**EXHIBIT 10.8(b)**

 

**BUSINESS LOAN AGREEMENT**

 

 

References in the boxesabove are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. 

 

Any item above containing “***” has been omitted due to text length limitations. 

 

 

**THIS BUSINESS LOAN AGREEMENT dated March 24, 2006, is made and executed between IRIS International, Inc. (“Borrower”) and CaliforniaBank & Trust (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including thosewhich may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, andagreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject tothe terms and conditions of this Agreement.**

 

**TERM.** ThisAgreement shall be effective as of March 24, 2006, and shall continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses,attorneys’ fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement. 

 

**CONDITIONS PRECEDENT TO EACH ADVANCE.** Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall besubject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. 

 

**Loan Documents.** Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreementsgranting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together withall such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel. 

 

**Borrower’s Authorization.** Borrower shall have provided in form and substance satisfactory to Lender properly certifiedresolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, mayrequire. 

 

**Payment of Fees and Expenses.**Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document. 

 

**Representations and Warranties.** The representations and warranties set forth in this Agreement, in the Related Documents, and inany document or certificate delivered to Lender under this Agreement are true and correct. 

 

**No Event of Default.** There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document. 

 

**REPRESENTATIONS AND WARRANTIES.** Borrower represents and warrants toLender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: 

 

**Organization.** Borrower is a corporation for profit whichis, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in all other states in which Borrower is doing business,having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which thefailure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes toengage. Borrower maintains an office at 9172 Eton Avenue, Chatsworth, CA 91311-5805. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its recordsconcerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full forceand effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s businessactivities. 

 

**Assumed Business Names.**Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower doesbusiness:**None.**

 

**Authorization.**Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under(1) any provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or orderapplicable to Borrower or to Borrower’s properties. 

**Financial Information.** Each of Borrower’s financial statements supplied toLender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financialstatement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements. 

 

**Legal Effect.** This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement whendelivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. 

 

**Properties.** Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writingto Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed anysecurity documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at least the lastfive (5) years. 

 

**HazardousSubstances.** Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage,treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach orviolation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any ofthe Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use,generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws,regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of theCollateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lenderto Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases andwaives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims,losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal,release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination,expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. 

 

**Litigation and Claims.** No litigation, claim, investigation, administrative proceeding or similar action(including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, ifany, that have been disclosed to and acknowledged by Lender in writing. 

 

**Taxes.** To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and othergovernmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. 

 

**Lien Priority.** Unless otherwise previously disclosed toLender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’sLoan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral. 

 

**Binding Effect.** This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signersthereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. 

 

**AFFIRMATIVE COVENANTS.** Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: 

 

**Notices of Claims and Litigation.** Promptly inform Lenderin writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or anyGuarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. 

 

**Financial Records.** Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examineand audit Borrower’s books and records at all reasonable times. 

 

**Financial Statements.** Furnish Lender with the following: 

 

**Annual Statements.** As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscalyear, Borrower’s balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender. 

 

**Interim Statements.** As soon as available, but in no event later than sixty (60) days after the end of each fiscal quarter,Borrower’s balance sheet and profit and loss statement for the period ended, prepared by Borrower in form satisfactory to Lender. 

 

**Tax Returns.** As soon as available, but in no event later than thirty (30) days after the applicable filing date for the taxreporting period ended, Federal and other governmental tax returns, prepared by a tax professional satisfactory to Lender. 

 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis,and certified by Borrower as being true and correct. 

 

**Additional Information.** Furnish such additional information and statements, as Lender may request from time to time. 

 

**Financial Covenants and Ratios.** Comply with the following covenants and ratios: 

 

**Working Capital Requirements.** Borrower shall comply withthe following working capital ratio requirements: 

 

**Current Ratio.** Maintain a Current Ratio in excess of **1.500 to 1.000**. The term “Current Ratio” means Borrower’s total Current Assets divided by Borrower’s total Current Liabilities. This liquidity ratio willbe evaluated as of quarter-end. 

**Minimum Income and Cash flow Requirements.** Borrower shall comply with the followingcash flow ratio requirements: 

 

**Debt ServiceCoverage Ratio.** Maintain a ratio of Debt Service Coverage in excess of **1.500 to 1.000**. This coverage ratio will be evaluated as of Quarter-end.Debt Service Coverage Ratio shall be defined as Earnings before Interest, Taxes Depreciationand Amortization divided by Current Portion of Long Term Debt plus Interest Expense based upon a cumulative rolling 12-month basis. 

 

**Tangible Net Worth Requirements.** Borrower shall comply with the following net worth ratio requirements: 

 

**Debt / Worth Ratio.** Maintain a ratio of Debt / Worthnot in excess of **1.250 to 1.000**. The ratio “Debt / Worth” means Borrower’s Total Liabilities divided by Borrower’s Tangible Net Worth. This leverage ratio will be evaluated as of quarter-end. 

 

Except as provided above, all computations made to determinecompliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct. 

 

**Insurance.** Maintain fire and other risk insurance, public liabilityinsurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver toLender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Eachinsurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in whichLender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require. 

 

**Insurance Reports.** Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing suchinformation as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then currentproperty values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower willhave an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. 

 

**Guaranties.** Prior to disbursement of any Loan proceeds, furnish executedguaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties. 

 

**Names of Guarantors**
  **Amounts**
**Statspin, Inc.**
  **$****16,500,000.00**
**Advanced Digital Imaging Research, LLC**
  **$****16,500,000.00**
 

**Other Agreements.** Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any otherparty and notify Lender immediately in writing of any default in connection with any other such agreements. 

 

**Loan Proceeds.** Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing. 

 

**Taxes, Charges and Liens.** Pay and discharge when due all of itsindebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penaltieswould attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge,levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contestedassessment, tax, charge, levy, lien, or claim in accordance with GAAP. 

 

**Performance.** Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrowershall notify Lender immediately in writing of any default in connection with any agreement. 

 

**Operations.** Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lenderof any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner. 

 

**Environmental Studies.** Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may berequested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive,at or affecting any property or any facility owned, leased or used by Borrower. 

 

**Compliance with Governmental Requirements.** Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct ofBorrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation andwithhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are notjeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest. 

 

**Inspection.** Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’sother properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including withoutlimitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records atall reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense. 

**Compliance Certificates.** Unless waived in writing by Lender, provide Lender at leastannually, with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date ofthe certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement. 

 

**Environmental Compliance and Reports.** Borrower shall comply in all respects with any and all Environmental Laws; not cause or permitto exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to theenvironment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event withinthirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission onBorrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. 

 

**Additional Assurances.** Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements,assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests. 

 

**LENDER’S EXPENDITURES.** If any action or proceeding is commenced thatwould materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due anyamounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited todischarging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred orpaid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’soption, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or(2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. 

 

**NEGATIVE COVENANTS.** Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior writtenconsent of Lender: 

 

**Indebtedness andLiens.** (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell,transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender. 

 

**Continuity of Operations.** (1) Engage in anybusiness activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sellCollateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default hasoccurred and is continuing or would result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to itsshareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholdersof a Subchapter S Corporation because of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure. 

 

**Loans, Acquisitions and Guaranties.** (1) Loan,invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinarycourse of business. 

 

**Agreements.** Enterinto any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations under this Agreement or in connection herewith. 

 

**CESSATION OF ADVANCES.** If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement orunder any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any otheragreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs amaterial adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify orrevoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred. 

 

**DEFAULT.** Each of the following shall constitute an Event of Default underthis Agreement: 

 

**Payment Default.** Borrowerfails to make any payment when due under the Loan. 

 

**Other Defaults.** Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation,covenant or condition contained in any other agreement between Lender and Borrower. 

 

**Default in Favor of Third Parties.** Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of anyother creditor or person that may materially affect any of Borrower’s or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of theRelated Documents. 

 

**False Statements.** Anywarranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished orbecomes false or misleading at any time thereafter. 

**Insolvency.** The dissolution or termination of Borrower’s existence as a goingbusiness, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy orinsolvency laws by or against Borrower. 

 

**Defective Collateralization.** This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any timeand for any reason. 

 

**Creditor or ForfeitureProceedings.** Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan.This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claimwhich is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amountdetermined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 

 

**Events Affecting Guarantor.** Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or anyGuarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. 

 

**Change in Ownership.** Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. 

 

**Adverse Change.** A material adverse change occurs inBorrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired. 

 

**Insecurity.** Lender in good faith believes itself insecure. 

 

**Right to Cure.** If any default, other than a default on Indebtedness, is curable and if Borrower orGrantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as thecase may be, demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender’s sole discretionto be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. 

 

**EFFECT OF AN EVENT OF DEFAULT.** If any Event of Default shall occur, except where otherwise provided in this Agreement orthe Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, atLender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, suchacceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all ofLender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action toperform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies. 

 

**DEPOSIT AGREEMENT SECURITY.** Borrower hereby grants a security interest to Lender in any and all deposit accounts (checking, savings, money market ortime) of Borrower at Lender, now existing or hereinafter opened, to secure the Indebtedness. This includes all deposit accounts Borrower holds jointly with someone else. 

 

**ADDITIONAL INFORMATION.** Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will furnish suchadditional information and statements, list of assets and liabilities, agings of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower’s financial condition and businessoperations as Lender may reasonably request from time to time, including without limitation: (a) detailed Accounts Receivable and Payable agings, as soon as available, but in no event later than twenty (20) days after month-end;(b) detailed Inventory Report, as soon as available, but in no event later than twenty (20) days after month-end. 

 

**ANNUAL INSPECTIONS AND COLLATERAL AUDITS.** Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will permitemployees or agents of Lender at any reasonable time, but at least annually, to inspect any and all Collateral for the Loan or Loans, as well as Borrower’s other properties and to examine or audit Borrower’s books, accounts, and recordsand to make copies and memoranda of Borrower’s books, accounts, and records as may be deemed necessary. Any such inspection or examination shall be at Borrower’s expense. 

 

**USAGE FEE.** Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower shall be assessedquarterly, a .18% fee on the undisbursed balance. Such fee shall be waived if the combined quarterly average usage exceeds 60% of the respective commitment amounts. 

 

**PRE-TAX PROFITABILITY.** Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower shallmaintain a minimum pre-tax profitability of **$1,500,000.00** for December 31, 2006 and December 31, 2007. 

 

**LOSSES.** Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower shall not incur losses for two consecutivequarters. 

 

**ACQUISITIONS.** Borrower covenants and agrees withLender that, while this Agreement is in effect, Borrower must obtain prior written approval from Lender for all acquisitions over $1,000,000.00 (transaction amount and not amount of advance). Such approval request to be reviewed and given byCommercial Credit Administartion. 

 

**TERM OUT OF EACH ADVANCEUNDER THE NON-REVOLVING LINE OF CREDIT.** Borrower covenants and agrees with Lender, that for each advance upon the end of the three (3) month interest only payment period, the non-revolving feature of this loan will be discontinued and theloan balance will be converted to a fully amortized, sixty (60) month installment loan, with payments of Principal including Interest at an interest rate based on the Pricing Matrix Addendum. 

 

**MISCELLANEOUS PROVISIONS.** The following miscellaneous provisions are apart of this Agreement: 

 

**Amendments.** ThisAgreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given inwriting and signed by the party or parties sought to be charged or bound by the alteration or amendment. 

**Attorneys’ Fees; Expenses.** Borrower agrees to pay upon demand all ofLender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, andBorrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcyproceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.

 

**Caption Headings.** Caption headings inthis Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. 

 

**Consent to Loan Participation.** Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or moreparticipation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lendermay have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participationinterests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will haveall the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against anypurchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan.Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. 

 

**Governing Law. This Agreement will be governed by federallaw applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California.**

 

**Choice of Venue.** If there is a lawsuit, Borroweragrees upon Lender’s request to submit to the jurisdiction of the courts of Los Angeles County, State of California. 

 

**No Waiver by Lender.** Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writingand signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver ofLender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shallconstitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lenderin any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. 

 

**Notices.** Any notice required to be given under thisAgreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, whendeposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by givingformal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unlessotherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers. 

 

**Severability.** If a court of competent jurisdiction finds any provision of this Agreement to be illegal,invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that itbecomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of thisAgreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 

 

**Subsidiaries and Affiliates of Borrower.** To the extent the context of any provisions of this Agreement makes it appropriate, includingwithout limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstancesshall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates. 

 

**Successors and Assigns.** All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documentsshall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein,without the prior written consent of Lender. 

 

**Survival of Representations and Warranties.** Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificateor other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive theextension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such timeas Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. 

 

**Time is of the Essence.** Time is of the essence in the performance of this Agreement. 

 

**Waive Jury. To the extent permitted by applicable law, allparties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.**

 

**DEFINITIONS.** The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated tothe contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require.Words and terms not otherwise defined in this

Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned tothem in accordance with generally accepted accounting principles as in effect on the date of this Agreement: 

 

**Advance.** The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalfon a line of credit or multiple advance basis under the terms and conditions of this Agreement. 

 

**Agreement.** The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended ormodified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. 

 

**Borrower.** The word “Borrower” means IRIS International, Inc. and includes all co-signers and co-makers signing the Note andall their successors and assigns. 

 

**Collateral.** The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, andwhether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. 

 

**Environmental Laws.** The words “EnvironmentalLaws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, andLiability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C.Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state orfederal laws, rules, or regulations adopted pursuant thereto. 

 

**Event of Default.** The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement. 

 

**GAAP.** The word “GAAP” means generally acceptedaccounting principles. 

 

**Grantor.** The word“Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest. 

 

**Guarantor.** The word “Guarantor” means anyguarantor, surety, or accommodation party of any or all of the Loan. 

 

**Guaranty.** The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. 

 

**Hazardous Substances.** The words “HazardousSubstances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated,stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials orwaste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. 

 

**Indebtedness.** The word “Indebtedness” meansthe indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the RelatedDocuments. 

 

**Lender.** The word“Lender” means California Bank & Trust, its successors and assigns. 

 

**Loan.** The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitationthose loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. 

 

**Note.** The word “Note” means The Note executed by International Remote Imaging Systems, Inc. in the original principal amountof $6,500,000.00 dated February 7, 2002, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the Note or Credit Agreement or any other subsequent Notes evidencing furtherIndebtedness. 

 

**Permitted Liens.** The words“Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens ofmaterialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or inany property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness andLiens”; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterialand insignificant monetary amount with respect to the net value of Borrower’s assets. 

 

**Related Documents.** The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deedsof trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan. 

 

**Security Agreement.** The words “Security Agreement” mean and include without limitation anyagreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. 

 

**Security Interest.** The words “SecurityInterest” mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage,collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoeverwhether created by law, contract, or otherwise. 

**Tangible Net Worth.** The words “Tangible Net Worth” mean Borrower’s total assetsexcluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and similar intangible items, but including leaseholds and leasehold improvements) less total debt. 

**BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREESTO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MARCH 24, 2006.**

 

**BORROWER:**

 
**IRIS INTERNATIONAL, INC.**   **By:** 
**/s/ Cesar Garcia**
  **By:** 
**/s/ Martin Parravato**
**Cesar Garcia, President/CEO of IRIS International, Inc.**  **Martin Parravato, CFO/Secretary of IRIS International, Inc.**
 

**LENDER:**

 
**CALIFORNIA BANK & TRUST****By:** 
**/s/ Joe Lim**
**Authorized Signer**
 

LASER PRO Lending, Ver. 5.48.00.004 Copr. Harland Financial Solutions, Inc. 1997, 2010. All Rights Reserved. - CA L:\CFI\LPL\C40.FC TR-13807PR-1 (M)