasonable business judgment necessary to protect the Collateral.  Borrower shall provide to Bank anyinformation with respect thereto requested by Bank.  Bank shall provide at Borrower’s expense all necessarycooperation in connection with any such suit, proceeding or action, including,without limitation, joining as a necessary party.  Following Borrower’s becoming aware thereof, Borrower shallnotify Bank of the institution of, or any adverse determination in, anyproceeding in the United States Patent and Trademark Office, or any UnitedStates, state or foreign court regarding Borrower’s claim of ownership in anyof the patents, its right to apply for

 

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the same, or its right to keepand 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 ofBorrower, from time to time in Bank’s discretion, after the occurrence of anEvent of Default, to take any action and to execute any instrument which Bankmay deem necessary or advisable to accomplish the purposes of this Agreement,including, without limitation, as may be subject to the provisions of the LoanAgreement:

 

(a)           To endorse Borrower’sname on all applications, documents, papers and instruments necessary for Bankto use or maintain the Collateral;

 

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

 

(c)           To file any claims ortake any action or institute any proceedings that Bank may deem necessary ordesirable for the collection of any of the Collateral or otherwise to enforceBank’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 anyperson.

 

**7.****             Events of Default.**  Any of the following events shall be anEvent of Default:

 

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

 

(b)           the occurrence of anEvent 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 ceaseadvancing money or extending credit to or for the benefit of Borrower under theLoan Agreement or under any other agreement between Borrower and Bank.

 

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

 

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

 

(d)           After an Event ofDefault, Bank may notify licensees to make royalty payments on licenseagreements directly to Bank;

 

(e)           Bank may sell or assignthe Collateral at public or private sale for such amounts, and at such time ortimes as Bank deems advisable.  Anyrequirement of reasonable notice of any disposition of the Collateral shall besatisfied if such notice is sent to Borrower ten (10) days prior

 

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

 

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

 

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

 

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

 

IN WITNESS WHEREOF, the Borrower and Bankhave caused this Agreement to be executed by their duly authorized officers asof 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.

 

Onthis              dayof March, 2004, before me, the undersigned notary public, personally appearedIrwin J. Gruverman, as Chief Executive Officer of MFIC Corporation, proved tome to be the person whose name is signed on the preceding document, throughsatisfactory 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 |

 

# **COMMONWEALTHOF MASSACHUSETTS**

# ** **

Suffolk, Boston ss.

 

On this               dayof March, 2004, before me, the undersigned notary public, personally appearedBrant 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 knowledgeof the identity of that individual, and acknowledged to me that he signed itvoluntarily 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                                                          |

 

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